On the heels of the announcement that the struggling CIT Group had extended the contract of its CEO Jeffrey Peek, comes news that the company (which has lost more than $5 billion over the past nine quarters and failed to win a second federal bailout from the government in order to stave off bankruptcy this summer) is negotiating a possible new credit deal of some $10 billion. According to Reuters, the new deal “could help the finance company pay off maturing debt and stave off bankruptcy...”

Another report in the New York Post indicated that hedge funder John Paulson of Paulson & Co is looking into a rescue plan for CIT that would include a merger with IndyMac Federal Bank. However, a “person familiar with the matter” dismissed that piece of news to Reuters saying it was “wrong.”
Stay tuned. CIT seems poised for a few more twist and turns as it works through its profound problems.

Lisa (names have been changed) held a mid-level position in Human Resources at a large bank and received stellar performance reviews every year for five years. Conscientious, she delivered projects on time and communicated clearly with her manager. Responsible, she organized her work so that if she was sick or on vacation, others would know how to respond to requests or issues that cropped up.

Several months ago, she lost her job.

Here's the kicker: she wasn't laid off despite her superb work habits. She was laid off because of them.

To understand that, let's go back a year to when the U.S. government bailed out AIG. "Too big to fail," we were told. The fallout would reach every nook and cranny of our economy. The reverberations would be felt around the world. Failure was not an option. So we pumped billions of dollars into their survival.

On the other hand, when Lehman was teetering on the edge of collapse, the government decided it was small enough that failure was an option and, given the alternatives, the best one available. So Lehman failed. And our economy went into free fall. Oops.

The government's mistake was in judging Lehman by its size. They thought Lehman's collapse would be contained, affecting only Lehman and a few other companies. But they were wrong.

Because it was never about size. AIG and Lehman weren't too big to fail. They were too confusing to fail.

Their businesses were too complicated. Countless little deals that nobody — including their leaders and managers — fully understood. They broke up huge pieces of business into innumerable little bits and then spread them around to millions of people. The business was untraceable.

Which created a Gordian Knot. Legend has it that Gordius, king of Gordium, tied a knot so intricate that no one could untangle it. There were no visible ends. It lasted for centuries.

The lesson here? The more difficult it is to untangle your work, the more dangerous and unpredictable it is to let you fail. On the flip side, the easier it is to untangle your work — to understand your job, how you're doing it, and who you're affecting — the safer it is to cut you loose.

Which bring us back to Lisa. I spoke with Lisa's manager, Sam, about why she got fired. Sam was upset about it too; the decision was made higher in the organization.

"Honestly?" Sam told me, "Lisa was fired because she was safe to fire. We knew what she was doing, who she was working with, what she was responsible for. Her work was contained. We understood the impact. There are other people who are less effective, less productive, less good but we can't fire them because we don't fully know what they do, what ramifications it would have."

In other words Lisa was clear, conscientious, and contained enough to fail. So she was fired. Other employees, possibly more reckless ones, whose jobs were less clear and more confusing — the individual equivalents of AIG or Lehman — posed more of a risk. So their jobs were safe.

When the wrong person is fired, it hurts everyone involved -- the person and his or her company. There's a better way to solve this problem and a worse way. The worse way first: If you're an employee and want to protect yourself, you can do two things:

1. Be excellent. The more effectively you deliver on your goals the less likely you'll be let go. Employers value productivity.


2. Be confusing. The more ambiguously you achieve your goals the more difficult it will be to fire you. Employers fear uncertainty.

There are two problems with this. One, it might backfire. Being too opaque could get you fired, especially if you're not quite as excellent as you think. And two, while this strategy might help you as an individual, it hurts the company which, eventually, will hurt you as an individual.

We got ourselves into this economic mess in part because leaders didn't understand what was going on in their own companies. While tying a Gordian knot may help individuals keep their jobs, untying it will help the businesses stay viable. That's the critical challenge facing industry today.

Here's the better way — one that helps everyone. Don't let anyone be a Gordian Knot. Leaders and managers can't afford mystery. They need to know what each person in the company is doing. Not just the results but the behaviors as well.

Write out role descriptions (or have people write their own); ensure each person has a transition plan with a clear, organized, standardized system of managing information; and, above all, communicate. I'm not suggesting you control everything people do — that would be micromanaging — I'm suggesting you know what they do.

When a company fires the wrong person, it's more than simply a bad decision. It's an injustice. And, with a little work, it's preventable.

There's a beautiful story told by Isaac Luria, a 16th century Jewish mystic. According to Luria, God placed divine light into a number of special vessels to use in creating the world. But God's light was too vast to be contained and the vessels were shattered, scattering shards of light throughout the world. It is our job to repair the world by gathering the lost light. It's a job that is passed from one generation to the next; a job that is never finished.

As we navigate through the complexity of repairing our companies, a job that may well take generations, let's build stronger vessels to contain the light. That way, even if they do shatter, at least we'll have an easier time picking up the pieces.