A Report from The Boston Consulting Group
One third of companies in Europe plan to lay off full-time employees, despite reports showing this cost-cutting tactic does not produce long- term benefits.A report by The Boston Consulting Group (BCG) and European Asso ciation for People Management (EAPM), Creating People Advantage in Times of Crisis: How to Address HR Challenges in the Recession, indicates that this strategy, while understandable given short-term pressures, could have a serious and long-term impact on a company.
The report states that employee commitment is a key element of an effective culture and how employees are treated in bad times will be remembered by them in good times. Because demographic factors mean that Europe’s companies will face shortages of skilled staff in the near future, the report advised, it is a factor which business leaders should not ignore.“Despite the colossal pressures business and HR leaders are under, they still have choices,” said Philip Krinks, partner and managing director, BCG London. “They can significantly shape the destiny of their compa nies.
During 2009, as well as responding to the pressures, companies have opportunities to prepare for when the recovery eventually comes.”
1 comment:
This highlights that despite all the chatter, two intractable realities still drive human decisions (and therefore corporate strategy):
1. companies exist to turn a profit for their shareholders. Therefore, anything that allows me to make the month and the quarter trumps any impact that my decision might have on next year's results.
2. people are creatures of habit. They will keep deciding to lay people off even though their head tells them that it's a bad decision. The traditional response to a challenge is always the easiest and the most acceptable, even if it's patently wrong.
Don't misunderstand me. Shedding poor performers or folks you can't afford and who are not generating a return on the investment is not inherently a bad decision... let's just be sure the criteria we are applying to the decision of who to keep/who to shed/who to hire are based on the right metrics -
Fit leads to Engagement, leads to Performance. We must make our staffing decisions (Staffing up, staffing down, or redeployment) on the basis of what matters: Fit with the manager, fit with the job, fit with the team and fit with the organization.
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