1. Understanding Layoffs
Mike Hake
Intisar Khanani
Monique Box
Wes Kepler
Jeff Brunson

2. Overview Disadvantages of Layoffs Alternatives to Layoffs
When Layoffs Are Done…

3. Disadvantages of Layoffs
Short-term to response to an ailing economy
Inappropriately conducted
Across the board layoffs
Seen as the solution to business problems
Short term: don’t take all aspects of the future into account.
Inappropriately conducted:
Across the Board: don’t retain enough employees to perform necessary services
let go top talent due to inadequate workforce planning
Seen as The solution:
Improving business processes is the key to increased profits; layoffs do not themselves accomplish this

4. Disadvantages of Layoffs
50% of employees experience decreased morale
41% of employees experience a decreased sense of loyalty
27% increase in resignations
70% of layoffs do not result in increased profits (Turner)
Some facts
Decreased morale: job security, sense of being appreciated and valued, means less personal interest in seeing the company survive
Decreased loyalty: means decreased commitment to company goals

5. Alternatives to Layoffs
“Layoffs are disrupting and difficult for everyone; most organizations are taking steps to avoid them if possible.”
Helen Dinan, Society for Human Resources President and CEO
A number of alternatives exist

6. Alternatives to Layoffs
Natural Attrition
Voluntary Early Retirement
Employment Freeze
Work Sharing
Benefits: maintaining ee morale, loyalty, and commitment while increasing productivity.
Natural Attrition: wait for employees to leave of their own accord, and keep their positions empty. This can lead to quick cost savings without many of the negative impacts in a company with high turnover.
Voluntary Early Retirement: same idea as attrition—leave positions empty
Employment Freeze: use when businesses have lower profits due to decreased business. Retaining current employees forces the business to improve their business plan and perform a productivity analysis.
Work Sharing: all employees face cut-backs and “share the pain.” Common bond b/c even executives face these cutbacks. Can reduce work weeks, temporarily reduce wages, etc. Temporary remedy until other reductions such as attrition take place.

7. Advantages of Layoffs Investors will be pleased
Stock prices typically rise
Rising stock prices increase shareholder value
-Many believe that the instigators behind these layoffs are coming from Wall Street, which is true to an extent. Wall Street does indeed have a major presence and influences among Fortune 1000 companies. The trend along Wall Street seems to be down size your company, and up the value of your stock. Layoffs usually tend to increase stock prices, and therefore shareholder value by reducing labor costs and taking proactive steps to better business practices. Companies need to make sure they are not sending the wrong message to investors; they do not want to be seen as a company with serious problems.

8. Advantages of Layoffs
Businesses can get the same product with fewer workers
Labor costs will be lowered
Technology is saving companies $
Increased automation
According to an article in Forbes, “business can get the same or nearly the same product with fewer workers, suggesting that the job cuts were well conceived”
The economy has been experiencing growth, but with this growth has come advanced automation, rapid advancement in technology, and fast paced information. Advanced automation in machinery and assembly have reduced the need for employees who receive low pay and require little skill at their job. Yet, this new technology is enabling the workers to become more productive. This then has reduced the number of employees needed for a given profit level

9. Advantages of Layoffs
Organizations are seen as in tune with current business practices
Profits can go up
Productivity can go up
Organizations are in tune with current business practices, in today’s market the trend is towards downsizing. So when a organization is not meeting its numbers it is an easy excuse that is seen as a common business practice.
-Following labor force reductions organizations profits go up by an average of 32% while productivity increases by 25%

10. When Layoffs Are Done… Interview with Bill McGowen, Sun Micro.
Open lines of communication
Treat employees with dignity
Offer post-employment services
“Layoffs are painful but effective. They are due to poor performance management, but they allow the company to restructure.”
Open lines of communication to keep trust high
Post-employment services: resume help sessions, outplacement services, and career counseling at no extra cost
helps with morale and loyalty.
Should not be done often—do it once, do it right, and don’t let it happen again.

11. Questions?