No CEO relishes laying off people. Every CEO I know dreads the prospect. Yet, all of them, without exception, have to brace themselves for that eventuality.
Why employee lay-offs?
A business downturn is the most common reason why lay-offs happen. The best laid plans of men can go awry, more so in the current volatile and uncertain business environment. But lay-offs can happen for reasons other than weak business conditions. For example, automation, adoption of new technologies and outsourcing can throw people out of work, although in the last named, companies can and do shift their employees on to the payroll of the outsourcing service provider. Because these circumstances can be planned, organizations can retrain and re-skill employees or move them to other parts of the business to avoid having to lay them off.
Mergers and acquisitions are another cause of employee redundancy. Rationalization of the branch network when two banks merge, of the sales force when ...
Simple rules like "last in first out" and "poor performers first" must be bolstered by transparent governance to ward off accusations of bias
Good management teams take a realistic view of business prospects at the start of the year and hire cautiously if they sense growth would be tepid - business judgment is the first defense against mass lay-offs
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