Saturday, 2 of August of 2014

When Short Term Changes Become Permanent—Lay-offs

Are the dramatic changes that we see in so many companies structural and permanent or a temporary result of economic uncertainties? If the changes are long term, what are the consequences?

Consider lay-offs. In a previous recession, mid level management seemed to be the ones laid off—with dramatic effects on how business was conducted. Many senior managers dealing with a myriad of issues never had the time to look at strategies and recommended action in detail. They listened to the “elevator summary”, that is, they asked for the key issues, findings and recommendation then moved to the next item on the agenda. Junior staff are often highly motivated and energetic but by definition, they lack experience; this can sway them to deal with issues at a surface level. Typically, it was middle management that had the experience and the time to analyze and understand issues in depth. Their input to decisions was critical. Among our business contacts across many industry segments, the ranks of middle management were decimated.

In our view, the quality of decisions often deteriorated. But its manifestations were gloriously disguised. Sixty page text rich reports became twenty page bullet point PowerPoint presentations. Text was replaced by illustrations, photos and diagrams. Word pro was replaced by desktop publishing. When we compare modern presentations with presentations that are as recent as a decade ago, the older documents look laughably out of date. Moreover, delivery times escalated dramatically. Reports that once took a month were now demanded in four days or overnight. Decisions were made immediately with no opportunity for second reflections or considered discussion.

If the content of virtually every business document was drastically abridged, was the thinking equally abridged, reduced to top lines? Too often the answer was yes. All too often we have seen significant business initiatives, from new products launched to new processes to mergers, where the potential benefit is questionable.

What have we seen in 2009? We all know people who have been laid off. What appears different from earlier experience is that many layoffs are among very senior experienced people.

A good friend with a meteoric career, repeatedly sought after and rapidly moving up the corporate chain told me that since his lay off six months ago, he has interviewed with 19 companies, half of which decided, after seeing multiple candidates multiple times, not to fill the position. Responsibilities are shifted to others who already had too much to do before the change. Seniors are being replaced by juniors or jobs are contracted out, not always to seniors with experience. I wonder if the failure rate on business initiatives has increased over the past decade. And I wonder it the failure rate will increase as skills are being cast aside. What is your experience?

The next few years will be very interesting. Forgive the cliché, but we aren’t in Kansas anymore.


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