LO and Big Layoffs LO5125

DAVID REED (DPR9989@KGV1.bems.boeing.com)
Thu, 25 Jan 1996 14:52:33 -0700 (PDT)

Replying to LO5005 where Geoffrey Fountain writes: --
> So how does a company survive the boom and bust cycles of the
market without laying off ? Thinking long-term, by making enough
money in good times to carry you through the bad times, by creating
market strategies and products with different cycles and realigning
your companies capabilities to thrive in these different markets. <

Tough question! I'm inclined to think that there are two dominate
models for large corporations; the holding company and the integrated
company. I believe there are major differences between these two
company architectures that have significant effects on people.

The holding company, who owns a portfolio of different enterprizes in,
perhaps, many different industries, produce a broad range of products
that allow them to offset the effects of cyclical business. They operate
these businesses independently of each other and generally do not
promote mobility between the enterprizes. These companies usually
have a wide variety of skill sets that are not necesarily transferable.
(General Electric is a good example of this type of company)

The integrated company operates a variety of enterprizes within a
single industry (although it may be a broad industry like transportation).
They are focused on a single product set. These companies are
generally influenced by cyclical trends and have systems , like layoffs
that help reduce costs. They promote mobility of skills amoung the
enterprizes to help offset effects of the business cycles. Their inability
to greatly diversify affects the ability to stem the market fluxtuations.
(Boeing is an example of this type of company)

Each of these types of companies plan for the future and spend a great
deal of effort establishing strategy. The inherent differencs in their
strategies result in very different people strategies. So for the integrated
company, it is not as simple as just increasing the demand or the market
share. During low market cycles, the strategy may be to reduce costs
so that it can invest in major proces changes or they may elect to invest
in greater research and development activites. Both will help maintain
employment levels. But if the effects of the market is great enough on
the integrated company, then something must give. Hopefully, people
are their last resort.

These are just my observations. Do they make sense?

--
 For now...
 David Reed
 (206)655-3245  Web:dpr9989@kgv1.bems.boeing.com
 Human Resources Strategy Development