Why layoffs are bad ? Layoffs and downsizing are bad for the firms that do it as well as bad for the economy. Many of us have known that high unemployment, reduced wages and benefits, and layoff after layoff have disastrously suppressed consumer demand driving the recession deeper and making it more intractable. Low morale among survivors, an exodus of talented, most-likely-to-be-poached survivors, expenses related to rehiring when business improves, potential lawsuits, reduced productivity, outplacement costs are some of the ill effects of layoffs. Let us look in detail at some of the reasons that why layoffs are bad : 1. Decreased Loyalty: The loyalty of the organization gets decreased both in the customers as well as the employees. Once …show more content…
Layoffs usually do not increase profits. Companies that downsized remained markedly less profitable than those that did not, according to a study of S&P 500 firms cited by Carlsen. She also shares results from a recent American Management Association study, which found that slightly less than half of the companies it surveyed reported that downsizing increased profitability, while only a third said it had a positive impact on productivity. 6. As another example of the link between employee attitude and company performance, longstanding analysis from Sears, which found every 5% increase in employee commitment generated a 1.3 increase in customer satisfaction, which in turn can result in a .5% increase in revenue. 7. Layoffs Do Not Cut Costs. This point is demonstrated by the findings in Wayne Cascio’s book Responsible Restructuring, Carlsen notes. She says Cascio details the direct and indirect costs of employee layoffs in a way that few companies would seem to have ever considered. 8. Layoffs are often a byproduct of bad management. Matching the size and abilities of a company’s workforce to the short- and long-term demands of its target market has always been a benchmark of good …show more content…
Broadly suggested measures could be a pay-cut, giving a vacation time, giving fewer holidays and making changes in the work‐rule instead of lay off. Before the companies decide to cut the staff, HRs should be engaged to understand the side effects of downsizing, unintended costs and the likely consequences. 1. Equal attention should be paid to both, those who lose the jobs and those who remain. Those who are leaving, make sure that enough re-training opportunities are provided. It is also suggested that the fare severance is also given to them. Those who are left in the organizations, multiple communication channels between the employer and the employee should be opened to ensure a free flowing conversation. They should be made aware of the resources used by the laid off employees. 2. Because of excess costs, inefficiency and redundancy, there are number of times the organizations go in loss, so the staff can be engaged in identifying such areas rather than going for staff
The next problem is poor morale. Morale is the job satisfaction, outlook, and feelings of an employee. Right now, employees do not feel secure within the business and are rebelling against it. They do not have a positive outlook for the future of the business and feel betrayed because of all of the people getting let go. The employees right now have a poor morale due to all these factors.
With the high rate of turnover, we would need to find a way to lower that and make sure the employees are feeling like they are valuable members of the business. I predict that I would find out that the employees don’t feel that they are treated well enough and getting rewarded for their liking. I think that they feel undervalued and disrespected and that causes the high turnover. I would recommend to the executives that they sit down and meet with their employees and figure out ways to better the relationship between management and the
Low wages means high turnover. That is a reality often discussed too little when analyzing the economic cost surrounding employees. When salaries are increased, employees show increased loyalty and turnover costs are reduced. In a 2006 paper published by the Harvard Business Review, Wayne Cascio a professor of Management at the University of Colorado demonstrates this effect using big chain retail stores.
Layoffs and early retirement is a normal occurrence in the corporate world. However, there is a problem when there is no plan for the layoffs. This was the situation with Westwood Publishing as discussed in Argenti (2013) (p. 192-194). The company was lacking in many ways prior to the layoffs with the CEO not actively involved with the employees, an outside person brought in whom took over Communications within the company, as well as no communication between the leadership and the employees. With such little communication the plan to lay off employees was to be established and completed by one person. There is little evidence that layoffs will increase a company’s worth or even help to increase profits. The employees laid off
Without understand the negative impacts of turnover, a company may be placing itself in a position that will ultimately lead to their demise. We are going to solve our problems and set our company on the path to success, a success that is not only reflected in our bottom line but also our employees’ morale.
