Thirty years of layoffs

Although this headline may seem a bit frightening, it nonetheless reflects a certain truth in our era. To understand the thought expressed here, let’s go back to 1981 when an economic crisis struck the entire industrial world in western society. Excessive production capacity had become evident and companies had to find new management strategies in an attempt to absorb this excess labour. The industrial world first turned towards the idea of early retirement, using this attempt as a combo approach (however many years of service was added to one’s age) to justify the initial offloading of human cohorts. Strong and conflicting emotions ran high in many corporate executives and the gap between generations was further widened. However this was only the beginning of the odyssey as the crisis continued and retirement benefits alone couldn’t fill the void of this industrial hole that had been dug.

We witnessed the onset of something which at this point no one would have ever suspected – mass strategic layoffs. There had been previous accounts of seasonal layoffs of primarily blue-collar employees in production lines. What happened here was quite different from that, and vast cuts were being made throughout all levels of organizations, both horizontally and vertically. We had just initiated the phenomenon of workforce reduction known as “downsizing”. This marked the first time that we decided to do a “house cleaning”. Encouraged by financial performance and economic necessity, companies decided to tackle both sides of the matter. Subsequently, a movement defined by reflections, writings, statistics and expert opinions had pointed out the road to restructuring or “rightsizing”. We understood the need from this point forward to model the organizational structure after the business model, or the new business model. The idea had been launched, we had to adapt, create and even provoke changes and more so, innovation. Obviously, the concept of change management was still in its infancy. Downsizing (reduction in workforce) occurred mostly as a matter of stringency in the 1980s, while rightsizing, which came to the forefront in the 1990s, proved to be more of a strategic management tool.

Mergers and acquisitions, another new economic tool, saw major expansion during the 1990s. The impact of this new tool was quickly recognized and it was established as a driver for strategic growth, niche business consolidation and territorial and global expansion. In the same spirit, we’ve outsourced production capacity to other places, however the quality of these manufactured products aren’t always monitored closely. One company after another transformed themselves and the market followed suit. We engaged in strategic repositioning in the industrial and commercial spheres, and in this spirit and in the uproar it created, companies tried to see things more clearly, to refine their identity and to continue to shape their organizations, forever sacrificing any notion of loyalty and in the process losing long term sustainability “from the cradle to the grave”.

The maelstrom that led international commerce towards globalization from the late 1990s and still to this day only amplified the notion of perpetual change and the need to evolve in order to survive (Darwin’s Theory). Never had competition been so fierce and aggressive. Companies saw the need to change the profile and expertise of their workers and even of their leadership. The cushioned layer of middle managers dwindled in companies leaving a great amount of skill and knowledge on the curb- a truly historical void. Any strategic shift, drop in results or performance would lead shareholders to become overcautious and cause senior executives to keep a firm watch over performance, financial statements, and market position. These changes, which are more common at the top of the pyramid with executives, initiated a wave of layoffs in senior management and subsequently brought huge payouts, the largest sometimes fell from above. In a single gesture, it was necessary to scrutinize, modify and strengthen governance and build and equip new methods of surveillance in an attempt to decrease financial abuse. So in the economic sphere, one company after the other attempted to mould their financial statements in order to maintain their market position. The economic gap between classes continued to widen throughout the population.

Over the past thirty years, never have so many individuals had their own ethics questioned both professionally and personally. In the contemporary saga of economic development, layoffs have become a common management tool in the heart of businesses.

For the individual, job termination was and will be somewhat customary, because since the manufacturing era through the service era and on to the era of knowledge, man has had to push forward and continuously adjust to the relevant demands of his society in order to survive. The impact of business capital on labor speaks for itself. For the individual, even though EAP, career transitioning, training and other services were created by experts as supportive measures, it can be difficult to comprehend how the consumer society that man has struggled to develop and establish has made an object of man himself.

Joseph Anstett CHRP, ACC
Joseph is Vice-president, career management and executive coach at Optimum Talent
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