In light of the various layoffs and reorganizations at Wyndham, Morgans and Marriott (development department), I was thinking about the short- and long-term impact of these moves.
Rarely do these cost-cutting tactics lead to great strides in a company’s performance. In the short run, expenses actually go up, as severance and executive buyouts are quite costly. Typically, the severance to departing management can be anywhere from six months to more than two years. On top of that, the loss of talent and the reworking of existing job descriptions can be gut-wrenching.
Over the long haul, significant cost reductions can be attained, but at what cost? The toll on morale, energy and loyalty can be significant if the reduction is not handled extremely well.
Knowing that the economy and a company’s strategy usually change every three years, it’s no surprise layoffs rarely have their intended affect. Leaders should be very careful and prudent when considering these moves. Make these moves when your strategy and long-term financial health dictate it, not at the whim of Wall Street analysts or dissident shareholders.