The thing I really don't understand is the persistent meme that companies have some obligation to their shareholders above and beyond their obligation to their employees, common ethics or the spirit of the law.<p>It's practically an article of faith in the business community that you deserve an 'attaboy' for laying a bunch of people off if it increases profit. But stiff the shareholders? Oh, the humanity! We're developing morals all of a sudden!<p>If all's fair in business, why don't we treat the shareholders as suckers, too? If enough of them get together, they can vote to fire you, but short of that, why do they deserve additional respect?
Yeah, it sucks to be fired. But, if you were worth more to your company than you are being paid, then they wouldn't have fired you.<p>This is tough to hear, but it is the truth.<p>Some might say that the company was wrong, and that may be true, but if the company is wrong about who it fires and hires, it will no longer be a company.<p>Your company is extracting value from you, that is how they make money.<p>If you are not looking for a way out or up, then you are going to lose.<p>Managing your career is something people just don't think about enough.<p>They like to think, "If I am loyal and work hard, then I will always have a job."<p>That's bullshit. I have known lots of people who worked hard and were loyal, but still got axed because they didn't create enough value.<p>This article has a "it's not fair" quality to it.<p>Well, no shit it's not fair.<p>Because we spend so much time at work, we project loyalty and security onto our company. We are fooled into thinking they are loyal to us.
Companies and employees don't "owe" each other loyalty, but the only way to earn loyalty from someone is to show it in return. If a company decides to throw its employees under the bus during tough times, that is its prerogative, but then it should not turn around and expect employees to stick by it during tough times either.
> If this is an intelligent and proper strategy, why shouldn't companies formally declare that they follow it?<p>Because it's a way more effective strategy if you practice the cut-throat approach while portraying a fuzzy, caring public image. To some extent, you can have your cake and eat it too.
> But it strikes me as horribly short-sighted for a company to simultaneously report record profits and fire loyal employees.<p>This is an incredibly naive conclusion, one that I would argue could only be reached without any critical analysis whatsoever.<p>For one, record profits can be ephemeral. Many companies thrive and dive based on the business cycle. As we saw in 2008, the dynamics of a company can change relatively quickly, so record profits today don't guarantee record profits, or even a profit at all, tomorrow. Building a strong cash position and/or returning capital to investors in one form or another often prove crucial to a company's long-term ability to survive and grow.<p>More importantly, it's critical to recognize that a loyal employee isn't necessarily a good employee, or a necessary employee. At large companies, particularly outside of technology, you can often find plenty of "loyal" employees: workers who have been on the job for more than a decade who would love nothing more than to stay in that job for decades to come. <i>Some</i> percentage of these employees, however, are better at doing what it takes to secure their jobs than they are contributing to the ongoing success of the company. Others, while dedicated and hard-working, may simply lack the skills required to contribute as the company evolves. Companies are not static; as they grow and market conditions change, it may be necessary to hire in some areas, and fire in others.<p>The author of this post might as well have used the title, "In tough times, abandon tough decisions."
The reason companies don't loudly proclaim this kind of thing seems pretty simple to me. Companies must simultaneously communicate with many different parties: employees, customers, investors, the board, governments, etc. An effective message for one constituency is often horribly inappropriate for another – layoffs are a great example of this.<p>So when companies do decide that cutting costs is more important than keeping employees, they message that in one way to employees, and in another way to analysts and investors. Employees and the general public who sympathizes with them might call that duplicitous and slimy, but it's a response to the balancing act the companies have to perform.
There must be some kind of study about businesses that are loyal to employees and loud about that loyalty. How does that affect their bottom line?<p>Do customers/clients choose to do business with an ethical company over an unethical one? If not, maybe the bigger problem is that the employees of the world choose to do business with companies that are not good to employees.<p>If ethical behavior was an important factor in customer's choices I'm sure we'd see less unethical behavior by businesses. However, Walmart, Goldman Sachs, McDonalds, etc all continue to thrive after their unethical behavior is made very public.
This article fundamentally misunderstands what profits mean in a financial statement. "Record profits" are recorded because companies are afraid to expand. They expect a macroeconomic contraction.<p>Remember: profits aren't included in the salary number, as that's a cost. So "record profits" aren't going to executives - that would be salary or options. And they usually aren't distributed as dividends. They go into the corporate bank account, namely the rainy day fund of the company. And the reason they are going into the rainy day fund of the company is that businesses in general expect many costs to come over the next few years, from the QE tapering to Obamacare.<p>Otherwise businesses would spend those "record profits" on hiring and expansion, or on salary increases to retain top talent, or on acquisitions. I think the fundamental misunderstanding here is that "record profits" have anything to do with executive salaries. Salaries are a cost.<p>Visual analogy: this is like reducing your marginal headcount and husbanding your corn with the expectation of a massive storm on the horizon. It does NOT mean you are feasting on your corn after kicking out marginal producers.
OP is the author of "Smart Customers, Stupid Companies: Why Only Intelligent Firms Will Thrive, and How to Be One of Them" has some good free ebooks to download at <a href="http://kasanoff.com/free-stuff/" rel="nofollow">http://kasanoff.com/free-stuff/</a>
This ignores the fact that many downturn layoffs are merely excuses to rid a company of dead weight.<p>It's expensive and risky to let someone go for cause. It's cheap and virtually risk free to do a mass layoff due to a decline in business.
Mass unemployment is one of the greatest plagues of a modern country. This is just one of the (many) sad side effects.<p>Too bad the lesson was forgotten globally by the ruling class.
My biggest issue with corporate layoffs is that not that they happen-- they're inevitable and necessary-- but that they're often done in an incompetent way that fails to account for the real problems. Everything that grows will eventually experience contraction; the problem is that companies don't know how to contract in a decent way. If you do a layoff wrong, the company ends up more fucked-up and future layoffs are inevitable.<p>1. Reducing headcount without reducing complexity will fail. Reducing operational complexity is hard because it requires that the top executives get access to information that the mere process of looking for will tip people off, and because it gets political rapidly. Layoffs need to happen quickly, the theory goes, so it's easier and better to just cut away 10% of the people in one fell swoop and, later on, reduce complexity. However, the complexity reduction often never occurs. According to typical executive thinking, it can't happen before the layoff-- it'd tip people that something's going on-- but after the layoff, people tend to see the first-order immediate problem (high costs) as solved and therefore don't handle the deeper issue (high complexity) that got the company in trouble in the first place. Thus, fewer people have to do more work; they do a worse job of it, and the higher defect rate leads to even more complexity, and everything goes to hell.<p>2. Plenty of companies are dishonest about layoffs and dress them up as aggressive "performance" reviews. I won't list names, but there are plenty of dishonest technology companies that claim to have never had a layoff because what the psychopaths in charge actually did was dress one up as performance-based firings, with kangaroo courts ("performance improvement plans") and all. At least banks are honest; they say, "business was shitty this year and we let people go". But there are so many tech companies that don't want the press of an honest layoff (they even pretend to be constantly hiring, to present an image of unyielding growth) so they lie and call it "performance". An existing stack-ranking regime helps. What these companies are really doing is throwing their own people under the bus to preserve their own reputations, and they shouldn't be surprised when people fuck them right back for it.