When will management take responsibility for how they have run the company into the ground with all the layoffs the past few years.
From Fortune Magazine:
“Layoffs are definitely a confession of poor management,” Jeffrey Pfeffer, a professor of organizational behavior at Stanford Business School, told me. His reasoning: Research shows that generally, layoffs don’t improve a company’s fortunes. Quite the opposite: They don’t reliably raise a company’s profits or stock price, but they do reliably reduce remaining employees’ morale, commitment, productivity, and trust. University of Colorado professor Wayne Cascio, who has spent a career studying layoffs, concludes, “As a group, the downsizers never outperform the non-downsizers.”
“Companies that have gone through heavy layoffs can attest even decades later to the damage they inflicted: Famously, Hewlett-Packard faced a crisis of survival when World War II ended. Most of its revenue from a major customer, the U.S. government, suddenly evaporated. The cliff-like drop in government spending overall triggered a deep recession. To avoid certain demise, the company laid off 60% of its employees. Bill Hewlett and Dave Packard were so traumatized by the experience that they resolved never to let a mass layoff happen again, and in their 30 remaining years of running the company, they never did.”
“Aren’t there difficult moments when layoffs are the best of bad options? Yes, says Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School, but those moments are rare. “The evidence seems pretty clear that except for really unusual situations—the company is about to go under, it’s the start of the Great Recession—large layoffs actually seem to hamper the ability to restart when things improve,” he tells Fortune. “There is good evidence for this from financial data.” For example, voluntary employee turnover increases significantly at companies that conduct mass layoffs. The total costs of turnover—severance costs of those laid off, plus recruiting and training replacements when business recovers—can be 1.5 to 2.5 times a given job’s annual salary. “All in all,” writes Cascio, “the significant indirect costs associated with employment downsizing may wipe out the direct savings in labor costs.”
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