Harvard Business Review’s Ideacast (a great listen if you’re one for podcasts) takes you under the hood of companies trying to figure out how – and if – they should lay people off. They compare four potential methodologies:
- First in, first out: Get soon-to-retires out now because they’re the dead wood.
- Yank and rank: Keep your A and B players, get rid of C and below.
- Last in, first out: Get rid of junior people first.
- Delay layoffs: 5% salary cut across the board with bigger cut for executives.
The podcast also analyzes some alternatives, including one Swiss firm that sent a corporation-wide email to gather ideas on cost-cutting. They adopted several of these ideas and saved a billion dollars without a single layoff. (Can you imagine an advertising agency doing this?)
If you or your agency experienced layoffs, did they fit any of these scenarios?
Better yet, are there any stories out there of agencies that avoided them by enacting creative cost-cutting alternatives like the Swiss company mentioned in HBR’s Idea Cast?
3 Comments
I know at some companies, they are asking people to retire. If you choose to leave early, you get a little extra. If you stay, you risk getting laid off without the bonus. That way, people wanting to leave get the boot first.
It seems there are two more options being used quite frequently across many industries:
5. Use the tight economy as an excuse to cut people you simply don’t like. Regardless of age, experience, skills, or salary, these people are annoying and bring down the overall mood of the office. You’ve been looking for an excuse to get rid of him/her, and now you’ve got it. No questions asked.
6. Look at the salaries of your staff. Chances are there are a few outliers who are making more than they deserve. Again, disregard age, experience, or skills and focus only on pay. Save money, dump the big-ticket staff members.
Based on the eclectic mix of people my company fired, including me, I don’t think there was any formula followed. But it’s clear that they put zero effort into solving the problem without lay offs. An across the board pay cut would certainly have done the job… and I for one would have gladly taken a 5, 10 or higher percent cut if it saved people. Of course, that doesn’t matter as I wasn’t asked.
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