Authentic Responses to Recession? Try Alternatives to Layoffs

by cv harquail on November 10, 2008

mass layoff economic crisis unemployment recession The latest report of the Bureau of Labor Statistics states that in September 2008 alone, 2,269 companies executed a "mass layoff" . (A "mass layoff" is defined as firing at least 50 employees at one time from the organization.) This is the highest number of organizations executing a mass layoff since September of 2001.

While this large number of mass layoffs can be seen as a reaction to what is clearly now a recession, how many of these layoffs actually reflect an authentic organizational response to the downturn in the economy?

What constitutes an authentic organizational response?

An an authentic organizational response is an deliberate action plan that demonstrates the qualities, values and priorities that the organization claims to define it. An authentic response demonstrates that the organization is who it says it is.

So how many of these ‘mass layoff’ organizations should have responded differently to sustain authenticity? Or, said another way, how many of these organizations probably acted inauthentically?

By my calculation, at least 168.

Here’s how I get that number—

First, hold at bay the assumption that layoffs were the only way to cut costs. (Yes, this is a big assumption, but bear with me).

Second, consider that an overwhelming majority of organizations large enough to fire 50 employees and still remain standing have mission statements and/or statements of corporate values. (Let’s estimate that number at 75%.)

If virtually every corporate mission or values statement (say, 99%) includes a claim about "valuing employees", but if only 10% of these statements are meaningful (according to Chris K. Bart , a professor of strategy and governance at McMaster University), then about 168 of these organizations have meaningful mission statements, statements that supposedly matter to them, that included some claims about valuing employees.

people before profits layoff How many of these 168 organizations had a mass layoff that contradicted its claimed values?

Probably all of them.

It’s too late for these 168 organizations to respond in a more authentic way, but there are options for organizations that want to respond to the economic crisis in a way that demonstrates and strengthens their authenticity.

How might they go about crafting their authentic response?

First, these organizations should turn to their identity, mission and/or values statements to remind themselves of how they want to ‘be’ as an organization.

Next, they should ask themselves:

  • "What does it mean to be (who we are)?
  • What kinds of behaviors reflect these characteristics?

Then, they should generate and evaluate their options, considering:

  • "What ways can we cut costs and/or expand opportunities, in ways that demonstrate the qualities that define us ?
  • What ways can we cut costs and/or expand opportunities, in ways that demonstrate what we collectively value ?

There are many examples of organizations that are responding to the economic crisis in creative ways , with action plans that might be just the thing to cut costs while strengthening authenticity. A simple google gives me 273,000 cites for "creative ways to avoid layoffs." There are some models out there.

Consider, for example, these creative layoff strategies, from Salary.com (thanks to Corporate Eye for the tip )

Company Strategy
415 Productions The company offered either an overall 5 percent pay cut, or a four-day work week reflecting the appropriate decrease in pay.
Acxiom Corporation Everyone took a 5 percent mandatory pay cut, plus an additional 5 percent volunteer pay cut,tempered with increased stock options.
Charles Schwab Corp. The company guaranteed a $7,500 bonus for any affected employee who gets rehired within 18 months. In addition, company founder Charles Schwab and his wife have created a $10 million educational fund for these workers. The fund will cover as much as $20,000 worth of tuition over two years at accredited academic institutions.
Texas Instruments The chip maker began "lending" several human-resources staffers to vendors for as many as eight months, with the intention of bringing them back to their original jobs at the end of that period. The supplier reimburses Texas Instruments for the staffers’ salaries during the loan period and agrees not to offer them a permanent job.

image The Charles Schwab Corp. emphasizes the importance of trust-based relationships in both the market and the workplace. Its corporate values statement uses the acronym FERSTT, which stands for Fairness, Empathy, Responsiveness, Striving, Trustworthiness and Teamwork.

Texas instruments, for its part, is cited as one of 2008’s most ethical companies, by Ethisphere, and has a reputation for being family friendly and prioritizing employee well-being. [I did not find an online values statement for either Acxiom or 415 Productions.]

empty offices Responding authentically to economic crises does not automatically mean no layoffs. At organizations where they live by the numbers, they die by the numbers. Where profits are the only priority, layoffs can be the authentic response.

And, even for organizations that strive to be authentic and/or that have great reputations for valuing employees, layoffs may be inevitable…and may even be the right choice. (Maybe Zappo’s becomes a good example of authentic layoffs?)

