Earlier today we learned that Sam Altman, CEO of OpenAI the company behind ChatGPT, was returning to his post as CEO, bringing a captivating story to a close (well at least for now).

In case you missed it, the company dismissed Altman on Friday. The company provided few details on its decision to terminate Altman beyond citing a lack of candour on his part when communicating with its Board.

Over the weekend we learned that following a failed attempt at reinstatement, the former CEO had agreed to join the company’s financial backer, Microsoft. Altman was joined at Microsoft by other executives and management who quickly exited the company following his termination. While Microsoft welcomed the employees, it also publicly left the door open for Altman to return to his former company. 

On Monday, in a stunning move, approximately 700 of the 770 employees at OpenAI, issued a scathing letter to the Board threatening to resign and follow Altman to Microsoft unless the current Board agreed to resign. The letter from the employees allegedly noted that they were “unable to work for or with people that lack competence, judgment and care for our mission and employees”. It’s important to remember that OpenAI’s mission is about building AI for “humanity and not for corporate profits”.

Ultimately, Altman is now returned to his post and OpenAI’s Board has been reconstituted. 

While this is very public and likely a relatively extreme example of the sort of ripple effect a termination can cause within a company, the story has some very valuable takeaways for all employers.

Key Takeaways for Employers

Consider termination carefully: If you are one of our clients and/or attend our webinars you’ve likely heard us talk about the strategy behind knowing when it’s simply time to terminate. While you may decide to skip any attempts at performance improvement where you simply know an employee either is incapable of improvement or perhaps wasn’t a fit from the get go, you also have to understand and prepare for the impact of terminating them. This consideration is about more than just the potential legal negotiations with the former employee over their termination, its also about the impact of their loss to the company and the employees of that company. 

Understand the ripple effect: We have probably all noticed that following the pandemic employees have placed a higher premium on balancing work with their lives outside of work. This doesn’t however mean that employees are less invested in the goings on at work, but it does seem to mean that they are less tolerant of decisions and changes they disagree with and are not afraid to make a change when it comes to where they spend their 9-5. 

While businesses naturally have to make decisions for their benefit (some of which won’t be popular with their employees) they must also be prepared for the impact of those decisions. Terminating a well-liked employee, especially a leader, may lead to other employees following quickly behind. This is more likely to happen where a former employee embodied, from the perspective of their colleagues, the ‘right’ mission and values (especially if that mission and value helped you recruit those employees in the first place). Even where employees don’t leave, expect a negative impact on the business as the morale amongst employees is likely to take a hit. 

Beyond losing employees, you also often lose potentially critical and very valuable organizational knowledge. While it may be difficult to understand the premium of this loss, it’s very important to understand that it has a very real potential to create blind spots within the business that will almost certainly impact your bottom line. 

While it is unlikely that terminating an employee will have the sort of extreme effect we saw play out earlier this week, it is critical that you understand and prepare for the potential impact of this sort of decision. If you’d like to explore, consider and plan for the impact of a potential termination, get in touch.