I was speaking with a friend recently. He had worked for a large financial services company and had lost his job the day before our conversation. My friend told me that he hadn’t been surprised by the announcement. In fact, he knew it was coming for some time and was just waiting for his “package.”
Business is down more than one-third and the job cuts were inevitable, he told me. What he said next just about knocked me over. The company he worked for was laying off more than 80% of its workforce! 80 percent? Business is down by a third and you lay off 80% of your people? That doesn’t compute. How does the company get two-thirds of the work done with 20% of its employees? How does it continue to serve its customers? Either it was grossly overstaffed, which could have contributed to the company’s downturn, or someone’s overreacting and in doing so is sealing the company’s fate because there is no way it can continue to provide a quality service.
What’s HR’s role in all of this? Are they to blame? Yes — well at least partly. There’s no denying that they certainly share a significant portion of the responsibility for this occurring along with the rest of the senior management. Look, I don’t know what transpired at this company, but I do know if they were that far overstaffed, HR has to share in the blame. Why weren’t they screaming, “We don’t need all these people to get the work done”? Why wasn’t HR jumping and down yelling, “All of this hiring is going to lead to our downfall”? And if they were and nobody was listening, then they’re in the wrong company to begin with.
Conversely, if someone has overreacted and has cut way too deep by eliminating 80% of the jobs at the company, HR has responsibility in that also. Again, human resources professionals must have a voice in a company. Unless the company was grossly overstaffed, there’s no reasonable way that it will be able to continue to serve its existing customer base. Thus, in essence, the decision to cut that many jobs guarantees continued customer attrition and possibly the demise of the company. HR needs to understand this and say it. And HR needs to fight for what is right — what is right for the employees, what is right for the customers, and what is right for the company. Anything less and they are not doing their job.
Everyone needs to share a sense of failure every time a job is eliminated at a company. Management and employees alike failed to serve customers well enough to keep everyone employed. Everyone in the company failed to sell enough products or services to hold on to every job. Every single person at the company needs to feel like he contributed to the loss of that job. Will companies continue to cut jobs? Yes. Is it sometimes necessary to cut jobs in order for a business to survive? Yes. What I am saying is that every time a worker is laid off, every person associated with the organization should feel a sense of loss. Someone’s life is being affected in a negative way. You need to feel it deeply. And if you do, you’ll fight to make sure it doesn’t happen often. That may be the best any of us can do.
Not Funny: I saw a cartoon the other day that showed a group of executives sitting around a conference room table with a caption that read something like “If everyone takes the buyout, who’s going to do all the work?” At first I started to chuckle, but after thinking about it for a moment I began to realize that it wasn’t as funny as I first thought. Layoffs, downsizing, rightsizing, reductions in force, whatever you call them, they’re not funny. On Monday more than 70,000 jobs were lost in a single day. According to one report, that brings the total job cuts this year to more than 200,000. 200,000 jobs have been lost in less than 30 days! That’s 200,000 people who no longer have a paycheck, the health-care coverage that comes with it, or fulfillment that comes with being gainfully employed. Not funny.
Dan Oswald, is president and publisher of M. Lee Smith Publishers, which produces the Employment Law Post and HRhero.com as well as many online and print products and live events with information from experienced employment law attorneys in all 50 states, the District of Columbia, and Canada, to help human resources and business professionals comply with state and federal employment laws.
No, job losses aren’t funny. I fear we will see more and more unless the government does less and less in terms of passing laws that hamper and choke businesses. Statism is the antithesis of a free marketplace. You cannot create jobs by legislation. You must allow individuals the freedom to start/run a business without so many mandates and government burdens that crush production. Unless the populace starts pressuring Congress to back off the legislative track they are on, the economy will collapse.
Well, just my two-cents since my background was with a major finance company that has gone through several rounds of layoffs since my time there. . .I am not sure it is an accurate picture to say they will be servicing their customers with 20% remaining in their workforce. What they do (or at least what my company and many others in the area have done in the last 5 years) is they lay people off often providing an incentive (VSP) to people to go hoping that their employees with longer service go since they are at the top of their pay grades then they hire people at lesser salaries than those laid off people even started at and also promote from within (again paying less for the same position). In my experience, the incoming people are, more or less, none-the-wiser and just happy to have a job while it works out to a net impact for the company of less than half of the reduction # with company payroll expenses being significantly reduced (though in this case the lay off impact is under 40% which is still huge). The company comes out looking great in most cases and more huge benefits/bonuses go to the man at the top for it (I am not saying it is right by any means but it seems to be the way of the land these days).
I can comfortably say that in most companies HR does the screamming, jumping and shouting during the growth periods but all Sr. Management wants to do at the time is “whatever it takes” as a result they turn deaf ears to the crtical skills and expertise of the Strategic HR partner. Believe me they are also doing the jumping and shoudting during these RIF periods probably not as loud to suggest an “I told you so” feeling, but hoping that Sr. Management and core decision makers would learn from all these mistakes and come out better and wiser through the rebuilding and restructuring.
If HR is left to do their jobs and most of these organizations embrace them as strategic partners in all aspects, I don’t think they would have this much of a mess to clean up, call it what you may, RIF, downsize, rightsize etc.As human resource proffessional we must seize this oppportunity to educate our companies.
I think Michaelle makes a great point. Companies do sometimes make short-term decisions such as laying off long-tenured employees that are at the top of the pay scale in order to replace them with new people that may be less expensive. However, the cost to the organization is immeasurable. The experience, corporate memory, etc. that walks out the door is often far more valuable than the savings the realized by laying off people only to rehire new ones. This brings me to another thought. How often do companies do a huge layoff in order to get the p.r. value and hopefully boost the stock price?
I agree, Molly, that if HR is left to do their jobs and are treated as strategic partners much of this could be avoided. I would also suggest that if HR isn’t treated this way, they should find a company that does value and respect HR.
I agree with Molly. Try jumping up and down and screaming – you become the advesary instead of their partner. We are currently cutting deeper and deeper, cutting overtime, and then being questioned when tasks and projects can’t be completed. People are doing the jobs of two or more at 40 hours per week with increased expectations to deliver.
Also, try finding a company that does respect and value HR – they aren’t hiring these days because so many companies are reacting to the massive amounts of layoffs with their own layoffs.
In many cases, HR tries to enter the strategic role when times are bad. If they haven’t been at the table all along displaying a keen understanding of the business model, they won’t be consulted or brought in from day one. You can see the potential age discrimination possibilities with the startegy of replacing older with younger,not withstanding the skill drain.
The company will value HR if you are involved in the establishment and implementation of the business model. You are influencing form “within.”