Layoffs is not the best solution in a downturn. Comment (View Comments)
Kamal Kapoor - Winner of the month
Posted On Tuesday, January 27, 2009 at 04:55:26 PM
"Will I able to survive in my organisation or will my organisation survive in this bad time?" is a question which every person is asking himself/herself these days. In today's phase of economic recession, every organisation and employee is concerned about his/her fate. Companies are trying to cut costs as much as possible and the most common way to do that is ‘layoffs’. Small, private firms do not have as much pressure to cut costs if the owner believes it is possible to ride out the storm. Conversely, in a public firm, even if a CEO is inclined to seek alternatives to layoffs, pressure from shareholders and analysts to cut staff might be too great.
Layoffs are done to save money; unfortunately, they are usually a short term fix, detrimental to the companies. In a study of 531 large organisations, three quarter reported having cut pay rolls. Out of these 85 per cent that sought higher profit, only 46 per cent saw any measurable profit; 58 per cent sought higher productivity but only 34 per cent saw even the slight increase; 61 per cent wanted to increase customer service but only 31 per cent achieved this. So layoffs is not the best option even in the period of economic recession.
Many companies fail to realise that they have already invested a huge amount on training and development of their employees. A company can save for a short term by conducting layoffs but it also has to spend more in training a new batch of employees once the economy picks up.
A company may lay off employees, but in the process it creates an atmosphere of uncertainty which causes others to leave the organisation. The first ones to leave the company due to uncertainty are usually the ‘best’ people. The ones who stay back are stressed most of the time. Thus, the climate of uncertainty...
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