Lay Off the Layoffs
Article: http://www.newsweek.com/id/233131
I don't necessarily believe we should emulate France with greater gov't controls/limits on companies laying off, but from a capitalist perspective I'd like to see the day when prospective employees generally choose companies who truly treat their workforce as their "most important asset". Let the free market work it out.
I like the example of Southwest Airlines. I wonder how pilots and other airline industry workers regard Southwest in comparison to other airlines. Is Southwest flooded with employment applications? I am inclined to assume so, though I'd like to know for sure.
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Are the SW Pilots not
Are the SW Pilots not members of ALPA? How are they treated differently?
(edit) ok, so I read the article. I agree with his premise, but what a hard sell to american business. Especially since the world is starting to follow that lead. I love his French example!
Well, I wasn't speaking
Well, I wasn't speaking about the union per se, but rather employee satisfaction. Are Southwest pilots (or employees in general) more satisfied with Southwest than other airlines? The fact that SW has never had a layoff says quite a bit, and I wonder how that translates into overall employee satisfaction.
My spouse is a pilot, not
My spouse is a pilot, not with Southwest, but another airline. From what I've seen networking with other families- SW has a good reputation among pilots and their families. Other families I've spoken with are happy with how SW treats not only the pilots, but the families of the pilots. While my spouse feels his airline treats him fairly better than several others, his airline is not particularly good to the families. There have been layoffs, and this definitely impacts employee satisfaction not only for the usual reasons (am I next?)- but layoffs can affect pay of existing employees because there is no movement in seniority, upgrades. Living base can be affected if you have to move for decent pay. Most people are surprised to find out how little the majority of pilots actually make and how hard a life it is on families.
I would imagine it
I would imagine it translates into huge satisfaction. Also, I think they know that laying off and then rehiring is actually more expensive in the long run.
Employee satisfaction used
Employee satisfaction used to be a huge secret. It's not just layoffs (which is the extreme case), but whole industries make a business model out of running their people into the ground (game development comes to mind).
In the last 10 years the information started to get out - sites like salary.com, glassdoor.com collect and distribute the employee opinion of how life is inside.
Once the economy improves and employees actually have a choice between employers - this info is going to come in handy.
Jane Prusakova
Senior Consultant at Improving Enterprises
LinkedIn Info
I agree with the analogy
I agree with the analogy between layoffs and bloodletting: A layoff tends to weaken the organism. This is specifically true when the layoff is done just to improve a balance sheet.
On the other hand, I once worked at a company that rarely fired anyone. The result was that a significant percentage of the employees were slacking. Really and seriously.
Guess how the company dealt with it? A "layoff". Thus, there was an upside to that "layoff": The slackers were released. But even in that case, there was the attendant problem of lost corporate knowledge. Losing a bunch of people at one time caused that problem. Also, there was a hit to morale. Layoffs aren't easy or free in any circumstance.
When you treat your
When you treat your employees as members of the team, everything changes. Anyone interested in "swarm?" SW Airlines practiced.
Jane, you're absolutely
Jane, you're absolutely right. Social networking will eventually end-game any attempts to hide employee dissatisfaction.
Jay, what is the "swarm" you mentioned?
Matt, here is a link to an
Matt, here is a link to an article on swarm intelligence writtne by Eric Bonabeau and Christopber Meyer that appeared in the Harvard Business Review in May 2001.
[Secondary link]
The basic concept: "Social insects work without supervision. In fact, their teamwork is largely self-organized, and coordination arises from the different interactions among individuals in the colony. Although these interactions might be primitive (one ant merely following the trail left by another, for instance), taken together they result in efficient solutions to difficult problem (such as finding the shortest route to a food source among myriad possible paths). The collective behavior that emerges from a group of social insects has been dubbed "swarm intelligence."
What's cool about it is that in practice it works, although in my management experience, there are other variables when dealing with human beings. The Chairman of the Board of my company is mentioned in the article, but I would also note that one of my closest advisors thinks that it is "bunk and hooey."
Pertinent to this thread:
Pertinent to this thread: Bob of Bob's Red Mill gives his company to his employees.
http://www.oregonlive.com/clackamascounty/index.ssf/2010/02/bobs_red_mil...
Companies have often poorly
Companies have often poorly understood the long-term effects of their business decisions; layoffs are a prime example.
Another trend that has been going on for a long time now is replacing permanent employees with contract employees. I have often seen employees laid off, only to come back to the same job as a contract employee. It saves a lot of overhead for the company (largely from not having to provide benefits), but loyalty cannot be as strong. Maybe if some form of health care insurance reform is enacted, the economic benefits of hiring contractors will not be as great, and the practice will lessen.
James, loyalty used to be
James, loyalty used to be important enough for companies to invest in - all-in-house workforce, company pension, going to school benefits, life-long careers.
It's hardly the case anymore - everybody gives lip service to how loyalty is important, but when it comes to making the hard decisions, loyalty isn't something people are willing to pay for.
