Layoffs, Responsibility and Decency

Yesterday, we were smacked in the face with another dose of bad news: massive layoffs by some of the country’s largest, best-known employers with predictions of more to come. (Click here, here, and here.) Did we become hysterical suddenly, or has the condition existed for decades?

The estimates of job cuts announced yesterday ranged from 55,000 to 75,000 — in one day. In December of ’08, small employers (1-49 employees) shed 281,000 jobs; medium-sized employers (50-499 employees) shed 321,000 jobs; and large employers (over 499 employees) shed 91,000. What made yesterday’s news particularly noteworthy is that the layoffs were announced by so many prominent companies.

The Bureau of Labor Statistics says that 2.55 million jobs have been lost since the current recession began (whenever that was). Economists predict that in 2009, another 3 million jobs will be lost. A million jobs here and a million jobs there, and pretty soon, you’re talking about a lot of real jobs and the people who used to have them.

I remember a CEO telling me 25 years ago that the business world was being turned upside down. He said it used to be that when a company announced a layoff, it was a sign of corporate failure. The company’s stock price would plummet. A CEO could lose his job. He found what was beginning to happen in the 1980′s disturbing.

As I’ve noted previously, it was in the early 80′s that the mass layoff became the remedy of choice for dealing with an economic crisis. If a CEO resisted a layoff, he could be fired. A new one would be hired to make the cuts. And the stock price would rise. It has only worsened over the past 2-3 decades.

Employment lawsuits are on the increase as a result of the recent mass layoffs. But that’s something employers will worry about later. It’ll take years for these lawsuits to go anywhere. It’s the short-term results that most employers are concerned about. Slash thousands of jobs, and the bottom line will look better sooner. Try something more creative over the longer term, and you’ll be left in the dust.

When President Obama gave his inaugural address, he pledged that the federal government would take bold action to deal with the economic turmoil, but he also called for an “era of responsibility.” Who was he talking to? If he was talking to employers, particularly the big ones, his words fell on deaf ears. What businesses are doing with layoffs, less than a week after Obama’s speech, is, in my opinion, the zenith of irresponsibility. If the pundits and economists are right about what the future of ’09 holds, we’re on the verge of a deep recession turning into another great depression.

Some of the same companies laying off employees left and right will pay $3 million for a 30 second ad during the Super Bowl this coming Sunday. I don’t deny that this sort of thing has some stimulative effect on the economy, but it’s short-term and hardly offsets the depressive, long-term effect of millions of employees being out of work. As we seem to be collectively experiencing mass hysteria, we’re casting aside not only responsibility but basic decency with the mass layoffs.

In the early 1950′s, Senator Joseph McCarthy’s Senate Permanent Subcommittee on Investigatons was looking for communists in every corner, at every turn. McCarthy and his subcommittee recklessly ruined careers and created a false anti-communist hysteria in the country. Special Counsel for the U.S. Army during these so-called Army-McCarthy Hearings was Joseph Welch, who one day had had enough.

McCarthy accused a young lawyer in Welch’s law firm of being affiliated with a communist organization. Incensed at this baseless charge, Welch asked McCarthy two questions that finally caused Americans to see the demagogue McCarthy was and to realize that the anti-communist hysteria was contrived: “Have you no sense of decency, sir, at long last? Have you left no sense of decency?”

I realize that the McCarthy debacle is different from our current economic crisis. But just as there was hysteria then, there is hysteria now. Each time there’s a new wave of layoffs, especially by big employers, the hysteria is ratcheted up a few notches. I’m not saying that employers aren’t trying to do the right thing by making tough choices, but it seems to me they are unwittingly making things much worse by taking away from millions of workers one of the most important things they have — without seriously considering alternatives.

Some McCarthy apologists still argue that he was trying to do what he thought was right. History has, however, judged him to be a monster. It took one person, Joseph Welch, to finally take responsibility for bringing McCarthy down by asking the decency question. When one surveys the carnage caused by the layoffs of ’08 and being caused by the layoffs of ’09, I think it may be time for a big-time business leader to ask all of us: “Have you no sense of decency . . . at long last?”

If the right person asks this question and then pulls together his or her counterparts to formulate well-thought-out remedies to this economic crisis, instead of what has become the knee-jerk layoff remedy, the private sector can join hands with the government and take joint responsibility for minimizing the hysteria and developing creative solutions for this economic crisis. If you’re an HR professional in one of these big companies and have the ear of your CEO, see if you can get him or her and the entire executive team to see the people who are hurting instead of the jobs being cut.

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1. 

   Maggie says:

   January 30, 2009 at 5:39 pm

   I totally agree with you. Why aren’t companies asking each employee to take a day off each week (along with the pay attached to it) so that 20% of the workforce does not have to be laid off? To me, this is so simple. Stop overtime. Stop bonuses. Stop unnecessary travel expenses. Give everyone a 5% cut in wages. There are so many alternatives to mass lay-offs. I have only heard of the State of Californa reducing work schedules to save money. Why aren’t others doing the same.

   We are all in this together. I would rather take a pay or hours cut than have 20% of my co-workers get the ax.

   I have been talking to other HR managers in firms that are using this economy to get rid of dead weight. These are the employees who should have been terminated a long time ago but management didn’t have the guts to pull the trigger. Now these people can say they were caught up in a lay-off and yet they were actually terminated for poor performance. Sheds a bad light on all the good people losing their jobs because of poor management decisions.

   And don’t get me started on the executive bonuses in companies that are losing money. Bonuses are for going above and beyond in your job. They are not to reward you for doing a crappy job. The $12 an hour person loses their job and the CEO gets a multi-million dollar bonus. Something is very wrong here.
   Where is the Board of Directors in all of these companies? I thought Board members have fiduciary responsibility to make sure these things didn’t happen.

   As you can see, I am a disgusted HR Manager who plays by the rules and sees those that don’t play by the rules are rewarded. Something needs to change.
2. 

   John Phillips says:

   January 31, 2009 at 10:32 am

   Maggie,

   I’m glad you weighed in with such a substantive, pointed comment.

   The point you make about boards of directors is a good one. All the negative stuff has been written about CEOs and other executives. They only do what their boards let them do — at least, that’s supposed to be the case. I think most boards have been asleep at the switch.

   Thanks again.

   John