What Do Layoffs Mean?

Should you go to a company that has had major layoffs?
Here's Monty's take:

Layoffs create more negative than positive results. The reasons?

1. Layoff expenses are hard to estimate.
Restructuring charges are often higher than planned and require increased investment of execs time managing the layoffs.

2. Companies lay off the wrong people.

It's hard to figure out who is really expendable.

Managers often guess wrong and then have to figure out how to recreate lost expertise.

3. Layoffs make good staff recruitable.

Worried about the future, they are highly recruitable by predatory competitors.

Unless you increase their comp to get them to stay. And that costs you some of the projected savings from restructuring.

Layoffs are a bad sign.

They mean:
1. Management made bad decisions in the past
2. Demand for the company's products and services are declining
3. Revenues will be dropping
4. The company will lose some key personnel in the near future.

(OK, cut the girls some slack if layoffs are industry-wide, seasonal, or if a tornado wipes out customer demand).

From a very interesting business blog called Monty's Bluff.

No comments: