Last year I happened to attend a conference that was followed by a panel discussion. In response to how his company was dealing with the issue, a senior executive of KPMG Malaysia said that they had no plans of mass layoffs. They had already started cost cutting in various other ways. They were flying economy class and were avoiding unnecessary expenditure.
This kind of a penny saved is a penny earned.
Every year major companies of the world publish their net profit per employee. Even if they do not the calculation is pretty simple. Every company does publish the net profit and the number of employees too is no secret. The point is employees are there in the company to make profit. An employee adds value which is far greater than his cost to company. If that is not the case, then that employee should not even be employed. If we ignore other factors for the sake of discussion for while, laying off employees would mean saying no to profit.
On the other hand, if the company is not able to create enough work for the employees to do, keeping the employees would be a loss. Which means it should be alright to lay off people for whom a company does not have work. However, this argument changes the equation. It is the failure of the company to create enough work and no fault of the employees. Due to this very reason an employee laid off is not equated with an employee who has been fired.
This kind of a penny saved is also a penny earned.
However, most of the times the scene is quite different. The moment one company announces a mass layoff, a layoff competition starts. Suppose a company lays off 1000 employees, the competitor lays off 2000. Yet another competitor lays off 5000 and so on. The explanation, which is usually not made public, is that they would loose competitive advantage as the competators have cut down cost. Is it not analogous to somebody cutting his arms because the competitor, the poor competitor, had to chop off his finger tips due to frost bite? The poor guy was helpless; he had a good reason to get rid of a small body part. But no! Competition is competition; competitive advantage has to be maintained even if that means giving off the legs too.
We realize that doing anything for the sake of doing it without any good reason is bad. For instance making a change for the sake of making a change is bad. There should be a good reason for making a change. But this is the extreme, cutting off your arms and legs (otherwise what would you equate the employees with, hair and nails?) for the sake of doing it?
A penny spent on this employee was supposed to get me a million, so is this penny saved a penny earned?
P.S: I am not saying the above is true in every case. There are a number of good reason that companies sometimes have to lay off employees.
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