Resumark Blog

I think the salient point here is that layoffs for the sake of layoffs are not a long-term solution. If a company needs to cut expenditures, it must look for intelligent ways to do so, and there needs to be an understanding that, within any layoff calculation, a certain amount of risk of losing value is assumed. I think the point made about "waking up one day" and deciding to lay people off is a good one - any organization that isn't constantly self-optimizing is probably doomed in the long run. I prefer the concept of cutting back hours and as many expenses as possible, and only laying people off as the last resort. If my people aren't productive in the first place, and if they aren't committed to the company's success, they shoudn't be here.

over a period of time organisations have grown up... the top management does not know all of his people... they understand only the numbers and the numbers are provided by sometimes multiple layers below them... so the intention of top management to get rid of non performers is always good. but it percolates like this ... VPs are told that we need to reduce the payroll... so they tell the manager below them... that we need 4 people from each of their team.... the managers below tell the asst. managers to take two people out from each of the team... so the people who are newly recruited are let go off... because they are still not known in the organisation except by their direct line managers and some time incompetent line managers, to avoid their jobs let go brilliant new comers and the company in the long run looses the great oppertunity

We have a different problem in Europe as we must make selections for laying people off based on length of service so you cant even get rid of the dead wood it works on a last in first out system. So sometimes we must get rid of the most effective and efficient workers.

Hi,

When we talk about the lay-off this should of what people or ineffecienies?This is the moot question we need to ask our self ..when we will answer this question ,the lay off of person requirment will be decrease atleast by 80%.

While the story makes sense if you work for a "thinking" company that pays you to "do nothing while waiting for an idea", most employees in the same position don't stand a chance in today's competitive market. The concept does have some merit in the sense that we should not lay off people without the proper analysis of their contribution to the overall operation.

Sergey, thats an excellent article on the pitfalls of layoffs.
I think one question that managers contemplating a layoff should ask is: What got us into this situation? If a layoff is being contemplated because there is overstaffing, then who was responsible for it? When folks make a pitch for layoffs stating that there are often under performers, then what was management doing about them for so long? Why were these folks not weeded out as a part of the normal performance management process? I mean, did the management just wake up one fine day and realize, Hey, we have way too many underperformers on our rolls and we could do with some layoffs!!!

Sometimes, the profitability of the firm is impaired not due to overstaffing alone, but mismanagement too, in which case the incompetent management should walk the talk and resign first.

Secondly the signs of a failing company are only too evident well before it actually sinks, and an employee should leave a badly managed organization before things get out of control. Too often employees are passive spectators and do not quit a bad management. This should change.

It is an egg and a chick problem with lot of dynamics. As it is said in a rationale: a man for home, a home for a village and village for a country - to be betted upon when it comes to survival. Given a chance employees are to be retained but if to be chosen, then company comes first to survive to do any thing later for business or its employees. Having said that,
-- I agree with article for: Perhaps the most important argument against layoffs is that they betray the trust between employees and management, which is very hard to build
-- I agree with Ryan for: However most “people” are employed by small businesses and layoffs can be the difference between surviving as a company and not and like it or not, most people understand that.
-- I agree with Ferd for: So if you decide that layoffs are absolutely necessary now you have to step up and keep the remaining team pulling to your goals, while realizing that you’re doing damage that you’ll never repair.

I agree with most of the article, but not as much with Ryan. When selecting people to be laid off, my experience is that office politics plays a bigger role than performance. It is often sadly true that layoff decisions are made for next quarter earnings and not weighed against impacts to team health or company reputation. Once companies get into the habit of propping up perceived earnings via layoffs, they keep doing it. They rarely bring back laid off employees, so they lose company-specific experience forever. They start a downward spiral of burning out their people, less efficiency and poorer quality, diminishing reputation and employee moral, and eventual stock price drops and lower profits.
No doubt companies cannot afford to keep non-performing employees, but management often overlooks its own ranks while blaming the troops. It is management's responsibility to maintain a positive work environment. The company is better served if experienced workers are exercised instead of allowed to go slack, Workers might accept layoffs and increased workloads if they perceive that true non-performers at all levels are let go first, and that there is a definite plan to right the ship. They'll even agree to hours and pay cuts to save jobs. But usually they see boot lickers stay while good workers go and the whole situation crumbles. This is critical in small companies, where moral and productivity problems are hard to absorb. So if you decide that layoffs are absolutely necessary now you have to step up and keep the remaining team pulling to your goals, while realizing that you're doing damage that you'll never repair.

I don't necessarily disagree with your comments, but I think you build a better case for why when layoffs are necessary, you need to consider the "soft costs" and not just focus on the bottom line. At large companies where management is more separated from the "rank and file" employees, this is harder to do. At smaller organizations (every situation is different based on the management structure, so I don't think it can be defined by simply basing this on the number of employees), it can be done and when the choice is between cutting compensation for top performers or laying off bottom performers, you risk doing more damage by absolutely avoiding layoffs than not in some cases. We are all grown ups (for the most part) and as long as management is willing to get their hands dirty and let employees have input into the process (perceived or real), then people can understand that sometimes hard decisions have to be made to keep a company alive and profitable. Being afraid to make these decisions can leave employees in fear of the company collapsing, thinking management is incompetent to make tough, but necessary decisions when needed, and leave top talent underpaid resulting in an outcome far worse than the generally temporary interruption to team dynamics caused by a layoff. When the layoff is driven simply by analysts and investors focusing on the bottom line (and management compensation), then I agree with you entirely. However most "people" are employed by small businesses and layoffs can be the difference between surviving as a company and not and like it or not, most people understand that.