What I learned when I fired someone I deeply admired

This week in Tech in Asia Jobs shares insights into how successful companies operate, hire, and more.

Photo credit: Nik Macmillan.

Virtusa was an IT company that I used to work for, and when its stock began trading on NASDAQ in 2007 under the ticker symbol VRTU, it was a matter of great pride for all of us. JP Morgan Securities was the sole book-running manager for the offering, with Bear Stearns & Co. as the lead manager.

We had barely learned how to run a public company to a quarterly rhythm when we felt the early tremors of the credit crisis. In an ironic twist, Bear Stearns was the first to fall and was forced to eventually merge with JP Morgan in a stock swap that valued it at a fraction of what it was valued just two days before the merger.

Events unfolded faster than we could imagine. The Virtusa stock, like the rest of the markets around the globe, went into a free fall, and employee stock options were soon under water. Clients began cutting—some even canceled—discretionary spends and revenue projections went for a toss.

Before the crisis

Virtusa took great pride in being able to partner with the CIOs of client organizations in shaping and executing their IT strategy. This called for some nontrivial IT and business consulting capabilities. However, most of these consultants were located in the US and Europe while our delivery teams were largely based out of Asia.

To strengthen the quality of our engagement with these consulting teams, we decided to hire a rockstar HR head for America and Europe. After a long search, we found Chris Carter, the perfect candidate, and brought him on board toward the end of 2006.

Carter was an unusually clear thinker and deeply passionate about nurturing talent. The consultants loved him. In a very short span of time, he was able to up the game and create the kind of clarity and positive energy never seen before. His understanding of the interplay between business needs and talent strategies was amazing. I admired and liked Carter deeply. Whenever I visited Boston, I would stop by his place, and he did the same when he visited India.

During one of my visits to Boston just before the financial crisis, we talked about interesting travel destinations. Ladakh, a region at the northern tip of India, was on top of the list for Helen, Carter’s wife. When I told her that summer would be a great time to visit, she made a remark that later proved to be prophetic: “If you don’t fire Chris, we will make this trip next summer.” I just laughed away the comment.

Several years later, Carter told me that they still remember this exchange clearly, and it comes up when they reflect on this time in their lives.

The financial crisis changed everything 

In the weeks following the collapse of Bear Stearns, analysts were all forecasting a long global winter, and we saw a loss in revenue faster than we had feared.

I knew we’d have a lot of difficult questions to answer on this, but tough calls needed to be made for the interest of the company.

After some serious deliberation, we figured that the only way to calm our investors was to make some hard calls on costs. So, we identified costs to be pruned and people to fire. Carter’s name was on the list, along with several others. I knew we’d have a lot of difficult questions to answer on this, but tough calls needed to be made for the interest of the company.

We worked out a separation package beyond what was in the contract. Carter accepted this decision with dignity and poise and gracefully agreed to communicate this and the firing of one of his team members to his team. In this latter conversation, he couldn’t completely mask what he truly felt about this decision and said, “The company is now no longer keen on a gold standard.”

Lessons I learned