LO and Big layoffs LO5165

Rol Fessenden (76234.3636@compuserve.com)
27 Jan 96 11:29:14 EST

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I am looking at a chart that ruins all my preconceptions about companies'
behavior in the last few years.

My own preconception, driven primarily by newspaper accounts, was that
corporations were creating a huge surplus of middle managers by their
ruthless 'flattening'. If that were the case, one would expect to see
large unemployment, and especially so among middle managers.

Another preconception is that large companies are more or less permanent,
and they could, if they chose, absorb the costs of keping unproductive
employees on the payroll until those employees regained their productivity
in another field.

Well, here is some information that forces some rethinking.

The current unemployment rate (The Economist, Jan 6, p. 88) in the US is
5.6%, lower than in all countries except -- Switzerland and Japan. Who
has higher rates? A number of 'wonder' countries:

Germany 9.3%
Canada 9.4
Holland 7.0
Italy 11.8
Sweden 7.2
Belgium 14.4
Denmark 9.5
France 11.5

Another article points out that all countries have problems with
undercounting the unemployed, and once all known corrections are made,
there is virtually no change in the standings. The US is still currently
in third place, with Japan moving up fast, but Switzerland holding its
lead.

On p. 22 there is an article shedding new light on middle manager
unemployment. It says that despite all the press about flattening and
middle manager layoffs, middle manager unemployment is at nearly an
all-time low of 2.5%. This news was reported in the Wall Street Journal
in the last few months as well. The WSJ also reported that middle manager
population was nearly the same as it was 10 years ago, another non-sign of
lost jobs.

The article says, "By conventional measures both groups (blue collar and
white) are in the midst of far better times than in recent years."

Finally, right after an article describing the tough times facing Motorola
(pillar of TQ & Training & Baldridge awards), there is an article on
employee loyalty (going down, naturally) in which it mentions that the
average age of a Fortune 500 company is less than 40 years and declining.
So much for permanent corporations who have the wherewithall to
indefinitely pay non-productive employees.

Going back to the article on Motorola, it ends by saying, "Fortunately,
our people continue to find new ways to surprise us." And The Economist
riposts, "So will all its new rivals." This, I think highlights some of
the weaknesses in the viewpoint that really, companies control their own
destiny. The reality is no one knows where the next Apple Computer is
coming from, or the next microwave oven. These unpredictable events make
controlling the future unrealistic. The only viable alternative is to be
fast and flexible so you can respond.

--
 Rol Fessenden
 LL Bean
 76234.3636@compuserve.com