Constancy of Purpose

[Kevin Mader]

Graeme's recent post in the forum topic Fear has triggered another.

Organizational closures and layoffs are an increasing epidemic. Many CEOs release press statements that the Economy is to blame.

What are your feelings on the responsibilities of the "Powers that Be" regarding them both? Do you feel the Economy is to blame? Or, is it the lack of vision and long-range planning?

Anyone?

Regards,

Kevin

[Jim Biz]

Kevin: Yet another great subject – to ponder.

I believe
Organizational closures/layoffs are all too often built into “Long Range Planning”.

IE: Objective ONE – reduce or eliminate labor expenses – increase shareholder profits
Objective Two – Increase Market shares – eliminate competition

High level CEO’s making literally millions in personal salaries and stock options – are the same people telling us Labor and materials costs are excessive.

CEO’s use many “word masks” for the issue – Poor economy – high union (or non-union) labor costs – and the key buzzword for the 1980’s “must remain competitive”.. bottom line is the company made x dollars but wants more – If we can’t show 20-40% profit above any expense - every quarter – we have no obligation to either those who purchased our product or to those who labor for us to achieve what we did make!!

This will not change until/unless we as a culture redefine the OBLIGATIONS and “Responsibilities” of all of our industries and the executives that adopt the plans. If the first “Goal” was an obligation to maintain the business products AND operations long term for our customers and those who labor for us.. and the secondary goal was that of profit to stockholders.. then we open the door to Organizational closures/layoffs being the exception – not the rule.

[Michael T]

Another great topic, Kevin - and one of my biggest pet peeves.

The company where I used to work (book manufacturing) was a cyclical business - balls-to-the-wall busy in the spring and fall, working 24/7, sometimes 12 hour shifts to squeeze every ounce of productivity out the the plant in order to meet production quotas. In the summer and winter, demand was about half of what it was in spring/fall. The very first place management went to reduce expenses was, of course, employee overhead. "Get the labor dollars out" was the mantra at the weekly staff meetings. All I could do was shake my head and mumble, "ya just don't get it".

And they didn't get it... these "managers" used to wonder why they had no committment from the employees -- when the plant was scheduled to work the weekend and mandatory overtime -- and the employees complained, or called in sick or some just simply walked off the job after being burned out from 4 weeks straight without a day off. Sure, production was up - but not the the extent that it could have been. Quality suffered, ship dates suffered, maintenance suffered, etc. In the Summer & Winter, manpower was practically cut in half. People who could afford to live off Unemployement Insurance didn't care, but those who couldn't - those that had a family to support, they suffered. The ugliest part about the whole thing was the lay-offs were for a week here and a week there. No time for employees to find another job. Again, production suffered, quality suffered, shipping dates suffered..... And management had the audacity to ask "why". And it wasn't as if management didn't know. I tried to convince them that what they were doing was wrong. They didn't want to hear it. They refused to face the concept that no committment from management to the employees leads to no committment from the employees to management. Who can blame the employees -- they aren't stupid and they definitely can tell when management is talking out of both sides of their mouth. Why would employees want to go the extra mile for management? What had management ever done for them?

Now - the company I currently work for is completely the opposite. When this current recession was getting in high gear, the CEO, the President & the Exec. VP called a plant-wide meeting. They told everyone here, there will be no lay-offs. Things will be tight and there will be no overtime either, but no lay-offs for anyone. The management used this time to retool some machines that needed it, make plant repairs that were put off for a short while, and you could practically eat off the floor, it was so clean around here. However, there were no lay-offs. Business is starting to pick-up and strategically, we are ready to take advantage of any upswing in the market when it finally does come about. The employees? They are motivated, there are very few complaints (oh, you have the usual grousing here and there), and they have a committment to the continued success of this business. Why? Because the management has a committment to the employees and to their well being.

So, have we suffered financially these past several months? Yep... sure have. Would there have been more money in the coffers for the annual bonuses had there been a reduction in manpower? Absolutely. However, as we start to pull out of the economic slump and production ramps up, those people who get the product out the door are committed to this company and we are able to meet demand without any mad scramble to find people to meet the increases. There is no training curve, there is no lag in shipping dates.

Are lay-offs endemic to a slumping economy? Nope. Lack of long-range goals and planning? Oh yeah.

Cheers!!!

[Kevin Mader]

Group:

In a weird twist of fate, the day after starting this thread, we had ourselves a meeting to discuss a two-week furlough. Timing is everything I suppose, and Mike’s post is relatively accurate minus the repeating effect at explaining our situation. Let’s hope that it stands at that as well.

In speaking with the many folks who got the time off, they confirm the obvious: distrust, resentment, and confusion of and with management. If this thing drags on further than they were told, I fear that it will worsen the existing feeling and make managements work harder.

