Layoffs Are a Dangerous, Risky Decision

Patrick Avery

In the past year, many companies across dozens of industries have laid off employees. But at what cost? Like chemotherapy, IT Business Edge contributor Rob Enderle says layoffs do a substantial amount of damage in hopes that they will allow the company to survive. However, if the real cause of the problem isn't addressed, they are used repetitively and often the patient, or in this case, company, doesn't survive.


Enderle argues that most companies fail to do a proper analysis before getting rid of employees. If they were to go about this process more carefully, they would realize that employees aren't the cause of the problem.

"Unless a company has lots of people getting paid to sit around and do nothing, each person laid off provides some function needed to maintain the income level of the company. It could be directly, as in a salesperson or manufacturing job, or it could be indirectly, such as a marketing, service, middle-management or executive job, but that person generally is doing something of some value to the company."

Layoffs are often too easy for executives, Enderle says. Instead of getting rid of benefits or other perks, it's easier for managers to numb themselves and tell people they have to get rid of them to balance the budget. Unfortunately, there are a lot of pieces to pick up after layoffs that managers often fail to see. Those left behind often feel betrayed and therefore lose trust in management.

"Layoffs give key resources to competitors, break relationships with customers, make the firm sicker and only adversely affect revenues (which is typically the problem the executive is trying to fix). They are speed over quality, they are surgery with a chain saw, and they are generally done because others do them and without enough questioning."

The Knowledge Network has several resources that help companies quantify the loss of an employee and understand the consequences of layoffs. There is also a guide to doing the best you can to make sure you don't get laid off. Here are some of those documents.


Layoff Checklist

This checklist covers what every manager should do prior to actually terminating an employee.


Total Cost of Turnover Worksheet

Use this worksheet to help you list and organize all the costs associated with employee turnover.


Reduction-in-Force Calculator

This calculator is designed to help you with the unpleasant but sometimes necessary task of meeting a mandated reduction-in-force target.


How to Not Be a Victim of Downsizing

This guide recommends several steps you can take to improve the chances of remaining gainfully employed.

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Add Comment      Leave a comment on this blog post
Aug 6, 2010 8:22 AM Daniel Daniel  says:

Interesting topic, more info can be found here: www.reductioninforce.org


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