Based on statistics they’re pretty dumb. And not just for those directly affected, but for the repercussions that will echo through your company long after the actual firings.
“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)”
Not only is that additional 2.6% of turnover expensive, it usually includes the people you least want to lose.
Beyond the effect on your people is the fact that the smartest companies use a downturn as a time to grab market share, acquire companies, and push innovation so they have new products ready when things turn around—and the always do.
This is just as true for small business as it is for large multinationals.
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 why are companies so quick to cut staff?
Because layoffs take the least creative effort from management and Wall Street approves.
Keeping your people and juicing innovation and productivity when times are difficult takes work—lots of it.
I’m excited! Today is the start of a new Sunday funnies feature here at MAPping Company Success, drawn by Jim Gordon, our very own Millennial and author of mY generation. Here’s a little background in Jim’s own words…
Hi, I’m Jim Gordon — a 22-year-old attending Clemson University. Contrary to popular belief, I am not an Art (with a concentration in stick figures), Graphic Design, English, Journalism, or Business major. I am an Industrial Engineering major in my last year of classe… I just happen to enjoy writing dialog. Anyways, I also study Italian, build websites, and have a girlfriend who goes to the University of Tennessee.
Now, without more ado, mY generation… (See all mY generation posts here.)
No matter the online persona you create it’s still flavored by your MAP.
This is especially true for managers who are working with virtual teams. In fact, I’ve noticed that managing virtual employees, whether temporary or permanent, local or off-shore, tends to magnify both the positive and negative in a manager’s MAP.
The idea that your mindset, attitude, philosophy and preconceived notions all change or go away because the interaction is virtual is ridiculous—almost all the same issues come into play.
Attitude, good, bad or indifferent, on either side will show up just as much in email, instant messages and phone conversations as they do face-to-face; if you avoid certain types you aren’t likely to change because they’re on another continent; age (whether younger or older) is almost as obvious in language usage as it is visually; etc. This is especially true when working with a contractor’s team on an outsourced project, since you have no input into hiring.
Typically, MAP affects a virtual workforce just as it does the in-house organization if you won’t hire a candidate on-site because of a personal attitude, then how in the world can you manage similar people virtually, since the same attitudes that create barriers when hiring create problems in managing?
Whatever you think of the war—I happen to be vehemently against it—has nothing to do with our troops. The war is about politicians and politics—the troops are about the men and women who serve and all too often die.
I wonder what our government spends $700 million dollars a day on, but apparently it’s not for necessities such as sox, boots, feminine products, razors, body wash, etc., let alone “luxuries” like Ramen noodles that our troops need.
I just learned about a website called Any Soldier and it’s a way you can help for very little money.
Not generic help, but very personal help. Read through the requests, choose based on what you can do and do it.
Finally, remember that there are a lot of troops there who get no mail and would appreciate receiving letters all year, not just at the holidays when it’s a major topic. Monthly letters from a class is a great school project—heck, it might even teach the kids here to communicate instead of text.
So step up, DO something yourself and DO what you can to get the word spread. Any Soldier needs all of us all and they need us now.
Although there are many things George Gilder has said with which I vehemently disagree, his thoughts and comments on innovation are definitely worth listening to.
Want to see and hear more of what went on at Stanford Summit?Click here
Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”
They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.
They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.
Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.
Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.
And now, of course, we have the Sub-prime debacle with which to contend.
And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.
The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.
Who will step into the breach to provide investment and liquidity?
Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.
“But a landgrab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.”
It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.
Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.
So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.
So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
I thought we’d have some fun today.
Whatever you think of the war—I happen to be vehemently against it—has nothing to do with our troops. The war is about politicians and politics—the troops are about the men and women who serve and all too often die.
They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.
