Friday, January 30, 2009

Layoffs and the Eventual Recovery

The Economist this week is running an interesting article on how companies are handling their downsizing and the potential future impact of these actions. As more and more firms jump in and use the recession as an opportunity to do some restructuring, the question becomes are these firms planning sufficiently for the eventual rebound. According to the article: "As a rule of thumb, a careful cull of the 10% of lowest performers can make a firm leaner by removing fat without damaging muscle. It is going beyond the 10%, as many firms are now starting to do, that poses the real risks to a firm’s competitiveness."

"This crisis is revealing how few firms have really thought through their talent strategies, says Mark Spelman of Accenture. Claims that “our workers are our most valuable assets” are too often platitudes, the emptiness of which is now being revealed. But those firms that have thought seriously about their talent needs have the opportunity to get ahead of those that haven’t, says Mr Spelman, not just by shedding poor performers but also hiring scarce talent from outside, in what is now a buyer’s market."

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