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Posted by: briansittley Comments: 0 0 Post Date: March 3, 2010

A recent cover story in Newsweek entitled “Lay Off the Layoffs” makes all kinds of sense.  The article’s premise, that “our overreliance on downsizing is killing workers, the economy and even the bottom line” resonates, I think, today more than ever.

Since you can read it yourself at the link, here’s the gist: companies lay off all the time, whether times or bad (in which case, nearly always) or even when they are merely ‘profitable’ but looking to appease The Street or boost so-called productivity (output divided by wages) yet further. 

But the article begins with a notable exception: Southwest Airlines in the aftermath of 9/11.  The author points out that of all the airlines back then, only Southwest chose not to lay anyone off despite the downturn in travel.  Altogether, tens of thousands of airline workers were ultimately laid off in the aftermath of 9/11.  Not one came from Southwest.  As Southwest’s head of human resources noted, “If people are your most important assets, why would you get rid of them?”


Depending on whose numbers you believe, there are roughly 25 million people in this country who are unemployed, under-employed or insufficiently employed.  That is an eye-popping number.

Granted, sometimes layoffs are the only choice.  Here, we’re talking company survival, as in, better to cut some to save the rest then to have the whole ship go down.  But what galls many is when companies continue cutting when the numbers aren’t so bad, or even when they’re profitable.

At our firm, we often whine about our inability to connect with a live human representative at one of our key software business providers.  Despite a profit in that division in excess of ten billion dollars last year, this well-known software company has cut so many field reps that we’re simply told there is no rep for you (by a phone rep responsible for seven hundred others just like us). 

In twenty-plus years of owning a business, I’ve never laid anyone off due to a business downturn.  Oh sure, we’ve cut pay plans and we’ve let people go for other reasons, but anyone who could contribute to our customers’ well-being and to our survival, always gets the chance.  Sometimes the money is good, other times, decidedly not.  But our long-held philosophy has always been that we share in the gain and we share in the pain.  Lately, there’s been more of the latter, but when the tide turns – and it always does – we think we’ll be well-positioned.

Read the Newsweek article to learn why layoffs mostly just don’t work.  How the conventional wisdom that says layoffs raise stock prices often turns out to be wrong.  Not to mention the research into the physical and emotional effects of downsizing on employees.  In fact, quite often the costs of layoffs actually exceed their savings – and generally speaking, they don’t increase productivity either. 

The question we’re left with is this: Can we learn from our mistakes?

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