LO and Big Layoffs LO5153

Rol Fessenden (76234.3636@compuserve.com)
26 Jan 96 16:29:28 EST

Sb: LO and Big Layoffs LO5125

In response to a discussion of Goldratt (Profit = sales-expenses), David
Reed says, "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."

I think that is accurate. This is a systemic issue, also, and there are
large-scale issues involved. For example, when the economy is not
growing, then by definition on average, no one is growing. To some extent
this is driven by things like consumer confidence and other ambiguous
things. We don't yet know how to control economic cycles.

Also, foreseeing the future is impossible. James Fallows writing in the
Atlantic mentions that 15 major political observers were asked their
forecast on the last election, and only 3 predicted the massive shift to a
Republican-dominated legislature. If we can't see into the future, then
we need instantaneous response, but this too is impossible. A new
factory, from concept to production, can take 3-5 years, and a
fully-trained employee can take 2-10 years.

Finally, there are no guarantees. The computer industry is a fine example
of a turbulent business with companies disappearing at a rapid rate
because of one or two bad decisions. No one says that if a company will
keep people on the payroll, then they will guarantee the company's
survival. Ultimately, this is what drives companies to very cautious
behavior. Does a company make a decision that can ultimately be harmful
to thousands of employeed instead of 'only' hundreds? Difficult
decisions.

One other point I just realized is that if I remember correctly, the
majority of employees work for small companies, not large. These
discussions have focused on the really big companies, but how does a
smaller company with more limited resources deal with these issues?

--
 Rol Fessenden
 LL Bean
 76234.3636@compuserve.com