Business Systemics LO5806

Thu, 22 Feb 1996 15:14:45 -0700 (PDT)

Replying to Rol: LO5727

Exerpts include:
>I have been on both sides of the issue of layoffs. I think this is a
very difficult issue. I hear some people saying that corporations should
be able to foresee changes in market and be prepared for them. For
example, in today's paper, GM is preparing to both lay off workers....Also
in last week's Economist there is an article on General Magic, a company
whose stock -- and prospects -- have plummeted. Why? ... AT&T has also
been discussed here. ... Someone has asked how can the stock market raise
the value of a company that is letting go its assets (people).

>In principle, increased efficiencies at Boeing for example, could free
welders to allow Boeing to go into the shipbuilding business. The reality
is Boeing has its hands full trying to make money in the airplane
business. They are -- my opinion only -- better off to let those people go
so they can work for Bath Iron Works, who already knows how to build fine

Rol, thank you for putting all of these comments into an understandable
context. Let me add a couple of comments regarding what large
organizations can and are doing to mitigate the impacts of their layoff

First of all, no executive wants to layoff their employees. After all, a
great deal of cost goes into hiring and training. But, one of the tactics
to increasing profits and thereby increasing shareholder values, R&D
investments, market expansion, and new product development, is reducing
workforce costs. These profits are important not for the executive, but
for the future positioning of the organization. Money to fund this
positioning effort must come from either increasing the company's
leverage, decreasing its costs, or use the gains from earlier investments.

As stated earlier, one form of reducing costs is downsizing. In my
involvement in downsizing efforts, I have seen a great deal of effort
expended by company executives to attempt to mitigate downsizing impact;
both to employees and their families, as well as the communities where
they operate.

These efforts have included:
o Retraining employees for other skills
o Redeploying to other in-house jobs and to jobs with our customers
and suppliers
o Outplacement centers to ensure successful placement
o Retirement incentives to help retain younger, less senior employees
o Special assignments (paid positions) with community service groups
o Special process improvement assignments
o Employee and family services (counseling and financial services)
o Shortened work week (essentially reducing pay)

The strategy has been to ensure that employees have the skills necessary
to be successful BOTH within the company or outside the company in the
event of layoffs. This strategy resulted in teaming efforts with our
unions, the community colleges and universities, local and state
governments, and other companies.

Providing services such as these come with great expense. Downsizing is
never a strategy. As a tactic, it has a lasting impact across the
organization. By mitigating those effects, employees get a sense that
there is hope for a future and will get the needed support for themselves,
their family, and their community. Without it, they will feel abandoned
and resentful.

In addition Rol, Boeing was in the shipbuilding business as well as
furniture, trains, and people movers.

For now...
David Reed
(206)655-3245 E-mail:
Human Resources Strategy Development



Learning-org -- An Internet Dialog on Learning Organizations For info: <> -or- <>