The Equity Issue LO5826

Scott R. Cypher (
Sat, 24 Feb 1996 06:45:26 -0400

Replying to LO5709 --

Is it a
>"problem" if shareholders and corporate executives want more money today
>and can't wait until tomorrow? Why ask why when the answer is apparent?

I would say the essence lies in our resistance to ask why of our bosses
when such interventions come out way, and just accept such decisions at
face value. I ask, "How do you know" that this is the answer? It is
universal? (that is, all downsizing efforts are conducted to increase
short term profits)

Wyatt Consulting did a survey in 1991, and found that: 71% of the firm
undergoing downsizing did so to increase producivity, yet 22% THOUGHT they
achieved that goal. in actuality:

"A lot of bullets were fired, some companies did it 3, 4 and 5 times, but
still didn't hit their expense reduction targets."

There are many myths that managers use to rationalize their actions in
choosing and managing an downsizing intervention. I would say that your
above belief is another myth that we all want to believe, because it
removes us from the source of blame (I'm a victim). I have no way of
seeing into the minds of corp execs to know if it is true. It certainly
has intuitive appeal, but I have no method with which to verify this as a
root cause.

The benefit in finding a root cause exercise is that we can devise
strategies to test the validity and eliminate the cause. Even if the
above were true, I hear you resigned to it as fact, unwilling to act on
it. There is a chapter (Whetten and Cameron) in the NRC book
"Organizational Linkages, Understanding the productivity paradox" edited
by Harris, that explores the downsizing phenomena and questions its logic.
Most of these phenomena are relatively unexplored by the research
community, and not enough case studies/reports have been done to get at
its true nature.

OK. Lets assume that "being profit driven" is the primary root cause of
the downsizing phenomena (which most of us agree is not healthy or
desireable). What would you create such that being profit driven does not
induce downsizing interventions?

-- (Scott R. Cypher)

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