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Layoffs Speak to Senior Management Failure

May 01, 2001 — CIO — "Mom Theresa’s joined the mob and happy with her full-time job."-Primitive Radio Gods

A COMPANY I USED TO WORK for recently announced it was laying off thousands of people from an assortment of departments in its headquarters, including a few hundred from the IT department, and more from plants and various other facilities around the world. The local news programs ran footage of employees carrying boxes of their personal belongings through the parking lot, some acceding to inane and tearful interviews. When one husband and wife (both of whom had been laid off) were asked by a reporter how they felt, I had to turn the television off.

My dad spent most of his years working in aerospace, a heavily unionized, stunningly inefficient industry that is no stranger to layoffs. The cycles of war and peace, combined with arcane and inflexible work rules forbidding personnel reassignment or the restructuring of responsibilities, made periodic layoffs a fact of life. Few of the large companies that are currently downsizing, particularly those in high-tech, have unions of any kind. (See "IT Workers of the World: Are They Uniting?" Page 134.) There are few, if any, restrictions on management regarding reallocation of personnel, salary or benefit adjustments, or a whole universe of other cost-cutting measures, and yet these managers see fit to shed the intellectual assets of the company.

As far as I’m concerned, a layoff is the most glaringly obvious example of senior management malpractice, and yet I can think of few examples when a CEO has been called to account. On the contrary, most are lauded for their willingness to take bold action and awarded an increase in their stock price by Wall Street (for a day or two) in anticipation of a turnaround.

This is completely nuts, and here’s why. When top management decides to lay off a significant number of people, it’s because of one of three things: There’s a downturn in demand for their product that they’ve failed to anticipate and adjust for in a constructive way; they’ve been employing a large number of people who they really didn’t need; or they’ve run the company into the ground and have gone out of business. Under which of these circumstances, exactly, do we in senior management deserve to keep our jobs?

I have stayed pretty close to some of the people I left behind at my old company, and as much as we try to avoid it, conversations eventually drift back toward work. Like it or not, I’m pretty well up to speed on what’s been going on there. For instance, I know that the senior team, tired of their long commute to the wrong side of the tracks, leased very fancy, very expensive offices within spitting distance of the highly polished neighborhood they all happen to live in. I also know that they’ve cut departmental travel budgets but kept their executive jets.

 

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