Jane Prusakova
Senior Consultant at Improving Enterprises
LinkedIn Info
I think you hit the nail on
I think you hit the nail on the head. Companies expect loyalty when they aren't willing to 'pay' for it. It isn't just $$$ either, its the other things that a lot of the good companies used to do to support their employees that unfortunately many have quit doing over the years.
The last thirty years in
The last thirty years in particular have displayed a tendency in American capitalism that devalues the worker and shifts the fruits of labor ever upward in the hierarchy. Salaries have become nothing more than an "expense" line on the balance sheet.
I think part of this (and I know I'm likely treading in a place I should avoid) is due to the flattening of marginal tax rates and the consequent "long tailing" housing, education and medical costs.
Unfortunately, the less regulated a system is, the more likely the inevitable "race to the bottom" will occur (really a corollary of Gresham's Law, if you think about it).
--
Artie Gold -- Austin, TX
Principal Software Engineer, F4W, Inc.
"...really a corollary of
"...really a corollary of Gresham's Law, if you think about it."
Meaning that when cheaper bodies are forced to be valued equally with more expensive bodies, cheaper bodies drive out the more expensive bodies?
("bodies" being the corporations' concept of what we call "persons")
That seems like a fitting description of the Law.
Excellent point. The
Excellent point. The offshoring and outsourcing have also contributed to this, as we now see "companies" which are composed entirely of "management", and no hands-on work is done internally.
Pls be careful with that
Pls be careful with that wide net that you're casting. My company is composed entirely of management right now (although some of it is technical/program management). We subcontract our technical development work (no hands-on technical work is done internally). But we're not a software company.
I'm a loud opponent of off-shoring for many reasons, BTW.
Well, I was thinking more
Well, I was thinking more along the lines of "bad" employers driving out "good" employers due to the short term perception of enhanced margins. But your statement of it similarly obtains.
The other -- and quite similar -- issue that I often see is the loud trumpeting of "productivity gains". While increases in productivity to a certain extent means that people in a company are doing their jobs well at some point it means that wages are being kept artificially low. Though some have tried to make it so, it's not that simple.
"Give me a bunch of players who are married and in debt," Casey Stengel used to say. Not a bad way to run a ballclub. But a terrible way to run a society...
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Artie Gold -- Austin, TX
Principal Software Engineer, F4W, Inc.
I've been through my share
I've been through my share of lay-offs, down sizings and 'right-sizings' - pick your expression. They all mean the same thing: people out of work.
In my case, both lay-offs that affected me resulted in off-shored American jobs. These were employees at all levels, with solid to excellent performance levels. (The low performing ones were let go prior to the layoffs). TAA petitions were approved in both cases, validating that American labor had been outsourced. Standard fare in big business. Ho, hum...
What hasn't yet been considered fully is the effect upon our future, as a nation, when those who have been let go - once, twice, sometimes more than twice - have to liquidate their longterm savings, the college and retirement funds, the nest eggs - in order to pay the bills. And where will the money come from then, to pay down our huge national debt?
This cost is incurred by the taxpayers, but it is initiated by companies putting people out of work. When will it end? Seriously.
Well-run projects utilize a contingency fund to handle risks. In my opinion, it should be a law that businesses take some of their profits and create a contingency fund for downturns. (And I believe some companies do this). That way, they can avoid lay-offs, at least for some time.
Call me an impractical idealist, but I for one would have more respect for a company that planned to treat its people right, through both the good and bad times.
Jim
Y'know, I might call you an
Y'know, I might call you an impractical idealist -- but I might just as soon call you a practical realist. We have a consumer oriented economy that has developed a self destructive creed (a variation on the crisis of the commons): Make being a consumer as difficult as possible.
What's the most important thing you need to have at your disposal in order to consume? Well, money, of course. Where, in general do you get money? Wages, naturally. And have real wages done, in general, through the long period of economic growth recently concluded (just how recently is a matter of opinion; I'll leave that as an open question)? Well, pretty much nothing. In the trades, for example, for many, wages are actually down in terms of nominal dollars over the past thirty years.
Even as despicable a character as Henry Ford realized that you have to pay people enough to buy your stuff. We have entered a time where we figure that our customers will get their money from somewhere else; someone else will be the one who puts the extra cash into the system. Well, when it comes down to it, them is us.
--
Artie Gold -- Austin, TX
Principal Software Engineer, F4W, Inc.
It is vast anonymity,
It is vast anonymity, marketing, and franchising that fosters this situation. As long as big companies can spread their storefronts all over the country, they can continue to make more money, crowd out local guys, and employ offshore services to improve their "bottom line".
So, to resist that trend, we can do the following:
1. Buy local products from local vendors. (Obviously this is limited in scope, because not everything is produced "locally". That's why some trade is necessary, but we can still make an effort.)
2. Resist using your credit card. It gives the CC company a cut of the purchase.
3. Use local banks or credit unions.
Of these, I think item 2 is the most inconvenient for me. It's just too easy to whip out the debit/credit card at the grocery store.