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The Layoff Obsession

1st February, 2009

Recession! Bah!

Companies of almost all industries (except for the unusually recession-averse liquor industry) are feeling the pinch. Apart from doing stupid things to cut costs (not replacing the toilet paper, for example), they resort to the most shareholder-friendly measure available to mankind – job cuts!

What I just dont understand is why. For the sake of this argument, lets consider a “layoff” as a job cut that was out of the ordinary – not the usual performance / attrition cut.

  1. The Brand Impact
    Laying off employees has an adverse affect on the companies future recruitment scenario. From a companies perspective, it aims to create value jobs, an environment that allows the employee to work at his/her best, attract competent talent etc etc. By laying off, you’re creating an environment of insecurity, sometimes even removing competent talent. Employees dont feel that their skill-set is even respected by the company!
  2. The Job Value Impact
    Lets say a value job is one that fully utilizes the employee’s competency skills. If you’re laying off employees, cutting down on business units, etc, you’re actually removing the value job for someone. Future employees would feel that some branches they were looking to climb were pruned off the tree!
  3. The Campus Recruitment Impact
    Any company that hires from campuses knows this fact – college students have actually no clue! They sway mostly to the company brand – especially from reviews of their college seniors. If a company is looking at maintaining a good influx of college passouts, they have to maintain good academic relations even in hard times! For the company, its a future investment – why jeopardize it?

I always thought that, for the above reasons, job cuts were to those extra-ordinary people, those who did something exceptionally stupid. Otherwise, a job cut not properly explained would be anathema to the company!

But that didn’t work, did it?

Still, we have massive job cuts in a wide variety of industries. All in the name of “recession” !! (do note – I did say ‘bah’ in the beginning!) Kind of strikes a resemblance to the “Customer is King; thank god he’s a fool” credo! If the OPEC decides to raise prices, the customer has no option but to buy it at that price. If everybodys cutting jobs, and nobody bothers about Point #1, #2 or #3 anymore, then everybody just has to accept it.

It seems then that this is probably the best time to cut jobs. Because if Microsoft lays off 9000 now, in 5 years a prospective employee will still think its a value job. Because we’re forgiving them now, companies are going ahead and doing the unthinkable.

All in the name of recession. Bah!

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4 Comments leave one →
  1. 2nd February, 2009 11:43 AM

    if they’d had even one session with the employees on discussing cuts, there would’ve appeared numerous suggestions which would’ve been good and wouldn’t have presented any threat to employees.
    In my office they cut down the workforce by 15 people. Really….how much did they save. They are anyway paying people about 5-7 month severance pay.
    If instead, they’d have gotten rid of the CCD outlet which no one bothers to go to (costing them around a lakh a month), or not provide free Transportation & free food, they could have had better cost cuttings.
    Anyway, the management is always right i guess….

  2. kranium256 permalink*
    2nd February, 2009 11:46 AM

    Haha .. actually very true!!

  3. 5th February, 2009 4:42 PM

    “It seems then that this is probably the best time to cut jobs. Because if Microsoft lays off 9000 now, in 5 years a prospective employee will still think its a value job. Because we’re forgiving them now, companies are going ahead and doing the unthinkable.”

    frankly, I believe you. and often times when i listen and watch the news on TV, i somehow think that other companies are thinking that this is a good time to fire its employees just because everyone is doing so.

  4. kranium256 permalink*
    5th February, 2009 5:32 PM

    and so, one by one, the dominoes fall …

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