The question here and in another thread is this: What is Senior Management’s job? And more importantly, do they know it? How much accountability does this position hold, in theory and in practice?

How do you create the organization that will stand the test of time? Marc, where is that magic wand?

Lots of questions, folks. Pick one or all, but what do you think?

Kevin

[CarolX]

To the Group

from Kevin's post

What is Senior Management’s job?

Most would say...Make More Money

Corporations cut the workforce to increase profits. But when this becomes the trend (as it is presently), who will these corporations sell their product to? If the average consumer has been downsized or layed-off, or even a threat of loosing one's job...the last thing would be to spend money on items such as new cars, appliances. If consumers aren't working, they aren't buying and the corporations still won't make any money.

'round and 'round it goes.

CarolX

Kevin,

Personally, I have been through gut wrenching, long lay off periods. One was for 10 ½ months and 10 months. Both were at a time where the employment picture was bleak. The people that remained behind were politically savvy and had located and bonded quire strongly with their stepfathers. As a young man, the first time, I didn’t understand the reasons other than time in service. Later, approx. 10 years ago, I had learned the game. But, I refused to play it. I witnessed the most despicable examples of hand licking, as- kissing, groveling and other sub human traits. The fact is they remained while I was sent on my merry way. Today, we call it “Team Player”. Nice word. Senior Management loves the power and expects the underlings to behave shamelessly. After all, besides handsome paychecks, they deligate projects and tasks and present them as part of their management style. It will never change. As to the formula for companies that will stand the test of time, they practice the exact, and to me, detestable methods that we question. You always see the phase “from the top down in our company”. That will never change. Hey, it works right now. They are the ones on the inside looking out. They aren’t scrambling to keep food on the table and a roof over their heads and clothes on the kids.
You will notice the “customized signature” below my user name. That’s what nobody practices and that’s why it there. And intellect is in the eye of the beholder. Like “Mirror, mirror on the wall”. Good discussions, Kevin.

[Michael T]

Hi all...

Kevin writes:

"The question here and in another thread is this: What is Senior Management’s job? And more importantly, do they know it? How much accountability does this position hold, in theory and in practice?"

and Carol replies:

"If the average consumer has been downsized or layed-off, or even a threat of loosing one's job...the last thing would be to spend money on items such as new cars, appliances. If consumers aren't working, they aren't buying and the corporations still won't make any money."

Yessssss.... Carol hit the nail right on the head! Peter Senge identified this trend as an "Escalation" System Archtype. In simple terms, look at the US and the former Soviet Union. Both had nuclear arms, both were afraid of the other getting the upper hand, so both kept producing more nuclear arms. The same thing applies to the economy. How can someone who is layed off buy anything and how can companies sell things when people aren't buying, so they have to lay people off... etc, etc, etc. A downward spiral that has no end unless direct and significant actions are taken to stop it.

So, on to Kevin's question...

What is Senior Management's job??? To make money? To satisfy "stakeholder" needs? (Will making money do that?) Stakeholder needs appear to be diametrically opposed to each other - how does management handle that? For example: Investors want an increase in their ROI, stock price, etc., Employees want increased job security, increased compensation, etc., and the Community wants its people employed, increase in the tax base, etc. These are at odds with each other. Management needs to know how to balance these.

However, I don't believe stakeholder needs are necessarily mutually exclusive. For example, recession hits, orders are off, yet Investors are screaming for increased returns. This is unreasonable. Management needs to moderate their expectations. If Management succums to Investor pressures and starts to lay off employees to show paper profits - the end game will ultimately be decreased profits due to poor employee moral and quality of products - even fewer orders from more dissatisfied customers, etc. Downward spiral. Investors need to have enough faith in Management to lead the company through economic uncertainty. If Management says "no layoffs", that shows a long-term view where more than just the bottom line plays into business decisions.

Wow... I could go on for chapters on this....

Cheers!!!

[HFowler]

Great discussion!!

I agree with Jim.

I think layoffs, downsizings, rightsizings, restructuring, etc are part of corporates long range strategic planning. I come from a manufacturing background and that sector really seems to see a lot of ups and downs. The current trend in manufacturing is sourcing off-shore regardless of what their customers think about it. For the last couple of years I spent a great deal of time traveling throughout China helping the company reduce cost and become more profitable. After realizing a 40% reduction in operating cost, and a significant loss of our customer base, I was laid off. Now I work for a small privately owned company that has no interest in moving manufacturing off-shore.

I think as this country loses more of its manufacturing experience, our national defense will suffer. Its going to be harder to build up that strong manufacturing base as quickly as it may be needed. Not having good paying manufacturing jobs is also being reflected in the weak economy.

Best Regards,
Hank