Layoffs during tough economic times may be necessary especially in industries and organizations that are restructuring. However, as Cali Yost points out in an interview on Public Radio International this past week, the costs associated with layoffs are even more costly than those associated with voluntary turnover – and the costs associated with turnover range from one-time annual salary for hourly employees to as high as 20 times for senior executives. Yost offers an informative comparative benefit analysis chart highlighting the costs associated with voluntary turnover, layoffs and flexible scheduling. Past research shows layoffs are a short-term fix with little or no long term profit payoff:
- 2001 Layoffs and Job Security Survey conducted by the Society for Human Resource Management found that only 32% of the responding companies said layoffs had improved profits. And even the massive layoffs in big companies like the one’s we are hearing so much about today, had not produced increased earnings years later.
- Another survey of the S&P 500 from 1982-2000 showed that profitability did not necessarily follow downsizing even two years later
Yost, CEO of Work+Life Fit, Inc., strongly recommends what she calls "flexible downsizing."
To read more:
- Visit Cali's blog.
- Read Employee Turnover is Expensive