Layoffs

This week’s case study, “The Layoff,” illustrates a situation that many companies have faced in recent years with the economic downturn in the U.S.: finances are weak, so mass layoffs become the solution.  Having been at a company in a previous position that did choose to do a mass layoff, there really are no winners or losers in that situation.  Those that are chosen to leave are obviously devastated to lose their job/livelihood, while those that are chosen to stay are left with survivors guilt and are forced to readjust to the new environment.  This move was a last resort for the company, who tried to go other routes with no success. 

While laying people off is an option for companies facing financial troubles, it is not the only option.  I appreciated the three responses to the case by Laurence J. Stybel and Maryanne Peabody, Jurgen Dormann, and Robert I. Sutton.  These commentaries highlight the fact that layoffs should be a last resort option, but if chosen, there are better ways to handle the situation than others. 

I especially agree with Dormann’s response to first look at the companies marketing strategy.  Their may be some long term strategic moves a company can make to generate revenue.  More importantly though, it is important to keep communication lines open.  Dormann uses an example of his experience as CEO of ABB.  He put the accountability on his workers to come up with ways to generate revenue/cut costs in order to turn the company’s financials around.  After two years, the company was saved as the employees helped contribute to saving $1billion with their ideas.  These open lines of communication clearly worked in allowing employees to be accountable for their jobs and the company’s success.

Often when companies find themselves in a financial bind, the first reaction is to cut costs.  Cutting costs is great, but it will only go so far.  Bottom line is that if a company is not generating revenue, no matter how lean they are, it will ultimately fail.

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