What is your most important asset?
“People are our most important asset.” That is the slogan, right?
If they are, then why the rush to reduce headcount when the economy hits a tough spot?
Consider the plight of the airline industry following 911. In the Newsweek article, “Lay Off the Layoffs” Jeffrey Pfeffer writes about business overreliance on downsizing and the effect it is having. Consider these excerpts:
On Sept. 12, 2001, there were no commercial flights in the United States. It was uncertain when airlines would be permitted to start flying again—or how many customers would be on them. Airlines faced not only the tragedy of 9/11 but the fact that economy was entering a recession. So almost immediately, all the U.S. airlines, save one, did what so many U.S. corporations are particularly skilled at doing: they began announcing tens of thousands of layoffs. Today the one airline that didn’t cut staff, Southwest, still has never had an involuntary layoff in its almost 40-year history. It’s now the largest domestic U.S. airline and has a market capitalization bigger than all its domestic competitors combined. As its former head of human resources once told me: “If people are your most important assets, why would you get rid of them?”
Managers also underestimate the extent to which layoffs reduce morale and increase fear in the workplace. The AMA survey found that 88 percent of the companies that had downsized said that morale had declined. That carries costs, now and in the future. When the current recession ends, the first thing lots of employees are going to do is to look for another job. In the face of management actions that signal that companies don’t value employees, virtually every human-resource consulting firm reports high levels of employee disengagement and distrust of management. The Gallup organization finds that active disengagement — which Gallup defines as working to sabotage the performance of your employer—ranges from 16 percent to 19 percent. Employees who are unhappy and stressed out are more likely to steal from their employers—an especially large problem for retailers, where employee theft typically exceeds shoplifting losses…
Companies that behave humanely—by providing generous severance packages and allowing displaced employees to say goodbye to colleagues rather than marching them out the door—are likely to see a smaller hit to morale…
The facts seem clear. Layoffs are mostly bad for companies, harmful for the economy, and devastating for employees. This is not news, or should not be. There is substantial research literature in fields from epidemiology to organizational behavior documenting these effects. The damage from overzealous downsizing will linger even as the economy recovers… (Emphasis added)
If people are your “most important assets”, how do they know that to be true?
What do you think?
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