These days I am reading a book named "Less Is More", this is THE amazing book I have read in the field of management...
I am just putting exact word to word copy of some paras which I feel like sharing...
This is form a chapter named "No LAYOFFS"
Highly productive companies have realized the pitfalls that await a firm when it attempts to balance its books by resorting to payoffs as a tactical response. The CEOs interviews cited four undesirable consequences of doing so.
I am just putting exact word to word copy of some paras which I feel like sharing...
This is form a chapter named "No LAYOFFS"
Highly productive companies have realized the pitfalls that await a firm when it attempts to balance its books by resorting to payoffs as a tactical response. The CEOs interviews cited four undesirable consequences of doing so.
- Organization lose valuable knowledge when institutional memory is not transferred to others. When employees leave, especially as a result of layoff, the departing employees may not pass along the institutional memory they hold. Daniel W. Rasmus, vice president of Giga Information group, has written, "As a knowledge management practitioner, when I look at lay offs, I see executive taking the easy way to cut cost - or give then impression that they're doing so- with little regard for the imact of workforce reduction on the long-term viability of the oragnization, let along its people. And savings may not result. After all, it takes several thousand dollars to coach an employee to thrive in a postion, and that investment is lost when the emplloyee leaves. Then there is the issue of losing members who are vital in terms of their knowledge about their work and their connections to content, processes, and people. suerly there is a cost in this loss."
- The damage to workers includes loss of moral, anixiety, presimism and a "save-my-own-butt" attitude- a soege mentality that isn't in the best interests of the company. Dr. Trevino points out that there;s plemty of evidence backing this up. "We know that eveyone within an oraganization pays close attntion to layoff because they know it's often not a single occurence . Layoff happen in stages. Instrad of working, employees look for clues as to when it might happen to them and discuss among themselves how they'll be trated.
- It's more expesive to lay off workers(legal, administrative and financial packages out the dorr) and then rehire (recruiting and training expense) than it is to shorten the workweek and temporarily reduce pay. Joutnalist Victor Infante, whos has extensively covered layoffs, sums up a secret that productive companies know. "Companies downsize to cut costs, but then are quickly forced to bring new people in because surviving employees leave for what they perceive to be more stable environments. This turnover starves production and lowers work quality." And he adds a thought that represents another way of looking at the cost issue: "Since the cost of a single new hire is generally equivalent to one year's salary, any savings from layoffs are negated." Dr, Trevino agrees. "Although layoffs have been touted as good management, they actually do not have a postivie impact on the bottom line."
- While layoffs may lead to superficial short-term effeciencies, they don't produce or sustain productivity. Consultant Darrell Rigby has written, "[Companies] understand that although employee layoffs will reduce costs in the short term, the combination of severance expenses,loss of knowledge and trust, and subsequent hiring, training, and retention costs can quickly overwhenlm expected savings" (From "Moving Upwards in Downturn," Harward Business Review, June 2001)
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