Laying off Veteran Employees is like Suffering an Institutional Stroke.
Posted in : Economics:
- On : May 11, 2009
by Richard Gottlieb of USA Toy Experts, Inc.
I am always amazed at the people that some companies choose to lay off during an economic down turn. It is usually someone who has a staff job or is in some other way seen as disposable. Typically, they have been with the company a long time and make a salary at the high end of their job description.
What companies sometimes fail to realize is that these people are a repository of the company’s history. They know who did what, what was done right and what was done wrong for the last ten, twenty or even thirty years.
Think about it. Most people stay with companies two or three years and then leave. That means that most of the company’s personnel don’t know what happened before they got there.
So, to my way of thinking, letting what of these old timers go is like having a stroke. It’s as if part of the company’s brain cells that control memory have been suddenly wiped out.
When you see the results of some of these layoffs you realize just how devastating this can be.
Laying off veteran employees to a company is like suffering an institutional stroke.
In one fell swoop, they have wiped out a big part of their institutional memory. There is no longer anyone there who remembers what happened more then two or three years earlier.
Let me give you a couple of real life examples of how companies suffer when they in so many words get “dumber.”
A large toy company decided to move all of its shipping to a new location in another state. In doing so, they decided to let the existing staff go.
Well, it seems that the old staff knew all of the rules and guidelines for the company’s retail customer base. They knew how to mark the cartons, what freight lines to use, how to pack the pallets and more.
The new people knew none of this so everything went haywire. Shipments were late, carton markings were wrong and customers were furious. It took them months to correct the problems but by the time they did they had devastated their customer relationships. They are still struggling to get back on track.
In another example, a number of years ago, a retailer (who by no coincidence no longer exists) decided to let all of the longest serving sales clerks go. These people made the most money and were seen as complacent because they had been working for the company for so long.
What the retailer failed to think about was that these people had, over the years, developed relationships with many of the consumers who visited the stores. As a result, long time customers ceased to visit. Why, because the charm was in going to a place where someone knew their names, remembered how old their kids were and understood what they were looking for.
When the company fired these clerks they lost that company memory and with it a big part of their customer base.
In times like these, when the need to cut staff becomes, in some cases, a matter of survival, companies need to think clearly about who they are letting go and what the results may be. Are they killing some company brain cells? Better figure that out now before becoming to dumb to figure it out later.