Saturday Odd Bits Roundup: Recession, Layoffs And Hiring
by Miki Saxon
Recession of not, you still have an organization that needs to be productive.
According to an Academy of Management Journal study of 200 enterprises even a modest downsizing encouraged their most valuable “keepers” to start looking and move on. Check out these numbers; a 0.5% layoff increased turnover 2.6% (13% vs. 10.4%) over companies that had no layoffs. Add to that research by Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001), that proved that a 5% improvement in employee retention translated to a 25%-100% gain in earnings!
So why do companies turn so quickly to layoffs? Mainly for these two reasons
- Wall Street loves them because they have the fastest impact on the bottom line—and all the Street cares about is the next quarter. It will applaud you now and crucify you when the economy turns around and you have a demoralized staff and nothing in the pipeline.
- They’re lazy. They require the least energy, managerial skill, leadership and creative effort, whereas keeping your people and juicing innovation and productivity when times are difficult takes energy, skill, leadership, creativity and work—lots of it.
Ever thought about what does it really costs to hire? Caliper has a nifty calculator. Try it, then multiply the answer by the increased 2.6% who walked when you laid off their colleagues. (Info hat tip to The Engage Sage.)
Smart companies, and even some governments, are getting creative, not for altruistic reasons, but because they don’t want to be crippled when the economy turns around. One of the primary actions that they’re using is to cut hours instead of staff—using with four-day work weeks, X% reduction in hours or closing extra days during the holidays and maybe beyond. Employees know that in an economy such as the current one a reduced job is far better than no job and companies finally figured out that staying prepared for the turn around is as important as cutting costs.
Finally, this WSJ article offers insights on attracting top people to a company in trouble, even one close to bankruptcy. Obviously, if these approaches work in those circumstances think how well they’ll work for healthy companies.
Image credit: flickr
