Inside A Layoff

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Not every employee got the bad news as impersonally as Peterson. When senior recruiter Kathleen Sullivan, 47, was let go, her boss led her from her cubicle into a "team room" where they could have some privacy. He apologized profusely and said he hoped they would stay in touch. "Then a tear started rolling down his cheek," she says. "I'm getting laid off, and I'm asking him if he needed a Kleenex."

But the pain was mostly hers. Sullivan had initially resisted going to Dell. But when it recruited her, she was enticed by the high pay, the 401(k), the stock options and the heady work environment. During the boom, she says, she once hired 600 people in five weeks. Dell hired 16,000 workers the past two years alone.

With money tight, there was pressure to cut back on departments that didn't generate revenue--administration, marketing and recruiting. Dell was also pushing to have in-house managers do more of their own job interviewing, leaving less work for Sullivan. Echoing Michael Dell, Sullivan blames the company for not doing a better job of anticipating work-force needs. "This is the first time I heard about reducing numbers," she says. "The company was growing too fast, and we didn't take a long view and look at what we had."

Gary Davidson's firing was mercifully brief. Davidson, 39, a network administrator in a factory that makes laptops, got to work at 7:30 a.m., and his boss called him into the human-resources building. He was told that he was history and was asked to hand over his badge, cell phone and corporate cards. "They gave me the option of coming back later to clean out my desk," he says. "By 7:45 a.m., I was out."

The news didn't come as a complete shock. When Davidson started out, money ran freely. "The mood was, 'Gosh, Dell has oodles of loot,'" he says. "'Let's just spend, spend, spend.'" But last spring, when the dotcom bubble burst, everything changed. It was harder to get anything more than a bare-bones computer to work on, and training was halted for several months. "You could practically hear the screws being tightened," says Davidson.

By early this year, rumors were rampant that job cuts were coming. But Dell traditionally kept a 10% to 30% buffer of temps and contractors, who normally get the boot during slow times. The company usually lays off an additional 10% of full-time staff after annual evaluations in February. The regular staff had hoped that those traditional purges, which happened again this year, would be all that were needed.

Many of the fired workers object to the way they were let go. Just days before D-day, as Feb. 15 is now known at Dell, management was denying planned job cuts. On D-day, officers from the Texas Department of Public Safety showed up at the Dell campus to escort the doomed to their cars. Workers were encouraged to sign "the bribe," an agreement not to discuss their package or sue Dell, in exchange for up to four extra weeks of severance.

One of the biggest complaints among redundant Dell workers is that the company has not explained how it chose whom to fire. Dell rigorously evaluates its employees, ranking each on a descending 1-to-5 scale; fives get fired first. But performance didn't seem to matter this time. "The first guy in my department to go was the second highest rated on the team," says Davidson. "It was more like a shotgun blast, or a lottery."