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The Virtue Of Employee Layoffs
Forbes ^ | 09/07/2012 | Yaron Brook and Don Watkins

Posted on 09/07/2012 6:21:27 AM PDT by SeekAndFind

A CEO stands in front of his crumbling, century-old factory and speaks to his employees. “I promise that no matter what, I will never renovate this place. No matter how many worn-out items break, no matter how much our out-of-date machinery slows us down, no matter how many people tease us for clinging to fax machines over email, I will keep this factory going as-is. It’s time to embrace the inefficient.”

How long do you think a company operated in such a fashion would last? How long do you think its employees would have jobs?

Everyone understands that in a competitive economy, businesses face an ultimatum: maximize efficiency or die. But although few today would demand that a CEO tolerate an unproductive factory, the notion that a CEO has a duty to maintain unproductive jobs is sacrosanct.

“You’re fired.” Two words that were unpleasant even before they were associated with Donald Trump. Losing your job can be incredibly painful, particularly in today’s economy, where Washington’s Byzantine regulatory regime has kept unemployment near double digits.

But keeping employees who are hurting a company’s bottom line isn’t good for anyone—not even the employee whose unproductive job is (temporarily) allowed to weigh down the enterprise.

It’s a lesson that is clearly needed in the wake of recent attacks on private equity firms, which profit by making other companies profitable. Mitt Romney has been excoriated because his firm, Bain Capital, sometimes acquired companies that could only be made attractive to lenders and buyers by laying off significant numbers of employees.

Why is this even controversial? Because we have a weird double standard. When an employee leaves a company for greener pastures—maybe higher pay, maybe more satisfying work, maybe a more pleasant commute—nobody complains. Of course he should do what’s best for him.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: jobs; layoffs
But when a business does the same thing? When it judges that some jobs are draining profits and need to be cut? Then it’s as if some nefarious sin has been committed.
1 posted on 09/07/2012 6:21:29 AM PDT by SeekAndFind
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To: SeekAndFind

Thanks for posting.


2 posted on 09/07/2012 6:35:26 AM PDT by justice14 ("stand up defend or lay down and die")
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To: SeekAndFind

But, what we are finding is that these businesses are terminating employees, not because of failing profits, but because the profits were not high enough. We are seeing companies that are laying off people with seniority, while hiring younger people at a lower rate. We see companies outsourcing entire departments to foreign countries - jobs that could be performed here. Then, after 3-5 years of discovery, these jobs come back. These layoffs are based on short-sighted goals, and pesonal greed; not for the survival of the company or any such goal at all.

Meanwhile, we see families that are struggling to survive, losing their sole source of income. Not because the breadwinner failed to perform his job, not because of any mistake he made - but because some manager made a wrong business decision. People do not like having their lives played with - they like to have some level of control over their lives.

Consider, if I find a better job somewhere; there is the expectation that I will provide a 2 week notice. During those last 2 weeks, there is the expectation that I will spend my time training my replacment.

However, this loyalty is not at all present on the other end. You may go into work at any time, and be laid off without benefits, without warning, without cause - without severance.

So, what do you expect? In the old days, companies did exactly like you described. A company would lay off it’s workforce - and usually the inept managers who caused the layoff to happen in the first place. Today, layoffs are done to appease Wall Street, and inept managers are sanctosant. Consider Carly Fiorina, who laid off over 30,000 HP employees - then bought 3 Lear Jets for herself and her staff; while driving HP into the ground.


3 posted on 09/07/2012 6:40:37 AM PDT by Hodar (A man can fail many times, but he isn't a failure until he begins to blame somebody else.- Burroughs)
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To: Hodar
Consider, if I find a better job somewhere; there is the expectation that I will provide a 2 week notice. During those last 2 weeks, there is the expectation that I will spend my time training my replacment.

You do that in exchange for the reference. However, if you have the references lined up, treat an employer like they treat you... when the day is done - you're even. When you walk into work tomorrow, you give it your best.

