LO and Big Layoffs LO5506

Sat, 10 Feb 1996 15:05:06 -0500

Replying to LO5366 --

In LO5366 Joyce Wycoff wrote
> Maslow said that a man with a hammer in his hand
> sees every problem as a nail. I think senior management
> has learned to use the hammer of downsizing to the point
> that they've forgotten about other tools.

I agree completely with this statement.

I recently read an article in the Wall Street Journal that discussed
*corporate anorexia*. This is simply when the corporation starts cutting
fat and cutting more fat so that they don't realize that they have started
cutting muscle instead. The result is that the corporation realizes
(often too late) that it has cut costs (usually by layoffs) to keep
profits up so much that they have effectively destroyed their capacity for
production and the resulting generation of revenues.

An example given was the major automobile manufacturers in the US who had
just recently posted (recent) record levels of "earning" as a result of
cutting and downsizing. The problem with all of this was they they hadn't
really generated any significant revenues during those reporting periods.
Their record profits weren't really profits.

At that point there wasn't much left to cut so near-record losses were
predicted as the automobile companies tried to produce adequate revenues
with overly depleted resources.

I have observed that these aren't the only corporations (or companies)
that have gone this route.

Clyde Howell
The Howell Group
Aiken, South Carolina, USA

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>