Cutting Costs without Layoffs
 Subscribe to the Three Star Leadership Blog |
| The Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. |
| For weekly tips and resources pointers, check Wally's Three Star Leadership Letter |
| Request your free copy of Wally's Special Report: Managing Headcount in a Downturn. |
| Find out more about having Wally speak to your company or convention. |
| Find out more about Wally's coaching services. |
 |
Cari Tuna wrote an informative piece in Monday's Wall Street Journal titled "Some Firms Cut Costs Without Resorting to Layoffs" The article covers many of the things I talked about in my free white paper, "Managing Headcount in a Downturn" and adds some more views. Here's an excerpt.
"Some workplace experts say layoffs are a useful part of the business cycle, allowing employers to weed out poor performers, increase efficiency and promote a high-performance culture. Layoffs "are not inherently bad," says Mark Nadler, a partner at management consultancy Oliver Wyman's Delta practice. "Some people...are just more crucial to the survival of the organization than others." Others say employers often underestimate or overlook the costs of layoffs. Anat Lechner, clinical associate professor of management at New York University's Stern School of Business, cites expenses for planning, legal fees, severance, outplacement and redistributing work. Layoffs also reduce productivity among survivors and cost a company institutional knowledge, she says. Add the cost of recruiting and training new workers when business picks up, and layoffs "simply do not make any sense," Ms. Lechner says. "
It's essential for a company to cut costs in bad times. Nobody would argue with that.
What this is really about is what we think of the people who work at our companies. In the last few years we've heard a lot from business leaders about the value of the people who work in their companies.
Business leaders have told us that people are assets. They're the source of sustainable competitive advantage. If you really believe that, you try to keep your team together.
Business leaders have told us that the people who work at their companies are something other than "employees." They might be "associates" or "cast members" or "team members." If you really believe that, you share the sacrifice, you don't just shove it to the bottom of the org chart.
Business leaders have told us that knowledge and relationships are critical in the knowledge economy. If you really believe that, you don't just indiscriminately send that knowledge and those relationships walking out the door.
We've heard the talk. Let's see how many of those leaders walk the walk.
Wally,
An excellent piece and referral all in one! Very timely information that many organizations can benefit from in these difficult times.
Reply to this
Thanks for those kind words, Nina. I'm worried as I watch companies go right for mass layoffs as their primary cost cutting strategy.
Reply to this
Very good commentary on the difference between a company's marketing material and their internal activities. Darren A. Lossia
Reply to this
Darren, in this case it's internal marketing. We've had too many leaders talking teamwork who aren't ready to be part of the team when things get tough.
Reply to this
An interesting take on layoffs. I think that anyone who takes a resource based view of business would consider layoffs the very last cost cutting measure. Generally, people only become better - they appreciate as a resource; things get old, they depreciate.
Reply to this
Good point. I only have one quibble. I think that people keep getting better when they're in a good, nourishing working environment.
Reply to this
Wally,
It's up to *real* leaders to push away the myths and lies about layoffs being "the" answer to a downturn, and to get creative about alternatives.
I'd be interested in your opinion about the "1 Truth and 3 Lies" that keep organizations from considering alternatives, at www.AuthenticOrganizations.com
http://authenticorganizations.com/harquail/2008/12/21/alternatives-to-layoffs-one-truth-and-three-lies-that-keep-organizations-from-trying/
Reply to this
Thanks for coming by and sharing your comments and the pointer to an excellent post. It's a great complement to my white paper on Managing Headcount in a Downturn.
Reply to this
Before I did not even think at least once in my life about the safety of my job in this economy. For the first time, I feel like no one’s job is safe especially that we are suffering from economic hit because of credit slumps and other related financial problems. Being laid off is the scariest thing I could ever imagine. I certainly don’t want to be coping and surviving unemployment, I’m sure it will be very hard. Mass layoff has been working on companies recently, and that worries me a lot. The latest round of mass layoffs comes from Silicon Valley and multinational chemical giant, Dow Chemicals.
Reply to this