If asked to lay off 15% of my employee population, my first task would be selecting those that will be laid off. Determining who will stay and who will go would result in examination of criteria such as seniority, performance, job classification, and job knowledge and skills (Society for Human Resource Management, 2016). Using seniority alone is not a simple process. Sonority may be the totality of time an employee has worked for an organization, or could be the time spent in a specific department performing a specific job (Fallon & McClennon, 2006). Next, the employees selected for layoff must be reviewed to assure an adverse (disparate) impact does not exist for any protected class (Society for Human Resource Management, 2016).
The employees will lack commitment, decline overtime and withdraw from work activities due to lack of
However, this move is not always a wise one because when an enterprise has fewer workers it would reduce its productivity which would mean more financial problems. Besides it strains the workforce. If these corporations continue incurring losses they eventually close down and as a result, the workforce loses jobs. This is what has been going on since December 2007. Unemployment is one of the biggest problems that governments have to deal with. (compston 2002).
The straight truth about lay offs: Right now, you might be thinking that the work you have done till now has broken down into pieces. Lay offs are the decision that is often outsourced to fancy expensive consultants. Neither culture nor the loyalty of the long- term employees is considered. Lay offs have nothing to do with your talent, brilliance and your ability. Lay offs are an excuse that a company uses to get out of a financial crisis.
Therefore, despite if the employee left on good terms or not, all property of the organization and access should be cut
Voluntary and involuntary turnover have an effect on organizations. Rapid changes in job descriptions, organizational structures, and inter-organizational competitiveness increase the importance of studying turnover and its relationship with organizational change. According to Leana and Van Buren (1999), "the loss of key network members can severely damage an organization 's social fabric and perhaps eradicate its social capital altogether." When businesses lose a high number of employees, problems can occur, costing the company time and money. Some of the costs incurred are associated with training, drug testing, physicals, and orientations to hire replacements that may take several months to learn the job and to achieve competency. There is a saying, “Good help is hard to find---and harder to keep”. This saying refers to good organizations trying to reduce turnover when the competition for retaining good employees is intense.
However, management should look at the future goals of the organization to help determine which employees might meet the criteria to push the organization forward (How to conduct a layoff, 2018). Before determining which employees are to be let-go-of first, it is important to take all other measures possible that precede a layoff. This can be done by eliminating all temporary or seasonal staff and initiating a hiring freeze, (Fallon & McConnell, 2007). In doing this, this shows all internal staff
An employee will always act in a specific way according to the way they are being measured. In the case you aren’t being measured you will never perform as well as than when you are. Most people behave in line with the way they are being measured. For example, if the performance of an employee or a supply chain is measured by having the lowest unit cost they will act in a way that gets the lowest unit cost. This means that they will start running machinery at capacity. Then you run into the problem of never ending inventory as well as a decrease in cash available. People believe that the savings of driving down unit cost will be shown on the bottom line. The truth is that those savings don’t show up on the bottom line, instead the savings are shown in the excess amount of inventory it took to drive the cost down in the first
The purpose of this report is to brief the management on the importance of employee satisfaction in achieving the competitive goals of the organization through increasing the retention of the employees.
Employee turnover in organization is one of the main issues that extensively affect the overall performance of a workplace (Tariq, Ramzan and Riaz, 2013). Various studies show that employee turnover negatively affect the overall efficiency at the organization (Tariq, Ramzan and Riaz, 2013). Xiancheng, (2013) mentioned the employee turnover is a method of personal issues who decided to stop associate with the company for better advantage. There are two types of turnover which are voluntary and involuntary turnover. Voluntary turnover can be defined as the termination of the official and the psychological contract between the employee and employer (Krausz, 2002; Macdonald, 1999; Mclean Parks et al, 1999; Rousseau, 1995) while involuntary turnover inescapably lead to direct negative results such as current job is insecurity, work difficulty, and status fluctuation (Gowan and Gatewood, 1997). However, other researchers such as Haven-Tang and Jones, (2012) concluded poor management, lack of salary, bad working environment and paucity of job opportunities could be the highest causes of turnover among organization. This statement was support by Kusluvan et al., (2010) where is they had stated that poor management, low payment of salary, work environment and lack of employees’ job opportunities on the organization will make employee want to quit from their job. Turnover intention situation will appear when labour had feeling that they want to quit from current job, so voluntary and involuntary turnover will become final stage for them as their decision (AlBattat and Mat Som, 2013) but it is different for researchers such as Mosadeghrad, Ferlie and Rosbenberg (2013) when they conclude that employee turno...