Lay Off the Layoffs. Our overreliance on downsizing is killing workers, the economy and profits.

Newsweek ^ | 02/06/2010 | Jeffrey Pfeffer

[SeekAndFind]

On Sept. 12, 2001, there were no commercial flights in the United States. It was uncertain when airlines would be permitted to start flying again—or how many customers would be on them. Airlines faced not only the tragedy of 9/11 but the fact that economy was entering a recession. So almost immediately, all the U.S. airlines, save one, did what so many U.S. corporations are particularly skilled at doing: they began announcing tens of thousands of layoffs. Today the one airline that didn't cut staff, Southwest, still has never had an involuntary layoff in its almost 40-year history. It's now the largest domestic U.S. airline and has a market capitalization bigger than all its domestic competitors combined. As its former head of human resources once told me: "If people are your most important assets, why would you get rid of them?"

It's an attitude that's all too rare in executive suites these days. As the U.S. economy emerges from recession, Americans continue to suffer through the worst labor market in a generation. The unemployment rate dipped in January, from 10 percent to 9.7 percent, but the economy continued to lose jobs. There are currently 14.8 million unemployed, and when you count "discouraged workers" (who've given up on job seeking) and part-time workers who'd prefer a full-time gig, that's another 9.4 million Americans who are "underemployed." While the pink slips are slowing as the economy rebounds, the lack of jobs remains the most visible—and politically troublesome—reminder that despite what the economic indicators may tell us, for much of the population, the Great Recession hasn't really gone away.

Companies have always cut back on workers during economic downturns, but over the last two decades layoffs have become an increasingly common part of corporate life—in good times as well as bad.

[ClearCase_guy]

I had a job that was pretty good. One day I got called by a headhunter who wanted me to come in for an interview at a different firm. Well, why not? Turns out the job seemed interesting, but I wasn't sure I wanted to switch, so I asked for a 25% pay increase. I didn't think I'd get that, but they said Yes, as long as I could start in two weeks -- that was their condition. Well, "two weeks notice" is not typical for my field, so I knew my present employer would be upset. I gave them a change to keep me (with a 25% pay raise) but they declined.

Well, after working at the new place for three years, I got a call from a head hunter ...

You cannot imagine how upset the second company was when I only gave two weeks notice when I left to go work for that third company! They said they felt betrayed.

Funny how that works out, huh?

[EGPWS]

It's an attitude that's all too rare in executive suites these days. As the U.S. economy emerges from recession, Americans continue to suffer through the worst labor market in a generation. The unemployment rate dipped in January, from 10 percent to 9.7 percent, but the economy continued to lose jobs. There are currently 14.8 million unemployed, and when you count "discouraged workers" (who've given up on job seeking) and part-time workers who'd prefer a full-time gig, that's another 9.4 million Americans who are "underemployed." While the pink slips are slowing as the economy rebounds, the lack of jobs remains the most visible—and politically troublesome—reminder that despite what the economic indicators may tell us, for much of the population, the Great Recession hasn't really gone away.

This being the case, then Osama Bin Laden is smiling with glee via a job well done.

After all, isn't the destruction of our economy the first focus of Al Qaeda?

[henkster]

Maybe the Stanford prof could make the same arguments to Newsweak; their circulation is way off. But they’d better not let anyone go, lest they be just another hypocrite liberal news outlet.

[Lancey Howard]

Heh heh, here comes Jeffrey Pfeffer and the rest of the liberal professors, going to work for Ubama and the rats.

[dfwgator]

The problem is that money is global, corporations are global. The vision Arthur Jensen had in Network, is now closer to fruition than ever:

You have meddled with the primal forces of nature, Mr. Beale, and I won’t have it. You are an old man who thinks in terms of nations and peoples. There are no nations; there are no peoples. There are no Russians. There are no Arabs. There is no third world. There is no west. There is only one holistic system of systems; one vast interwoven, interacting, multivariate multinational dominion of dollars. Petrodollars, electrodollars, reichmarks, rubles, rin, pounds and shekels. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things today. That is the atomic, subatomic and galactic structure of things today. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things. You have meddled with the primal forces of nature, and you will atone! Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and Democracy. There is no America. There is no democracy. There is only IBM and ITT and AT &T and Dupont, Dow, Union Carbide and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state? Karl Marx? They pull out their linear programming charts, statistical decision theories, and minimax solutions and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations inexorably determined by the immutable by-laws of business. The world is a business, Mr. Beale! It has been since man crawled out of the slime. And our children will live to see that perfect world in which there is no war or famine, oppression or brutality. One vast and ecumenical holding company for whom all men will work to serve a common profit and in which all men will own a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused. And I have chosen you to preach this evangel.