4 posted on 09/07/2012 6:58:01 AM PDT by glorgau
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To: SeekAndFind

“Why is this even controversial? Because we have a weird double standard. When an employee leaves a company for greener pastures—maybe higher pay, maybe more satisfying work, maybe a more pleasant commute—nobody complains. Of course he should do what’s best for him.”

My experience is that when employees leave it is usually the least productive and lower paid but when layoffs are done a company has a real incentive to rid its self of the older, higher paid worker whom they assume will cost them even more in the future.


5 posted on 09/07/2012 6:58:24 AM PDT by count-your-change (You don't have to be brilliant, not being stupid is enough.)
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To: glorgau
You do that in exchange for the reference.

But even then, most companies will only verify that you worked there, out of fear of being sued.

6 posted on 09/07/2012 7:00:57 AM PDT by dfwgator (I'm voting for Ryan and that other guy.)
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To: glorgau

Back when I was a shop rat, I had a saying...

“Notice?? Yeah, I’ll give ‘em notice. They’ll notice me carrying my tool box out the door”


7 posted on 09/07/2012 7:13:08 AM PDT by joe fonebone (I am the 15%)
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To: SeekAndFind

I had a good friend back in the 80’s who worked for a top level tech/engineering company. He told me of the work environment and it frankly astounded me.

The top engineers would get assigned to a new “BIG” project and would work like crazy until they were about half way through the job. Then they would start trolling for the next big contract and as soon as they could they would hop over to it leaving the current job high and dry with the second and third tier engineers to complete it.

That led to great designs and horrible follow-thru and delivery to the customer. As the guys that designed it weren’t available to correct any of the inevitable design errors that occur in any big project.

That sort of attitude to the commitment to the contracted work bothered me. Until it was explained to me that this company routinely laid-off EVERY person associated with the completed project if they weren’t already assigned to a different one.

Then I learned of another facet to their hiring that sealed the deal for me to NEVER work for them. They hired in blocks of employees, once you were assigned to a “block” you stayed in it your entire life. And their practice when rehiring following a lay-off was to re-hire by “Blocks”. When the average age of a particular “block” was within ten years of retirement that “block” never got re-hired no matter how great the quality of the employees within that block.

When I look back I know that it was simple short-sightedness and that the Accountants ran that company. The Quarterly bottom-line was sacrosanct and everything was subordinated to it. Now that company is a shell of what it once was, they have sold off all of the profitable divisions so as to keep their “core” business running and I expect that they will be out-of-business in a year or two.


8 posted on 09/07/2012 7:47:48 AM PDT by The Working Man
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To: SeekAndFind

Hiring the perfect employee is darn-near impossible, as every other company strives to do the same.

So, you focus on training, yet put up with mediocrity and sloppiness, but only to a point. When things go sour, you know who the marginal performers are; cut quick, and cut deep.


9 posted on 09/07/2012 7:51:49 AM PDT by pingman ("Human history seems logical in afterthought, but a mystery in forethought." (Strauss & Howe))
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To: The Working Man
When I look back I know that it was simple short-sightedness

I own my company. The closer I get to retirement, the more short-sighted my decisions get. When I retire I intend to take as much money out of the company as I can for my retirement. That was always my plan. I pay my employees enough to keep them but they need to plan their own retirement.

If I was interested in long term, I would move out of California. Employees wouldn't be to happy.
10 posted on 09/07/2012 8:15:02 AM PDT by Seven_0 (You cannot fool all of the people, ever!)
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To: glorgau
However, if you have the references lined up, treat an employer like they treat you... when the day is done - you're even.

I subscribe to the belief that you NEVER burn a bridge - no matter how shoddy and crappy that bridge was. Someday, someone may ask a previous employer whether you gave them a 2 week notice prior to leaving; and the answer to that question may determine whether you get your dream job, or not.

11 posted on 09/07/2012 9:06:58 AM PDT by Hodar (A man can fail many times, but he isn't a failure until he begins to blame somebody else.- Burroughs)
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