Culture and strategy in a downturn
by Miki SaxonImage credit: eschu1952
Creating and sustaining a culture of innovation isn’t easy in the best of times, but what do you do when ‘best’ is a distant memory and the times are well on their way to ‘worst’?
According to Wall Street “wisdom” you throw your strategy out the window, cut your staff beyond the bone and focus on now—since even a quarter is too long-term.
The Wall Street approach is to pull in your head and limbs like a turtle and spend as little as possible—and that means getting rid of people.
But not so fast. Statistics show what any employee can tell you, including the ones who aren’t directly affected, that layoffs don’t motivate.
According to Think Before You Fire in Business Week,
“For companies, layoffs are a quick, albeit unpleasant, way to trim costs, right? Not necessarily. A recent study of 200 enterprises found that even a modest downsizing can unleash an exodus of valuable employees. For instance, companies that laid off 0.5% of their staff experienced, on average, a turnover rate of 13%—compared with an average turnover rate of 10.4% at companies that didn’t do layoffs. (Academy of Management Journal)”
And that additional 2.6% of turnover are rarely the folks you’d choose to lose.
Way back in 2001, when thousands were being laid off, Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001) showed in carefully researched studies that a 5% improvement in employee retention translates to a 25%-100% gain in earnings.
So what are the advantages of layoffs?
They take the least creative effort from management and Wall Street approves.
Keeping your people and juicing innovation and productivity when times are tough takes work—lots of it.
Which are you choosing?
Your comments-priceless
Don’t miss a post! Subscribe via RSS or EMAIL
Subscribe to MAPping Company Success 