Comments on: Qualities of a good leader: Avoid layoffs at all cost? http://itknowledgeexchange.techtarget.com/cio/qualities-of-a-good-leader-avoid-layoffs-at-all-cost/ A SearchCIO-Midmarket.com blog Tue, 24 Nov 2009 06:40:30 +0000 http://wordpress.org/?v=2.6.2 By: DeanLane http://itknowledgeexchange.techtarget.com/cio/qualities-of-a-good-leader-avoid-layoffs-at-all-cost/#comment-64 DeanLane Mon, 23 Feb 2009 14:17:42 +0000 http://itknowledgeexchange.techtarget.com/cio/?p=193#comment-64 Jennings advocates creative scheduling and cutting executives' perks and pay before contemplating employee layoffs. The most productive companies, he said, are completely opposed to layoffs. "They believe that layoffs are the worst things you could possibly do, and the last tool in the arsenal to pull out," he said. "If a company begins laying people off, the rest of the people stop worrying about their work and start worrying about themselves and their future." That leads to a noted drop in productivity in those who remain with the company. In past recessions, Jennings said he has observed a pattern whereby companies lay off workers to please Wall Street, but when the economy rebounds, "the costs of recruiting and training the new hires is more than the savings that were realized in the layoffs," he said. They also lose the "tribal knowledge" of how things are done in the organization. As a manager for the last 25 years, the most unpleasant task I have performed is to lay off an employee. It is a terrible disruption to a life, a family and an extended family. Depending on the company, labor is usually the largest cost. Typically companies try to reduce all other costs first, then offer packages for people near retirement, then ask for volunteers, etc. Jason Jennings has uncovered virtually nothing here. I doubt that anyone can find a company that wants to perform a layoff. Also, even if a company were to lay off employees “to please Wall Street”, Jennings would never be privy to that kind of information, as there would be multiple law suits. Additionally, you can’t just call a Wall Street analyst and say “Well, were having a tough time, so we’re going to have a RIF (Reduction In Force) of 8%. That tells the analyst nothing. People who have assisted in putting together a briefing for Wall Street and are familiar with company operations know that the analysts want to see the whole picture, from: What are you doing to increase sales/revenue, how will you position for the future, what non-core activities are you going to shed, etc., etc., etc.. . Jennings claims to have studied over 100,000 companies in 20 years. Let’s see, that is 5000 companies per year or 13.7 companies a day, seven days a week. What with having started two companies, speaking, writing and consulting, one must question his qualifications. Dean Lane Founder, Office of the CIO® Jennings advocates creative scheduling and cutting executives’ perks and pay before contemplating employee layoffs. The most productive companies, he said, are completely opposed to layoffs. “They believe that layoffs are the worst things you could possibly do, and the last tool in the arsenal to pull out,” he said. “If a company begins laying people off, the rest of the people stop worrying about their work and start worrying about themselves and their future.” That leads to a noted drop in productivity in those who remain with the company.
In past recessions, Jennings said he has observed a pattern whereby companies lay off workers to please Wall Street, but when the economy rebounds, “the costs of recruiting and training the new hires is more than the savings that were realized in the layoffs,” he said. They also lose the “tribal knowledge” of how things are done in the organization.
As a manager for the last 25 years, the most unpleasant task I have performed is to lay off an employee. It is a terrible disruption to a life, a family and an extended family.

Depending on the company, labor is usually the largest cost. Typically companies try to reduce all other costs first, then offer packages for people near retirement, then ask for volunteers, etc.

Jason Jennings has uncovered virtually nothing here. I doubt that anyone can find a company that wants to perform a layoff. Also, even if a company were to lay off employees “to please Wall Street”, Jennings would never be privy to that kind of information, as there would be multiple law suits. Additionally, you can’t just call a Wall Street analyst and say “Well, were having a tough time, so we’re going to have a RIF (Reduction In Force) of 8%. That tells the analyst nothing. People who have assisted in putting together a briefing for Wall Street and are familiar with company operations know that the analysts want to see the whole picture, from: What are you doing to increase sales/revenue, how will you position for the future, what non-core activities are you going to shed, etc., etc., etc.. .

Jennings claims to have studied over 100,000 companies in 20 years. Let’s see, that is 5000 companies per year or 13.7 companies a day, seven days a week. What with having started two companies, speaking, writing and consulting, one must question his qualifications.

Dean Lane
Founder, Office of the CIO®

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