Countering the merchants of emplocide

One reason CEOs, promoters and shareholders resort so easily to massive downsizings is that they suffer relatively little from these events, which destroy thousands of lives Should we change the balance of pain?

The past few months have seen brutal downsizings in heretofore relatively immune sectors Far from being essential for survival or even improving financial performance, several of these seem imitative parrot plays Jeffrey Pfeffer, of the Stanford Graduate School of Business, captures it well "Layoffs probably don’t cut costs in fact, there is little empirical evidence that layoffs help improve profitability, and some evidence they actually hurt profitability"

As bad as the actual pain caused to thousands of employees and their families, is the tension and demoralization of those who remain. 2 Next ,come the ripple effects of other firms following the examples of emplocide set by these generally model employers.

Reading the open letters from some of these bleeding heart CEOs, with love for their employees oozing out of every 'mea culpa' teardrop, I was reminded of the concluding verse from 'The Ballad of Reading Gaol' about men killing what they love:

Some do it with a bitter look, Some with a flattering word, The coward does it with a kiss, The brave man with a sword.

Whether such CEO love is delivered by the sword or the stiletto, most employees would prefer not to be its object. If there is no succour to be found in love, shall we rely on mercy? We have no less a personage than Portia tell us: The quality of mercy is not strained; It droppeth as the gentle rain from heaven

Upon the place beneath

Unfortunately for her and for our faith in human nature, Portia soon realizes (if she didn’t expect it all along) that mercy is strained So strained that it has to be squeezed out of Shylock by the threat of a far worse catastrophe befalling him if he doesn’t relent And who are we to argue with Shakespeare’s judgment? Perhaps we too shall spot kindness glimmering behind CEOs’masks only when there is the threat of greater unkindness being visited on them. In a much earlier piece, I had hinted at this pain-sharing necessity. 5 Do read that column for a fuller perspective on my views on downsizing. This time, however, I’d like to make specific suggestions to make business leaders more wary of declaring war on their workforces. Unless CEOs (as well as other members of the leadership team), shareholders (as well as other investors) and corporate reputations take concomitant hits, the pernicious trend of eliminating people as casually as waste paper will continue. What can be done to distribute the pain more equitably?

Progressive painshare

On May 27, 1942, Jan Kubiš threw a bomb that fatally injured, Reinhard Heydrich, one of the planners of the Holocaust and, at that time, acting Governor of the Protectorate of Bohemia and Moravia Unable to find the attackers initially and in an attempt to placate Hitler’s fury, the Nazis decided that the village of "Lidice [which had no connection to the assassination] was to be destroyed The men were to be shot on the spot and the women were sent to a concentration camp The village was to be burned to the ground and its remains levelled so that no trace remained… The Czechs paid a heavy price in blood for the death of the tyrant, with over 5000 victims of Nazi reprisals, …the majority innocent civilians." 6 What shocked and disgusted the world was that most of the people massacred had no responsibility for planning, deciding or carrying out the act that led to the reprisals.

Nearly ninety years later, almost every tech company overestimated the demand for its services. The more honest (or brazen) CEOs owned responsibility for the miscalculation. In an attempt to placate shareholder fury at the capacity that had been added heedlessly, the ones responsible for the blunder decided to decapitate the innocents brought in recently (as well as many older hands for good measure). No one seems particularly shocked that almost every single eliminated employee had no part in the decisions that brought on the crisis

As repugnant as these parallel cases of vicarious, collective punishment should be to any individual with even a marginally developed sense of fairness, there are also perfectly rational economic reasons for targeting the top rather than the bottom of the pyramid Depending on the level, each senior defenestration yields savings equivalent to at least tens and, more frequently, hundreds of operating and contractual employees 7

Thus, it is both just and rational that the leaders that brought the company to such a downsizing pass and those whose continuation costs the company the most, must take the lead in paying the price for it too. The distress can be distributed through the organization in the following ways.

The first suffering share is obvious: separations at all levels, with the proportion of people eliminated being higher at levels taking strategic calls and where reduction will save the most. To my thinking, the CXO level immediately below the CEO should lose twice the percentage loss of the operating and contractual employee levels. Intermediate level exit percentages can be suitably extrapolated If levels are fuzzy, the same progressive impact can be achieved through a ranking by earnings The CEOs' own continuation would be determined between that person’s conscience and the Board

The major show of solidarity retained employees can be asked to show is through a reduction in their Costs to the Company (CTC) including allowances and all benefits Only half of this savings should accrue to the company, with the rest going towards a National Unemployment Fund which will be the subject of a future column

Read more at : https://www.peoplematters.in/article/employeerelations/countering-the-merchants-of-emplocide-36862