Posted by: zyxo | December 8, 2010

Mr. CEO : when you downsize, you kill people.

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 !)

Sources :

Stretching fewer employees to cover ever more work in our job-starved recovery is no way to run the future.
During major downsizing, suicide levels increase
Lay Off the Layoffs
Downsizing dangers

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