Selective Job Cuts Often Benefits Firm More Than Broad Layoffs Over Long Term

It is difficult to pick up a newspaper or listen to a business news broadcast without being greeted with the announcement of another massive corporate layoff or cutback. The economy catches a chill and, as a result, the corporate world catches a profits "cold." Before long the pink slips begin to fly. We have come to accept this as the inevitable employment cycle. Is it any wonder that employees feel so little loyalty toward their employers?

On the other hand, corporations seem to have no alternatives. With the squeeze on profits, and stockholders and analysts anxiously watching, company leaders feel that they must act quickly or bear the wrath of Wall Street. They understand that their response may in fact be a little shortsighted, but investors have short fuses when it comes to waiting patiently for earnings statements to turn around. However, without viable alternatives, corporate executives seem doomed to repeat the same pattern. Is there any alternative?

The answer is both "yes" and "no." In the short term, some cuts may be essential, but it is far better to do so by the use of a scalpel, rather than an ax. Why? Because your organization's long-term future may well be on the line, and its future profitability may depend on the way you respond to the present economic downturn.

Positive Benefits that Accrue from Not Cutting Staff

There are numerous direct benefits to either not cutting staff or, if cuts must be made, to minimizing them. And if cuts are necessary, highly selective surgical cuts should be utilized wherever possible to remove only under-performing or marginal employees rather than implementing massive across-the-board cuts. The benefits to following this course of action, to name just a few, include:

customer and vendor relationship continuity;
recovery of sunk recruiting, experience and training costs;
higher morale and efficiency;
personnel knowledge base retention;
containment of sensitive information, such as customer data, proprietary processes and methods;
marketplace responsiveness;
continuing organizational development; and
the potential for innovation

However, in the long term, I believe the greatest advantage in avoiding across-the-board job terminations is in fostering a strong, pervasive and healthy corporate culture that is unique, very visible and highly regarded throughout the organization as well as by its customer and supplier base. In the last three decades, many corporations have demonstrated a singular disregard for any development of their corporate culture. Fixation with leanness and repeated cycles of mass hiring and firing were justified as the means to achieving high profits and maximizing stockholder return on investment. However, in his books Built to Last and Good to Great, Jim Collins points out that even the most touted of these corporations have failed to achieve the returns of other, less mercenary organizations that have chosen to pursue a longer-term vision with a people-centered path to achieving greatness.

Developing a pervasive and positive corporate culture encompasses far more than merely vocalizing a series of platitudes. It demands a continuing commitment to pursuing greatness as an organization, even at the cost of more immediate near-term success. Leader's who view the establishment, development and nurturing of a strong corporate culture understand that it creates value in and of itself. Is this a value that appears in the asset section of the balance sheet? No, not in the short term. But over time, the stability, loyalty, commitment, enthusiasm and pride that a strong corporate culture engenders does very definitely impact the real financial value of the organization.

Today, employees at every level of the corporate organization want more than merely to earn a living. They have higher expectations! Job satisfaction encompasses much more than basic pay, benefits and a safe working environment. Employees expect, if not demand, a far deeper sense of satisfaction from their labors, and so should their employers. After all, it does not require extensive surveys or studies to recognize that happy, satisfied employees are more productive to the organization than those who grudgingly or fatalistically work only for a paycheck.

A positive, motivating and exciting corporate culture attracts excellent people like a magnet. Instilling a sense of accomplishing something truly worthwhile, even when performing tasks of a routine nature, satisfies an inner need to make a valuable contribution as an individual. We are by nature social. A common, unifying set of goals and values creates a team that can be far more effective than the sum of the individuals working independently. During WWII, British Prime Minister Winston Churchill provided us with a graphic example of how time and again, the outnumbered, out resourced and dispirited can be rallied into an unconquerable force. Whether on the beaches of Dunkirk, during the London Blitz or in the Battle of Britain, the British prevailed against enormous odds under Churchill's bold leadership and undaunted encouragement.

There are numerous aspects to building and fostering an effective corporate vision, but one of the preeminent essentials is the continuity of staff. Camaraderie, trust, loyalty, the development of personal relationships, mentoring, and the less formal, repeated verbal communication of organizational traditions, are intensely important. All of these are disrupted when a mass exodus occurs. Corporate cultures are relationship dependent. Positive relationships are the links between individuals which facilitate the transfer and reinforcement of a dynamic culture, not the employee manual or a written statement of vision, mission or purpose. The latter may form the foundation upon which the corporate culture is built, but it is not the culture itself.

