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Layoffs
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In my last column, I wrote in praise of naivete on demand,
the ability to suspend your awareness of harsh, demotivating
client and agency realities, in order to allow yourself to consider
even the most improbable, interesting, unsaleable solutions
and ideas.
This time around, I would like to ask two questions brought
on by naivete over which I have less control.
My first naive question pertains to the knee jerk reaction of
most businesses, like ad agencies for example, when econonomic
conditions aren’t great and especially when the fourth
quarter is at hand. That knee jerk reaction is the laying off
of employees.
My question is, simply, why? Why are layoffs so automatic? Always
it is “with great reluctance” that layoffs are announced,
yet these companies do it anyway, every time. These fourth quarter
layoffs in particular, just when the holiday season is upon
us, seem so cynical, and are so embittering, I have to think
there’s another way.
Let me just acknowledge up front that, being naive and all,
what follows no doubt fails to take into account the complexities
and those pesky harsh realities of business and economics. All
of that aside, I’m guessing the big picture question can
still be asked.
As little as I understand about business, it seems that a company
can, in theory, simply decide to have a less profitable year
by keeping their employees on the payroll, even when, at that
moment, the amount of business the company is doing doesn’t
warrant having that many employees.
On the rare occasion when this is actually done, it is usually
a privately owned company, accountable only to itself, which
summons the courage to choose people over profit. If the company
is publicly held, on the other hand, it is accountable to the
stockholders. So it is the stockholders who are invoked as scapegoats
in justifying layoffs.
Is it true that stockholders insist that the company be optimally
profitable every single quarter, even in hard times, even if
it means temporarily devastating the lives of a bunch of hard-working
employees, employees who’ve made the company profitable
in the first place?
Have they no understanding of the fact that businesses shouldn’t
be in business to make money, but rather, to stay in business?
And that, perhaps, a company is better positioned to stay in
business if, when business picks up, as it usually does after
a slowdown, the company is already fully staffed and prepared
to handle the additional business with no lag time, and no need
to spend the considerable time and money necessary to re-staff
and re-train people?
Don’t stockholders know that laying off employees is bad
for morale which means bad for productivity. And that it damages
the corporate culture, by, among other things, dialing up the
fear factor. Do they know that this culture has a bearing on
the success of the company, as hard as that may be to quantify?
To take the economic hit in lieu of layoffs is a business decision
in which the fact that the business has a life beyond the current
quarter, and that human currency has value, are factored into
the equation. Is this lost on stockholders?
Don’t these stockholders have jobs? Have they ever been
laid off? And what about the employees of the company? In many
cases, they themselves are stockholders in the company for which
they work. Would they vote to put themselves out of work?
This brings us to my second naive question: Why are people so
stupid? Either the stockholders are stupid to embrace such a
myopic, quarterly-minded perspective on their investments. Or
else those who pass the buck by laying the responsibility for
layoffs at the feet of the stockholders are stupid for selling
the stockholders’ thinking short. Or else they’re
stupid for thinking that we don’t realize their concern
about what the stockholders will think is, at bottom, concern
for their own continued employment.
It would be very interesting, at some stockholder meeting, to
put the question to a vote. Should we layoff 10% of our workforce
to ensure a profitable (or, in most cases, more profitable)
year? Or should we keep the lives of hundreds or thousands of
people, people we profess to value, intact, spare them the wrenching
trauma of
unemployment, and let our investment absorb the hit?
United Airlines and other flying behemoths laid off employees
by the thousands on September 12, (at least it seemed that soon),
adding to the casualty list, while Southwest Airlines laid off
no one, not one person. What’s wrong with that picture?
As for the advertising industry, believe me, I understand full
well what a bad year this has been. (I even considered laying
myself off earlier this year, but then who would answered the
phone?)
Many agencies, especially smaller ones, faced the choice of
laying off employees or closing their doors. For others, even
layoffs couldn’t save them. But for the big guys, the choice
was, put a slew of people out of work, or take a bottom line
hit. Isn’t the operative word here “choice”?
The carnage we’ve seen in the advertising industry all
year long, with announcements of layoffs practically every week,
begs this question: Why are there no “Southwest Airlines”
among Chicago’s ad agencies?
One last thought. Given that this propensity on the part of
ad agencies and other businesses to lay people off in the fourth
quarter isn’t likely to go away, can we all agree to move
the fourth quarter from fall to spring, so that those who get
the ax can at least enjoy a leisurely summer, rather than facing
a holiday season in which the comfort and joy have been eviscerated
by those whose own comfort and joy (and continued employment)
is secured in so eviscerating?
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