[Habibi]

“Non-union Southwest laps the other airlines because they aren’t beholden to overbearing unions.”

Obviously you are unaware of the fact that Southwest is a big union shop. It is definitely not non-union. Don't feel bad. It is a common error by those that don't know much about airlines, or Southwest in particular. Research is always a good thing. I am often embarrassed when I shoot from the hip around here. A little research before posting helps, but not always. :-)

[ClearCase_guy]

I, for one, agree with you.

Basic manufacturing is a good and essential economic endeavor. Well, if someone on the other side of the world will manufacture the goods for $1 day, then Americans can "compete" if they will do the work for less than $1 a day. Uhhhhhh, that won't fly -- unless we're willing to turn our country into Haiti.

We cannot all be farmers, and we cannot all be copywriters. Some people need to make stuff. And those people need to survive. With a truly global economy, that really becomes challenging and just leads to a growing segment of the population that cannot survive without government "assistance".

It's a knee-jerk reaction to say "tariffs cause trade wars and do nothing but damage" but I think corporate taxes do a lot of damage too. Overall, I think this country would be better off with a little more emphasis on tariffs and a lot less emphasis on taxation.

[jimbo123]

Newsweak’s ad revenue was down almost 50% last quarter and they cut a bunch of their liberal staffers right before Christmas. Funny how the liberal corporate elite don’t practice what they preach.

[Lancey Howard]

Newsbleak forgets to mention that the one airline - Southwest - that didn’t have layoffs was the one who isn’t unionized.

That is absolutely the LAST piece of information this simple, Ubama-loving professor would include in his thesis.

[1raider1]

You wrote: Employees aren’t meat robots that can be used and discarded.

I’m afraid they are. Employees are hired when there is work to be done. No work, no employee needed.

[mulligan]

One cannot argue or reason with a fool.

[SeekAndFind]

Are you saying that people should have a “right” to a job and that companies should keep them on the payroll no matter how much it affects the firm negatively?

I think if you read the article correctly, it does not say that people have a "right" to a job. It is making an observation --- That over-reliance on layoffs to increase a company's bottom line is short sighted and backfires. There are many tools in a management's arsenal to increase bottom line, but layoffs should not be seen as one of the top tools to use.

I'd like to see someone refute the studies cited by the author.

[american colleen]

I like your common sense. It amazes me how so many Freerepublic posters back canibalizing America(ns) at the expense of a political agenda.

Also, I appreciate that you and some others, rather than criticize the authors of the posted subject actually present ideas - and on topics you don't agree with, present your ideas again without personally criticizing the author - which leads no where.

[1raider1]

Could it be that the prevalence of layoffs by companies interested in making and keeping profits is evidence?

[Bryanw92]

>>I’m afraid they are. Employees are hired when there is work to be done.

Then, you say that it’s the employee’s job to do as little work as possible to drag out the job for as long as he can? Loyalty is a two-way street.

[jimbo123]

The liberal academic author of this article offers no solutions in this article. He scolds but provides no solutions. Typical liberal.

[dfwgator]

The Consultant’s Creed, “When you can see the light at the end of the tunnel, extend the tunnel.”

[truthguy]

Professor Jeffrey Pfeffer Professor of Organizational Behavior
Graduate School of Business, Stanford University

Professor Jeffrey Pfeffer applies the principles of organizational behavior to business, teaching companies to turn knowledge into action and bring out the best in people as a means to maximize results.

Before joining the faculty of Stanford Pfeffer was a professor at the University of Illinois and the University of California, Berkeley.

The more we listen to guys like this who are educated beyond their intelligence the worse off American business will be. In fact I think you can correlate the decline of American business and capitalism to the emergence of the MBA degree. Just a thought.

[1raider1]

No, I’m saying that when orders fall off and there is no reason to keep producing at full production, then an astute company will pare their workforce down to what it takes to fill those orders.

[SeekAndFind]

Could it be that the prevalence of layoffs by companies interested in making and keeping profits is evidence?

Then in effect you're saying that the studies cited by the author are BOGUS. The question is, out of X companies that rely on layoffs to increase bottom line, how many percent of them really became more competitive and more profitable?

I am less impressed with citing a few companies to bolster one's argument, I'd rather one cite STATISTICAL DATA. In other words -- How BIG of a correlation is there between layoffs and company profits ? ( and I don't mean the stock price for a quarter or two, I mean over a few years ).