If layoffs are so bad for business, why are they so common?
Apparently the evidence is hiding in plain sight: both scholarly studies and industry research are reaching the same conclusion, that layoffs are bad for business, bad for employees, bad for the economy, and bad pretty much all around. The examples cited in the Newsweek article are appalling and leave me scratching my head. Professor Pfeffer proposes that “follow the crowd” behavior is at the root of much of the recent rash of downsizing, managerial behavior “spreading like the flu across companies.”
There is no denying that some industries are in transition, and in them, staffing realignments are a recognition of the new reality. However, when organizations get into a cycle of layoffs during downturns and rehires as soon as the economy picks up, it’s hard to escape the conclusion that the layoffs may not have been required to keep the enterprise alive, but were rather an exercise of keeping up profits in the short term. The real question is, was the pain of the layoffs also short term, and the answer seems to be no.
If all of the research cited can be believed, the findings and Pfeffer’s conclusion do not reflect well on corporate leadership, particularly if, as I strongly suspect, much of the evidence of the deleterious effects of layoffs is right in our BI systems, should anyone care to look for it.
It just cannot be all that difficult to prove, for example, that announcing a layoff does not necessarily raise the company share price, either immediately or in the longer view. If companies that experience increases in productivity are as likely to have added staff as to have reduced staff, that, too, ought to be supported by the evidence in our records of sales and staffing trends. Pffeffer claims that layoffs don’t even reliably reduce costs, and that ought to be the easiest claim of all for management to confirm whether or not it held true in a particular organization.
Is it that no one wants to be the one to tell the emperor/ empress that s/he has no clothes? Now that I can believe, but that is one reason why you bring in outside consultants, to deliver the news that no one internally will deliver, unless they, too, are so invested in telling management what they want to hear that everyone, within and without, is a huge Greek chorus of yes men and women. If so, it’s a sad state of affairs indeed, but let’s not kid ourselves: if executive leadership want the truth, one way or the other, I am convinced that we in IT could provide it to them.