But the point is — rarely is a layoff the best way to demonstrate that your organization values employees (and we’ve all seen the unconvincing  ratiocinations).

The place to start is with responses that demonstrate who you are as an organization and that put your values and priorities into action.

{ 4 comments }

tramky November 17, 2008 at 2:15 pm

Gobbledygook. There is no such thing as ‘authentic’ or ‘inauthentic’ mass layoffs–they’re just layoffs. Employees are out of a job, period!

I love the thing at Charles Schwab, about being promised a cash bonus if a laid-off employee is hired back within 18 months–is that how Schwab punishes itself? And more importantly, will we hear how many employees actually COLLECT that bonus? Don’t think so. It’s just corporate doublespeak–it sounds strangely comforting, but is a blatant lie.

I was one of the minions in Colorado Springs when Michael Capellas, who just signed on for $20 million as the new CEO of the corrupt & bankrupt Worldcom, inadvertently & prematurely announced that 1 of every 4 people in that room and across the company was going to be laid off within weeks and who, when asked about the value of the company’s stock in the stock options that had been dished out by executive decision in lieu of an actual pension of value, told us “They’ll be worth zero. Tough luck.”

It was then that we learned the authentic reality of American corporations–whether you get paid or not for your work is a matter of chance rather like playing roulette in Vegas. Whether you’ll get paid what you were told you’d get paid is almost literally a crapshoot. And a $20 million CEO doesn’t buy you someone who can keep a secret.

Oh, and the other authentic truth: stockholders don’t own a corporation–its bondholders own it. Which is why stockholders are tossed under the train when a corporation goes south, and bondholders become the new stockholders. The answer for the old stockholders: “Tough luck”. At least going to Vegas would have been more fun!

CV Harquail November 17, 2008 at 2:31 pm

Tramky- Your so right in saying about so many explanations of layoffs” “It’s just corporate doublespeak–it sounds strangely comforting, but is a blatant lie.” That’s my point exactly– in the next post where Stephen Colbert plays CEO. Thanks for your comments. cvh

Fatsima December 20, 2008 at 1:03 am

Wow! You guys speak the truth. I wa laid off yesterday by one of Forbes top companies to work for Marriott. We did not recieve any notice and the employees who retained their jobs have had their vacations cancelled to fill in for the laid off workers. Meanwhile Bill Marriott blogs about building new hotels and how great it is to be a Marriott employee. Corporate America is the modern Pharoah!!

Stephanie January 13, 2009 at 5:47 pm

Fatsima,
I was also one of those laid off with no warning, called in for a Friday meeting, and blindsided as management cuts were made. I watched my company whose motto is “take care of your employees, and they’ll take care of your guests” lay off the exuecutive chef of 27 years (who has an autistic son). I was the most valuable agent in the front office leadership team, but it came down to “years of service” and I was laid off rather than the idiot we’ve had 1 week longer than my 3 years of service. I, too, was incensed by Bill Marriott’s heartless comments about new properties. I was blinded by the Forbes top ten into thinking that this company really cared about me, and I could depend on my benefits (which thankfully paid for my stepdaughters spinal surgery before being laid off). I accepted the severance package (which you should DEFINITELY seek with a lawyer if neccessary) and will be happy to collect the unemployment Marriott will be paying the government to pay me while I relocate in the hospitality industry. And today, I received a call from the Whitehall group, contracted by Marriott to contact all of us who were laid off. She presented herself as a “career transition specialist”, that would help me avoid collecting unemployment and finding a new job with Marriott’s help. Laughable to say the least! They sure don’t want us to reap the benefits we will collect from the wages they will lose paying into unemployment! How ridiculous. Needless to say, I told her to put it where the sun doesn’t shine. I’ve had enough “help” from Bill Marriott, tyvm. I hope that someday, while all the execs in MD are stuffing their pockets with Christmas and operational bonuses, that someone will expose the sham of a company Marriott really is. They care for the employees and spread the propaganda machine as long as it suits them, and decided to be “proactive”, which is surely the same line you were fed. Rather than leaving Joe Blow with his job, and making sure the economy flows well, Joe can’t afford to go to WalMart, and so Walmart lays off it’s employees. It’s a vicious cycle, and of course no exec or manager or millionaire cares to see the only real destroyers of the economy are the ones like Marriott, who choose to make sure they make 10 billion next year instead of the 9.5 billion they would have made if they had kept all of their loyal employees, who built the empire they preside over. :::getting off the soapbox now::: Thanks for nothing, Bill.

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