When executive leaders must weigh layoff and termination decisions, it is crucial that the leaders recognize not only the direct costs of maintaining employees versus cutbacks, but also the organizational costs, the costs to stability and the corporate culture. How will this alter who we are, what we represent and the way we function as a team and organization? These are all questions with very real long term financial implications to the organization.

A healthy, vibrant corporate culture powerfully serves two primary ends. First, to attract the required talent for the organization's continued development from "Good" to "GREAT." Second, to foster an environment where employees are confident and motivated to use each day to the fullest in building a better tomorrow. To do so requires continuity of staff. I am a vocal advocate of asymmetric growth, but not of discontinuous vision, values and relationships.

What Else Can Organizations Do to Stem Falling Profits?

If you shouldn't be chopping, but sales and profits are sagging, what should you do? INNOVATE! It is amazing what cost reductions can be quickly experienced and what market share gains are possible when we become innovators and teach each person within our organizations to do likewise. To grow in spite of the economy we need to create a corporate culture of continuous innovation. What's more, by doing so, we position ourselves to jump ahead of the pack as soon as the economy does begin to turn the corner.

Any organization can cut its way to profitability in the short term, but we can never cut our way to long-term GROWTH!

Copyright 2005 by John Di Frances.

John Di Frances is an internationally recognized organizational legacy expert and motivational speaker. http://www.difrances.com

---

Google News Updated : Fri, 05 Sep 2008 14:05:39 GMT Nokia Forecasts Drop in Third-Quarter Market Share (Update1) - Bloomberg AFP Nokia Forecasts Drop in Third-Quarter Market Share (Update1) Bloomberg - 1 hour ago By Juho Erkheikki Sept. 5 (Bloomberg) -- Nokia Oyj, the world's biggest maker of mobile phones, forecast a drop in third-quarter market share after competitors slashed prices and a new handset was delayed. Nokia Sees Market Share Slipping in Third Quarter Wall Street Journal Nokia Lowers its Third Quarter 2008 Mobile Device Market Share Outlook FOXBusiness MarketWatch - Reuters - TheStreet.com - The Associated Press all 138 news articles Publ.Date : Fri, 05 Sep 2008 12:50:07 GMT Reviews of McCain's speech - MSNBC Telegraph.co.uk Reviews of McCain's speech MSNBC - 30 minutes ago The AP’s Ron Fournier says McCain “preached bipartisanship and unity from a stage retooled to carry him out to the Republican faithful. McCain: I work for you CNN Political Ticker ‘Change is coming,’ McCain tells GOP in speech Kansas City Star CNN - Houston Chronicle - Forbes - Chicago Sun-Times all 906 news articles Publ.Date : Fri, 05 Sep 2008 13:35:16 GMT Lebanese ruling majority accuses Syria of interfering in Lebanon - Xinhua Sydney Morning Herald Lebanese ruling majority accuses Syria of interfering in Lebanon Xinhua - 2 hours ago BEIRUT, Sept.5 (Xinhua) -- Lebanese ruling majority accused Syrian President Bashar Assad of interfering in Lebanese internal affairs and not recognizing Lebanon's sovereignty, local press Naharnet reported Friday. Video: Sarkozy in Syria : the press is divided france24english Editor's Notes: A losing battle, so far Jerusalem Post PRESS TV - Ynetnews - Ha'aretz - New York Times all 1,062 news articles Publ.Date : Fri, 05 Sep 2008 11:59:29 GMT PIECING TOGETHER A PLEA How the deal got done - Detroit Free Press Boston Globe PIECING TOGETHER A PLEA How the deal got done Detroit Free Press - 6 hours ago BY JOE SWICKARD • FREE PRESS STAFF WRITER • September 5, 2008 Prosecutors rolled Detroit Mayor Kwame Kilpatrick's plea deal into court Thursday praying the wheels wouldn't fall off. Detroit Mayor Acknowledges 'Poor Judgment' NPR Detroit mayor pleads guilty, to leave office Reuters DetNews.com - International Herald Tribune - The Associated Press - WWJ all 853 news articles Publ.Date : Fri, 05 Sep 2008 07:57:24 GMT Dell looks to sell factories worldwide - CNNMoney.com Wall Street Journal Dell looks to sell factories worldwide CNNMoney.com - 50 minutes ago By Scott Moritz Dell (DELL) is getting more serious about trimming costs and is exploring plans to sell its PC manufacturing plants, according to a news report Friday. Dell said to consider sale of factories MarketWatch Ahead of the Bell: Dell may sell plants, WSJ says Forbes Bloomberg - EETimes.com - BloggingStocks - Zacks.com all 83 news articles Publ.Date : Fri, 05 Sep 2008 13:15:09 GMT Lavrov rejects Cheney's attack on Russia - CNN International BBC News Lavrov rejects Cheney's attack on Russia CNN International - 1 hour ago By CNN's Matthew Chance MOSCOW, Russia (CNN) -- Russia on Friday rejected sharp criticism by US Vice President Dick Cheney that its intervention in Georgia raises doubts about Moscow's reliability as an international partner. Video: Cheney Slams Russia for War Against Georgia AssociatedPress Russia says Cheney fanning Georgian aggression Reuters India Reuters UK - guardian.co.uk - RIA Novosti - Voice of America all 2,162 news articles Publ.Date : Fri, 05 Sep 2008 12:45:40 GMT In Long-Awaited Maps of Cancer, The Breakthrough Is the Problem - Wall Street Journal In Long-Awaited Maps of Cancer, The Breakthrough Is the Problem Wall Street Journal - 10 hours ago By GAUTAM NAIK After struggling for years to improve the treatment of cancer, scientists now hope to fight the disease with the help of the same techniques that deciphered the human genome eight years ago: mapping it. What You Need to Know About Mapping the Cancer Genome U.S. News & World Report Data on defective genes make tailored remedies possible Baltimore Sun Reuters - The Associated Press - Bloomberg - eFluxMedia all 261 news articles Publ.Date : Fri, 05 Sep 2008 04:01:28 GMT Automate Your Blogging RSS to HTML

