Aren't there better ways to cut costs than layoffs?

[2001 AE]

Layoffs p*ss me off and show no real managerial innovation. Good management find new ways to cut costs and GET THEIR BONUSES.

[jasestu]

Ummm, actually since labour tends to be one of the largest costs of an organisation, layoffs tend to be a very effective way to cut costs.

Of course you're right though, cutting costs is a fairly stupid thing to be doing. In laying people of the company is loosing productive capacity, so they'll have less of their good or service to sell, so they'll make less money. Since they're making less, they'll need to save more, so there will be more layoffs... etc etc... The managers need to be enlightened... Some degree of cost cutting does have it's place, but typically it's just a short term solution that leads to major longer term problems...

And as for the managers striving for thier bonuses, that's getting closer to the root of the problem. The measures that are used to determine a managers performance are often incorrectly set and force such foolish behaviour as cost cutting...

Anyways..

[Spec2 Girl]

Unfortunately some companies don’t really have a choice. Look at what’s happening with all the corporate mergers around the world. A lot of positions within companies are then doubled up which inevitably leads to redundancies. That’s the situation I’m in at the moment. Our company has recently been bought by our main competitor and we are the smaller of the two. I’ve been through mergers before and know what tends to happen in these situations. Generally the staff employed at the smaller company are the ones that lose their jobs. Hopefully I’m safe for the near future (at least the next 6 months anyway), then who knows what’s going to happen? So unfortunately it’s something that is totally out of our control.

[jasestu]

Yes, layoffs are pretty much inevitable in mergers. However I have been surprised at how the Fonterra (NZ dairy, kiwi, nz dairy board) merger has been going. It seems to be very well organised and the companies seem to be blending together well. Their have been job losses of course, but they have only been in managerial positions and not at the production level. This is good to see as this doesn't limit production. The merger has also opened many new positions, many of which can be taken by the laid of managers.

[Spec2 Girl]

Originally posted by jasestu
Yes, layoffs are pretty much inevitable in mergers. However I have been surprised at how the Fonterra (NZ dairy, kiwi, nz dairy board) merger has been going. It seems to be very well organised and the companies seem to be blending together well. Their have been job losses of course, but they have only been in managerial positions and not at the production level. This is good to see as this doesn't limit production. The merger has also opened many new positions, many of which can be taken by the laid of managers.

Yeh, they seem to be one of the few that haven’t had too many redundancies which is great. Maybe there is some hope after all!

[2001 AE]

What I meant by new ways was early retirement, attrition, buyouts and that kind of thing. There is always salary cuts if all else fails.

[YogsVR4]

Let me tell you what happened for us. We were absolutly destroying our cometition. In fact we drove some of them out of business and a few others were just about toppled. One of them got bought out by an investment firm that wanted a piece of their division (not related to what we were doing).

The company that bought them kept them up and running their competive product for about a year, but they knew it was not worth their investment and considered killing it. Instead they thought they would dive deaper into the market and ended up buying our company. We had about a hundred employees and a few million dollars in sales each year. This company CSI out of Canada is worth billions, so our owners did well for themselves in the sale.

Anyway, CSI merged us together. So we got combined with a company that we were kicking the shit out of. Needless to say that it put some strain on the organization and made positions redundant. Since we are relatively small, those positions cost the company quite a bit of money. Because it takes time to expand in a verticle market, there were people that the company couldn't afford to keep. I'll let you guess who were let go. Life in a capitalist system is great, but this is one of the pitfalls.

[nubiannupe]

I feel ya on that one, Yogs!! My company (amazon.com) laid off a LOT of people earlier this year, and the morale around here went entirely in the crapper. There were people with a LOT of tenure that they just put right out.

But like jasestu said, layoffs are pretty much inevitable in this society, nowadays. Sucks!!

[G-Forces]

I can attest to a lot of this too. My company grew too big too fast. When the large companies got past the Y2K hype the ERP market took a dive their client base dried up a bit. Instead of taking the oppertunity to retrain their employees in the 'next big thing' they laid off a bunch of people.

In my case it was a combination of crappy planning and managerial foresight. I only worked about 60% of the time in the 3.5 years I was with them. The rest of the time I was at home doing nothing. However I got paid a full time salary.

It was a sweet job. I hated it, but I'm sorry to see it go.

[jasestu]

Originally posted by 2001 AE
What I meant by new ways was early retirement, attrition, buyouts and that kind of thing. There is always salary cuts if all else fails.

Salary cuts are a good way to retain the skilled workforce for when times improve, but you need to have a really good committment to the company from the employees so that they'll accpet the short-term cut.