The end result was the firm could get back to focusing on the business without the distraction of a lot of pissed-off employees. The laid-off employees appreciated the treatment and most didn’t leave hating the company (many actually were able to find jobs in different parts of the firm). The upfront cost is higher, but it is also contained.
The way layoffs are currently done is very different. Rather than a sudden event they are announced well in advance, the people are left in place for up to a year, and the collateral damage is massive. It places folks who will get raised and bonuses right next to folks who are pissed, won’t even have a job, and are likely going to share their dissatisfaction with the entire process with other employees, customers, investors and any social media they are involved with. They also have a higher probability of acting out, which can range from minor theft to major embezzlement and even physical violence in extreme cases. So while it appears cheaper, the hidden costs could be massive and almost impossible to mitigate.
Executives who use the more common latter process clearly are focused on the tactical visible expenses and have no concept of the higher strategic costs and collateral damage.
How a company does layoffs can tell you a lot about them
I started out back when manpower management was a skill and managing people was more about science and research and less about compliance and filling out forms. This change is most noticeable in how firms do layoffs -- badly and often, instead of infrequently and well. The end result is that market impacts that force downsizing have a far deeper and more painful impact on the company and its employees than needs to be the case.
There is a huge shortage of deep experts like Jerry York was and the end result is a lot of practices that focus on short-term visible costs and ignore the far larger crippling results of these bad practices. The most egregious of these are HR practices like stacked ranking and especially layoffs.
Everyone has a choice of who to work for, one of the criteria should be whether the irmn demonstrates not only how well it pays, but how well it treats employees when it has to downsize. Firms that treat employees like obsolete hardware that can be abused and discarded likely should not even be your last choice when it comes to where you want to work. Why invest your career in a firm that demonstrates it doesn’t care for the folks that form its life blood?
Sign up for CIO Asia eNewsletters.