8 of 10 in Fortune 1000 cut payroll since 1987

March 15, 1993|By Gerald Graham | Gerald Graham,Knight-Ridder News Service

More than eight out of 10 of the Fortune 1000 companies reduced their work forces between 1987 and 1991. Wayne Cascio, writing in a recent issue of The Academy of Management Executives, reports this findings:

* Financial disappointments. Less than half of the firms reported meeting their cost reduction expectations. Profits increased as much as had been expected at only 30 percent of the companies. Most firms actually rehired many of the people they laid off either as consultants or part-time employees. In some cases, the "rehired" employees earned four times as much per hour as a consultant.

* Ill-prepared. Almost half of the firms did not have plans for retraining or reassigning employees or restructuring work after downsizing. As a result, they often alienated workers, sold off profitable businesses and modernized ineffectively. Typically, the work was simply loaded onto the backs of fewer employees.

* Disappointing productivity. In half of the downsizing efforts, employee productivity either stayed the same or worsened.

* Poor morale. Many of the more skilled employees left for positions at other firms at the earliest opportunity.

On the other hand, half the firms that downsized did report lower costs and many reported higher profits -- although perhaps not as high as expected. How did these firms differ?

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