Crash Diets: The Cure for Overweight Companies?
Corporate layoffs are like weight loss programs. Carrying around less fat leads to better health, which raises energy level and productivity. But is weight loss always a good thing? Not if you’re cutting muscle instead of fat.
Given the enormous costs of recruiting and training employees, it’s surprising that so many companies are purging themselves so quickly of their valuable talent resources. Indiscriminate job cuts reduce the company’s chance for success, and they drive talent into the hands of the competition. When a company lays off a top-producing engineer or salesman, it’s only natural that the person would go to another company—infusing the competition with years of product knowledge and longstanding customer relationships.
Talent: The Power Behind Corporate Muscle
Luckily, there’s a counter-trend at work in today’s employment marketplace, as thousands of smaller, privately held companies take a different approach to their human capital. Faced with the same slow growth or diminished profits as giant corporations, small business owners are also forced to tighten their belts. But instead of cutting jobs, they’re learning to live with aging capital equipment or last year’s software in order to hang on to the employees they’ve spent so dearly to recruit and train. By investing in the future through their staff, small businesses are not just helping stem the tide of unemployment; they’re easing the severity of the recession, as well.
While it’s hard to work up much sympathy for a multi-billion dollar company eager to sacrifice 5,000 employees at the altar of corporate profits, Ford Motor Company is just one example of how trimming the fat isn’t as easy as it might appear.
Ford tried to implement an objective, three-tiered rating system designed to thin the ranks of consistently under-performing managers. Since rewarding mediocrity serves no real end, a merit plan seemed both logical and fair—except to the people viewed as a liability. Blasted by age discrimination lawsuits, Ford was then forced to trash its own rating system and, with it, any hope of reforming a workplace to ensure equal outcomes rather than high levels of performance.
Experts who predicted an end to the “binge-and-purge” hiring mentality following the last recession were proven wrong; recent layoffs have perpetuated a seemingly endless hiring and firing cycle. The good news is that when the economy heats up again, so will the frenzy to hire more people—more proof that the employment “paradigm shift” of the mid-1990s appears to be stuck in neutral.