Cutting Costs by Cutting Jobs

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Recommended: Macroeconomic impacts on business

When companies are starting to see a tough economic situation, they look for ways to reduce spending and overcome their financial short comings. N. Fredric Crandall, founder of Center for Workforce Effectiveness, contends most organizations find themselves faced with the difficult task of downsizing at some point (3). Further he argues payroll remains at the top of the list of damaging expenses; it is repeatedly the largest a company possesses (5). With the economy shifting between its highs and lows, American companies are looking for financial stability by means of a layoff versus other employee friendly processes.

In American society, the act of a layoff in terms of seeking financial stability has been present for many years. Business and economics writer for New York Times, Louis Uchitelle, provides insight to the history of layoffs and financial benefits to the American company. Before 1980, layoffs were, more often than not, associated with drops in production and sales, with laid-off workers returning or recalled to work as conditions improved (4). Continuing in the 1980s, greater proportions of layoffs were caused from plants and offices stopping operation and were, as a result, permanent (4). As the economy enhanced in the 1990s, layoffs continued, even occurring at profitable corporations, indicating a change in past practices (4 – 5).

What is causing American companies to look for a means of financial stability in today’s society? Some key causes of layoffs and financial instability for American companies include technological advances, international competition, changing customer demands, economic downturns, and inadequate company management. While these grounds may be seen as an ally for the company, they c...

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...offs has their disadvantage, American companies, clearly seeing the advantages, can find financial stability in the global economic state of affair.

Works Cited

Calabresi, Massimo. “The Ripple Effect.” Time 174.11 (09/21/2009): 32-34. Print.

Crandall, N. Fredric. The Headcount Solution: How to Cut Compensation Costs and Keep the

Best People. New York: McGraw – Hill, 2003. Print

Downs, Alan. Miracles of Management. Boston: Prentice Hall, 51-53. Print

Hironimus – Wendt, Robert J. “The Social Costs of Worker Displacement.” Social Policy.

Spring/Summer2007: 83 – 89. Print.

Uchitelle, Louis. The Disposable American: Layoffs and Their Consequences. New York:

Knopf, 2006. Print.

Tuna, Cari. “Weighing Furlough Vs. Layoff.” Wall Street Journal 13 Apr. 2009: B6. Web. 29

Jan. 2011. < http://online.wsj.com/article/SB123938638933208987.html>

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