The Layoff

Robin Astrigo was the CEO of a home improvement store that had fallen upon harder times than wall street had estimated it to be. He really wanted to have the company meet the expectation of the analysts and there was a recent trend involving a decline in revenue and he felt the company had expanded too fast. In his head he determined that he needed to cut 10% of the workforce to get the company back in line from a profit or EPS perspective. So his focus is on the cost side, this is more of a “management” approach and not a leadership one. The piece doesn’t really mention the overall well being of the company or the impact of simply reducing costs without any revenue changes. The reader is left to assume that any old 10% of the workforce is sufficient to cut. Perhaps this 10% is measured in dollars, because otherwise it wouldn’t make any sense. Or perhaps the added costs of the severance packages offset the savings of implementing the LIFO approach. (All of the approaches the article offers reminded me of inventory costing methods by the way.)
Various experts were able to offer their own two cents worth, qualifying why they believed such as they did. If I had to choose from all of their terrible blanket approaches, I’d probably end up agreeing most with the crank and yank. However, I wouldn’t let the news trickle out slowly, and I’d go big and slash 15% for good measure. These estimates are usually biased and additional rounds of layoffs are needed in future periods. As this bad news is delivered slowly, morale and opinion of the management team is dwindled and the reign won’t last. There was a part in The Prince that offered the best advice in my eyes. “Violence must be inflicted once for all; people will then forget what it tastes like and so be less resentful. Benefits must be conferred gradually; and in that way they will taste better.” – Machiavelli

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