When a company gets into trouble, whatever the cause (lousy products, lousy employees, lousy management, better competitors, lousy investments…) one of the first things they do is to downsize. Less employees means a lighter payroll. And admit it : don’t we all perform some unnecessary work. In a 5000 employee company surely there must be some people that can be missed. Is it not ?
So they decide to downsize.
What they want to happen, but does not happen :
- companies that announce layoffs do not enjoy higher stock prices than peers
- Layoffs don’t increase individual company productivity
- layoffs do not increase profits
- Layoffs do not reliably cut costs
The collateral damage, the effect on people, what they did not expect or at least what never showed up in their calculations :
- people leave the company, mostly the best ones who can easily find a job elsewhere
- among the people who accept the layoff package, a lot of them are the ones the company does not want to lose => loss of “institutional memory”
- layoffs reduce morale, trust, motivation, commitment, and increase fear in the workplace
- When the recession ends, a lot of employees will look for another job
- as more work has to be done with less resources, creativity and innovation goes down
- downsizing increases stress levels
- increasing stress and worsening work conditions increase absenteeism due to depressions.
- increasing stress and worsening work conditions increases suicide levels. Simply put : when you downsize, you kill people. (I saw this happen !)