Layoffs employed as cost-cutting tool

January 02, 1995|By Chicago Tribune

CHICAGO -- After years of deep and wide cutbacks, there are signs that the tide of layoffs in corporate America may ebb this year. But observers say the repeated job cuts of the 1990s have changed the rules of the game: For many companies, layoffs have become a quick fix, rather than a last resort.

U.S. companies said they would lay off about half-a-million workers in 1994, compared with 615,186 in 1993, according to Challenger, Gray & Christmas, a Chicago-based job placement firm.

The count is incomplete, since not all companies publicly announce their layoffs. The federal government does not keep track of layoffs.

"Because of the strength of the economy, big cuts are being put off for some time, but smaller, ongoing cuts do not seem to have abated," said John Challenger, executive vice president of Challenger, Gray & Christmas.

It's unclear whether layoffs will continue to decline this year, but most management surveys indicate that companies plan to continue to rely on layoffs.

Eric Greenberg, research director of the American Management Association, suggested that such actions have become routine.

"Companies that do it once, do it again and again," said Mr. Greenberg, whose New York-based business group has regularly tracked cutbacks among large companies.

"It becomes like painting the Golden Gate bridge," Mr. Greenberg explained. "They are always painting it."

What's different today, according to Mr. Greenberg, is that layoffs often are not driven by dire economic conditions, but rather come from officials' desire to winnow their work forces.

"They are looking for that core group that they need to turn on the lights in the morning and shut the door at night," he said.

As U.S. companies have faced deregulation, greater competition, or decided to reorganize, they have increasingly relied on layoffs rather than other cost-cutting solutions.

U.S. companies also seemed committed to layoffs in 1994 despite often-negative results from their cutbacks, Mr. Greenberg observed.

"Only one-third of the companies report productivity gains. No more than half report increased profits and nearly all report a negative impact on morale," said Mr. Greenberg, citing his group's most recent studies.

The fallout from such changes is an anxious work force, according to a recent survey of human resource directors by Cambridge Human Resource Group Inc., a job-placement firm.

Among their major concerns, company officials said, was a need to "revitalize" employees and to help veteran workers who have not "adjusted fast enough to the realities of the new workplace."

"People are under great pressure. Some are doing two and three jobs. There's a lot of paranoia" said Carole Crane, an official with the job-placement firm.

"People need to be listened to and told what's going on."

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