Layoffs are Plan C

With unemployment on the rise, we all know someone who has been cut. In many cases, that person was a valuable asset to the organization. Personally, I have a friend whose company moved her to a new city and invested in her training, only to let her go just a few months later during an episode of mass layoffs that affected 8,000 people. They paid them all severance. That’s a waste of their money, why hire in the first place? It’s poor planning.

Sure, I sort of get it. My cable service is a relatively valuable asset to me, but if I wasn’t being paid and losing hundreds of dollars each month to basic sustenance costs (food, roof), I’d cut it. But the thing is, I have an emergency fund and several savings accounts. I have a back-up plan for my back-up plan. And I’m only playing with fractions of pennies and considering just my own needs compared to these corporations. So I also don’t get it. There just has to be an alternative, maybe like… work harder or get creative.

I’m not anti-layoffs though. Sometimes they’re needed. Like when you undergo a major shift in strategy because you’re about to bankrupt. But that should never be the back-up plan. The potential for disaster is elevated when layoffs are a quick fix without any consideration to talent management. “Let’s cut project Z, and since Jane, Jack, and John work on that, let’s cut them too.” Never mind that project X has much potential and is in serious need of Jane and Jack.

One of the subprinciples in the book Good to Great is to be Rigorous, Not Ruthless when it comes to talent management:

“To be ruthless means hacking and cutting, especially in difficult times, or
wantonly firing people without any thoughtful consideration. To be rigorous
means consistently applying exacting standards at all times and at all levels,
especially in upper management. To be rigorous, not ruthless, means that the
best people need not worry about their positions and can concentrate fully on
their work.”

On the other hand, there’s the Global Head of Talent Management from a billion-dollar organization (emphasis mine):

“I would recommend that every CEO and HR Executive should learn to use social
networks to communicate with expert groups and top performers and to know who
their top networkers are. Knowing which employees are the nodes and connectors
in the corporate network will enable it to leverage those individuals for
communications and avoid inadvertently downsizing key nodes during layoffs.”

If that doesn’t speak to our contentment with the culture of ruthless hacking and cutting we have going on, I’m not sure what does. And at some point, the quick fix will bite back.

Pretend for a minute you are the top 20% delivering the 80%. If a large portion of your team has been laid off, without much credible reassurance from management, what are you going to do?

Cut costs, not assets. And plan ahead.