Downsizing is stupid, as are its instigators

WILEY A. HALL

March 25, 1993|By WILEY A. HALL

The Baltimore man, whom I will call Mark, got laid off thre weeks ago -- a victim of the current corporate mania for downsizing.

Mark is 32 years old. He has a wife and two small kids and a fairly big mortgage. Mark had bought a new home just eight months before his company eliminated his entire division in an effort to reduce operating expenses and remain viable.

But Mark doesn't seem to see himself as a victim.

"In a market economy you've got to expect these things to happen," he says with a shrug.

"We'll get by. My wife works. We've arranged more manageable payment schedules with all of our major creditors. And I don't expect to go too long unemployed. Something'll come up."

Mark is a big disappointment to me. I had hoped for a reaction a lot more dramatic.

"Oh no, don't get me wrong," says Mark. "I'm upset. Getting laid off is very stressful, especially all those months before I got the notice, when we had to deal with all of the rumors. At this point, I had hoped to be moving up to the next level, not struggling to survive. I'm just trying to take life as it comes."

But I confess I could not resist the temptation to instigate: "Suppose you are going through all this stress and trauma for nothing," I say.

"Huh?"

"Suppose your bosses did not make your company leaner and meaner when they threw you into the street, but weaker and meeker. Suppose you are suffering all of this because the men in charge of corporate America are essentially a bunch of dimwits?"

Mark chuckles.

"That wouldn't surprise me at all," he says. "I've known they weren't too bright for a long time."

I've known it too. In fact, I bet a lot of people working for a lot of companies will not be surprised by this news. Now, though, we've got scientific data to back this up.

Pinched by the recession, Corporate America is in the midst of a firing frenzy; more than 6 million people have been permanently laid off since 1987, according to the Bureau of Labor Statistics. And the end of the frenzy is not in sight: 52,000 employees were laid off in February alone.

Some of the largest, most stable companies expect additional layoffs in the near future. Moreover, federal, state and local governments have caught the disease -- which should surprise no one, since politicians have long been convinced that the best way to manage government is to emulate private industry.

It's true that drastic measures can increase a company's chances of survival. But at what price? Some researchers say that layoffs do little for the balance sheet. The American Management Association, for instance, found that two-thirds of the 500 major firms they surveyed did not increase efficiency when they started cutting employees, more than half did not increase profits, and better than 75 percent conceded that they had destroyed employee morale.

Companies (and governments) are finding that they have hurt productivity and crippled their ability to respond to a changing marketplace, experts say. To add insult to injury, troubled companies can't even fool Wall Street by firing people; studies have shown that a company's stock rarely goes up following an announcement of downsizing.

Then there is the effect on the economy. One reason the country has been so slow to rebound from the recession is that the ruthless slashing of payrolls has made people uncertain about their own economic futures -- and afraid to spend. The only thing these firings really accomplish is to mask a lot of corporate mismanagement.

What's troubling about this is that here we have a business fad that hurts the economy, hurts companies and hurts people. Yet there is no mechanism to get executives to stop. We do not even have a set of values that says such stupidity is wrong.

I'm glad people like Mark are able to take sudden unemployment so philosophically.

As for me, if I'm ever laid off because of the shortsightedness, self-serving shallowness and out-and-out stupidity of my employers, I'm not going to just shrug it off. I promise to fly into a royal rage.

For all the good that will do me.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.