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It's The Workforce, Stupid! »

Posted by: stephen-johnson 2 years, 8 months ago

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by James Surowiecki - This isn't to say that Wall Street has gone soft-it still cares about profits, not people. But investors seem to understand that fewer people doesn't always mean more profits. Downsizing may make companies temporarily more productive, but the gains quickly erode, in part because of the predictably negative effect on morale. An

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stephen-johnson

Out to lunch without a sandwich

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Comments: 6

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ETproductions
April 24, 2007, 12:33 a.m.
Wow! How long I have been thinking this. And such an eloquent term to describe it, "It's The Workforce, Stupid!"
The reductio ad absurdum makes it easy to grasp. Since layoffs cut costs, let's just lay EVERYBODY off and rake in huge profits on sales just like today with ZERO labor costs.
Excellent find, Stephen Johnson. Thanks for the post.
Avg rating: (+2/-3 -1)
brothers
April 24, 2007, 2:47 p.m.
So you downsize and leave people with no jobs. No jobs means not buying a lot of things. The company then loses more money because no one is buying so they downsize again. Boy, that makes sense.If you outsourse things the same thing happens. No jobs no money therefore no buying.
And the beat goes on, and the beat goes on.
Avg rating: (+18/-3 15)
chevydog
April 24, 2007, 4:39 p.m.
How many times have we heard companies say "Our people are our greatest asset."? Then they go about and treat the people like crud. Sometimes one must put the money where the mouth is. The latest such managerial boof was at Home Depot. Dollar to a donut that there are other cases like that out there waiting to happen.
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ArtIsNotFree
April 24, 2007, 7:13 p.m.
Downsizing helps incompetent management achieve budgets mandated by executive management. Execs only see that budgets are made and the Street sees EPS is made and all are happy until the train derails because there is nobody left with morale to do the job. Companies end up buying replacement employees at higher salaries than the workers who left and a downward spiral of poor earnings and performance is created. We'll never get the Street to reward long term growth oriented strategic thinking, but perhaps we can change corporate behavior by demanding excellent customer service and voting with our feet. We the consumer can drive a lot of change but only if we act en masse.
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1-2-Oscar
April 24, 2007, 9:47 p.m.
Surowiecki is one of the most insightful writers on economics available. I never miss his column in the "New Yorker," I expect that very soon he will point out that the rise of mega-stores like WalMart coincided with traditional stores cutting back on customer service employees. After all, if you're not going to get service, you might as well go for the lowest price.