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

How to Use an HR Consultant

Bringing an HR consultant into your organisation can often be... Read More

Hiring and Retaining Good Employees

Hiring good employees is not only important to business, it's... Read More

It?s Not All About Cheese: The Missing Component in Employee Development (Part 2)

In part one of this article I told you about... Read More

Indecent Proposal in the Workplace ? An Overview of Workplace Harassment & Employer Liability

An allegation of harassment in the workplace is a growing... Read More

Commercial Collections Billing Practices Advice

Swiftness is the key to collecting past due commercial accounts... Read More

Does Your Management Style Remind People Of Something They Read In Dilbert?

With thanks to Jeff Foxworthy, the comedian who does the... Read More

Hiring a Book Keeping Service

Whether you choose to do your own books and accounting... Read More

Tales From the Corporate Frontlines: Team Dynamics and Communication

This article relates to the Team Dynamics competency, which evaluates... Read More

Why Would Anyone Do That in My Meeting?

Imagine that you open a meeting by saying, "We need... Read More

Is It Worth To Outsource? How One Can Outsource Wisely

Recent trends in software development market show that it is... Read More

In Leadership, The Critical Convergence Drives Great Results

The Leader's Fallacy lives! We subscribe to the Fallacy when... Read More

Accountability Equals Meeting Success

Leslie was the new manager of the group. She was... Read More

Basic Management Skills

Recent studies have shown that industrial supervisors are working at... Read More

Character: Is It Necessary In Leadership? (Part One)

We know character when we see it, but what exactly... Read More

Employee Motivation: Make Everyone A Cheerleader For Your Company

Do you manage by walking around? What do you see?... Read More

What To Do When Your IT Project Is Late, Over Budget, and Looks Like It?s Never Going To Work

Here's a scary statistic. According to four prominent research firms,... Read More

Towards Intercultural Understanding

An individual's ability to forge effective relationships across cultures is... Read More

The Significance of the Mundane

This article begins with a tip of the hat to... Read More

The High, High Price of Distrust

A paper manufacturer with over 300 employees once announced that... Read More

To Thine Own Self Be True--Its Better for Business: What Arthur Andersen Would Say to His Company

As a child, you probably heard, "to thine own self... Read More

Does My Bum Look Big in This?

If a good manager asks his workforce for their opinion... Read More

Getting Software Developed for Your Business

At some point, your business is going to need to... Read More

Cross Cultural Solutions for International Business

Globalisation, the expansion of intercontinental trade, technological advances and the... Read More

Profits and Business Success - 5 Profit Traps to Watch Out For

The old saying 'You have to spend money to make... Read More

People - You Cant Make Them What Theyre Not

Many business people and managers are spending too much time... Read More