Harvey Newstrom wrote:
>
> The problem, as I see it, is that these CEOs don't deserve a raise for these
> layoffs. The logic is that cost-cutting makes the company more efficient
> and raises profits. However, these layoffs aren't really cost-cutting.
I think this view misses a few things. No CEO enjoys laying off
employees. It is one of the toughest and most delicate tasks
that a CEO can face. But it is the CEO's job (and why he makes
the big bucks) to make even hard and personally painful choices
for the good of the company he was hired to lead. If the
business climate changes and many projects that people were
hired for simply will not fly in the current climate and when
they will is unknown there is little good sense in keeping the
people on if they cannot be integrated into other projects
likely to be successful. And this is only one of many, many
scenarios that could make layoffs a necessity for the health of
the organization.
A business is not in business primarily to give its employees
employment. It is primarily in business to be a profitable,
successful enterprise within certain stated company objectives.
It is the CEO's job to ensure this success to the maximum of
his/her abilities. It is a tough job.
>
> True cost-cutting occurs when a new efficient method is found to produce the
> same services cheaper. If a company were to announce some major
> breakthrough technology that allows them to do more with less, this would be
> true cost-cutting. They then could cut jobs while maintaining productivity.
> This would decrease the cost-to-benefit ration and product more profits.
>
This is nonsense. The organization must grow and shrink in
response to the environment and its needs. To produce this
breakthrough technology may take more resources than the company
can afford for longer than the company can remain viable at a
loss. It may require tying up resources that could be used to
competitive advantage to insure the company even stays in the
game.
> But when a company cannot compete in the market or spends more to produce
> its services than they are worth, this company is failing. Such a company
> is destroying resources without adding value. Simply laying off employees
> without a new methodology won't change the cost-to-benefit ratio.
Layoff employees that you can no longer gainfully keep is
logical and utterly necessary to the health of the company and
to the continued employment of the rest of the employees.
>By
> cutting resources and using the same methods, these companies are cutting
> costs and benefits. These CEOs are in effect saying that since they
> destroying value rather than creating value, the best course is for them to
> do as little as possible. They aren't making more with less. They are
> making less with less to minimize the impacts of their value destruction.
>
Actually, this is largely false. During hard times various
means of cost-cutting and changes of working methodologies are
put into place. But a company in survival mode is unlikely to
have enough staff and resources to find brand new methodologies,
not for lack of trying.
> Such a company is destroying resources with no net benefits. Such a CEO is
> failing at the job. Claiming that this course of action is "cost-cutting"
> or "profit-making" is simply fraud. Such a CEO is defrauding the
> stock-holders and is driving up debt to line his own pockets.
>
This is BS. Try the job yourself some time and see what you
think.
- samantha
This archive was generated by hypermail 2b30 : Fri Oct 12 2001 - 14:40:23 MDT