Layoffs are a crime against staff. New leadership approach is needed.

In 2015, I was witness to an incident that happened with one of my colleagues who was the finance manager in the company for five years. Drawing to the close of the financial year, the CEO decided to make some budget cuts to save some money and proposed layoffs to tackle the problem. Downsizing the company was the decision made by the CEO even though different solutions were presented to him by the finance manager to avoid the layoffs. A month later, the CEO made his decision and dismissed several employees including the finance manager.

On his way back home that day, the finance manager fainted in the train station due to the stress that he had experienced all day in office. By a mere coincidence, there was a doctor nearby, he gave him some medications, helped him to regain his strength and go home. After a week in the hospital suffering the results of the layoff, the CEO kept his decision arrogantly. He did not listen to the various solutions presented to him by all staff members to account for the savings without resorting to the layoffs.

The problem with the “Please the shareholders” way of thinking is that all what the shareholders care about are short-term profits. The long-term health of the company does not matter to them as long as they get their dividend checks and the stock price keeps going up. If it doesn’t, then they whine and cry for some form of fix to make it happen. Layoffs are a great way to drive short-term costs down, but the long-term price of morale and company performance can be horrid. Drive efficiency to make sure you are operating at the best level, but cost-cutting just for the sake of cost-cutting is a sure way to run a company into the ground.

By maintaining the inflated salaries of CEOs—and other C-level executives—at the cost of laying off thousands of workers, a company’s productivity and values are damaged. This means that any Board of Directors that allows layoffs to balance the books when other options are available is destroying the human values or human social contracts between staff and management. Such CEOs shall be sacked and kicked out of company doors as soon as their pens’ ink touches the layoff notice.

 

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