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> But it strikes me as horribly short-sighted for a company to simultaneously report record profits and fire loyal employees. This is an incredibly naive concl

> But it strikes me as horribly short-sighted for a company to simultaneously report record profits and fire loyal employees. This is an incredibly naive conclusion, one that I would argue could only be reached without any critical analysis whatsoever. For one, record profits can be ephemeral. Many companies thrive and dive based on the business cycle. As we saw in 2008, the dynamics of a company can change relatively quickly, so record profits today don't guarantee record profits, or even a profit at all, tomorrow. Building a strong cash position and/or returning capital to investors in one form or another often prove crucial to a company's long-term ability to survive and grow. More importantly, it's critical to recognize that a loyal employee isn't necessarily a good employee, or a necessary employee. At large companies, particularly outside of technology, you can often find plenty of "loyal" employees: workers who have been on the job for more than a decade who would love nothing more than to stay in that job for decades to come. Some percentage of these employees, however, are better at doing what it takes to secure their jobs than they are contributing to the ongoing success of the company. Others, while dedicated and hard-working, may simply lack the skills required to contribute as the company evolves. Companies are not static; as they grow and market conditions change, it may be necessary to hire in some areas, and fire in others. The author of this post might as well have used the title, "In tough times, abandon tough decisions."

nickff 13y ago
I would also like to add that it is in the interest of the valuable employees to lay off the low value employees for three reasons: 1) Low value employees reduce net cash flow (profits), which can cause the company to go under when times get tough. This would cause difficulty to all employees, not just the marginal ones. 2) All employees add organizational inertia; in the case of low value employees, this is needless and prevents adaptation to changing market conditions, which can doom any organization. 3) Every non-value creating employee is consuming a salary which could be used to hire someone who might create value, growth, and possibly additional hiring.

nickff 13y ago

I would also like to add that it is in the interest of the valuable employees to lay off the low value employees for three reasons: 1) Low value employees reduce net cash flow (profits), which can cause the company to go under when times get tough. This would cause difficulty to all employees, not just the marginal ones. 2) All employees add organizational inertia; in the case of low value employees, this is needless and prevents adaptation to changing market conditions, which can doom any organization. 3) Every non-value creating employee is consuming a salary which could be used to hire someone who might create value, growth, and possibly additional hiring.