January 30th, 2009
The latest corporate dance: Layoffs by the numbers
Not Quite a 12-Step Plan But Close
I was speaking with a top executive of a major software firm this week regarding morale and the economy. She indicated that her firm’s strategy for layoffs follows a predictable pattern:
- Step 1 – Do a round of layoffs that cut out a lot of dead wood and kill several programs/initiatives that probably should have been cut some time ago. At this stage, tell all the survivors that their jobs are probably secure. Only one token top executive will get the ax but you can bet a ton of regular Joes are going to have a tough time making their home mortgage payments.
- Step 2 – Institute an across the board pay cut. Tell everyone that the downturn is rougher than management anticipated. Rather than cut more personnel, everyone will take a haircut. This story is spun as a way to keep full employment. The lower pay is justified as being more ‘market relevant’. Rest assured, the board will make the top executives pain be lessened by re-pricing their stock options. That won’t be the case for the rank & file.
- Step 3 – Make an even deeper round of layoffs. This time the cuts are ‘too the bone’ and hurt management and the rank & file deeply. Not really. Top executives will still be there although thousands of other workers will be devastated. This is the layoff round that sends shockwaves through the industry. Worker morale will plummet as they won’t believe this will be the last round of cuts. It won’t although management will insist it is.
- Step 4 – Announce a hiring freeze. Now the company is attempting to use voluntary attrition as a substitute for another layoff round. This is really depressing to the rank & file. Sadly, employees who return from pregnancy leave, medical leave, etc. are not allowed back.
- Step 5 – Suggest that employees take ‘unpaid sabbaticals’. Using charity work as the backdrop for its newfound benevolence, the company will gladly permit its workers to leave for three month or longer stretches. Only the most naïve and gullible accept these offers as they won’t be allowed back later.
- Step 6 – Announce the inevitable ‘final final layoff’. This really won’t be it but, on the bright side, workers are now immune to management’s hype. They all know the company is tanking and they’ve all had their resumes out since Step 1. Like a mercy killing, many employees are hoping that management offers them a package to walk away from this corpse of a business. Unfortunately, packages and severance were only available in Step 1. Now, instead of severance, you get a security guard to escort you to your car and off the premises.
Another executive explained the process at his firm. It’s real simple there: everyone’s on furlough. When you think the furlough is going to end, the company notifies you it has been extended.
Or, if you’re firm is contemplating job cuts, see how they spin it. I particularly liked this term IBM used in this InfoWorld article:
Many tech companies are cutting staff amid the world’s persistent economic woes, but IBM also trims jobs on a regular basis, referring to the process as “workforce rebalancing.”
Maybe, I’m just naive. I thought re-balancing was something you did to tires.
How is your firm handling the economy? Is it doing the death by a thousand cuts? Is it well-thought out? Does it cut equally between the regular Joes (and Janes) and top executives? Are you getting the boot while the pilot who flies the corporate jet is getting a new plane?
This blog explores the intersection set between services and technology. If it impacts either space, it will be covered here. Brian Sommer is a former Accenture partner. He did an 18-year tour of duty there and ran three small practice units (Finance Center of Excellence, HR Center of Excellence and Software Intelligence). He’s sold service projects in almost every continent and remains just as current on both services and technology today as ever before. Brian is currently CEO of TechVentive, a strategy consultancy servicing technology providers, and a research analyst with Vital Analysis. See his full profile and disclosure of his industry affiliations.
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