Today David Carr writes about how the Journal News (a suburban Westchester newspaper) essentially laid off all 288 of its staff and invited them to apply for the for the 218 or so jobs that remained after "restructuring." This is super nasty! But it's secretly and not-secretly going on all over. For instance, Johnson & Johnson recently did the same thing when it consolidated business units: they laid off a couple dozen senior vice presidents and invited them all to apply for the remaining, much-fewer jobs. This is obviously the best possible way to treat employees.
Monday, August 31, 2009
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If you subscribe to a Welch-ian management philosophy, this is a great tactic. The bottom 10% might be ensconced in the higher echelons of the organization. By letting everyone go and having them apply for a limited number of positions, you effectively oust the erstwhile untouchable high-level under-performing hacks by making employment (suddenly) merit- rather than tenure-based.
But a bummer all the same for those who have to undergo the psychological pain of being let go and told to reapply for their job.
I'd be curious to hear from the organizational psychologists in our midst about the long-term repercussions of laying off and rehiring someone. What does it do to their job performance post-rehire? Do they work harder, living in constant fear of being canned again? Does that stress negatively (or positively?) affect the quality of their work? Or do they work less hard because they feel expendable and/or disinclined to reward the company's lack of loyalty with their hard work?
Also (and sorry! Questions, I have many!) how much money does a company lose in the fire and rehire process? There are certainly costs associated with letting people go, as well as with hiring folks... I'd love to see some numbers.
I can say that as a consultant I have been a part of a couple of restructures that have employed this tactic. I can only speak definitively to the numbers and client satisfaction. Because I have no soul, you see.
Rarely does a company "lose" money on a fire and rehire. There is a relatively simple metric (that I am sure varies from firm to firm/industry to industry) that takes into account - among other things - early retirement settlements and severance costs versus the long-term obligation of those X salaries in question. So, while there might be an initial investment of expense, that investment will put the organization on a solid financial foundation within two/three years.
Oh hurrah, the consulting geeks have gathered once again!
Thanks for the info on the fire/re-hire costs. Makes sense to me, though I'm secretly disappointed that these companies aren't getting whacked with hidden costs (HR costs, IT costs, blah blah) as punishment for acting like amoral dickbags.
In your travels have you gathered any numbers on the % of employees who do indeed reapply? Certainly those numbers are affected by the economic climate are are higher now than they would have been a few years back, but I'd be interested in hearing them. Also, any stats on the quality of the candidates who reapply? It would be a fantastic burn if the stars eschewed the reapply process and sought opportunities elsewhere, while the 10% dregs turned out to be the only ones looking to go back to the company. I know this is a pipe dream, but it's a nice one, non?
It would be a fantastic burn if the stars eschewed the reapply process and sought opportunities elsewhere, while the 10% dregs turned out to be the only ones looking to go back to the company. I know this is a pipe dream, but it’s a nice one, non?
True, it would be interesting. Unfortunately that hasn't been my experience. This isn't really the bread and butter of my firm's practice, we've only had to do this a couple of times. And each time it was absolutely necessary.
We'll usually advise the organization's leadership to conduct an employee engagement session on the back end of this that empowers participants to forge the future vision of the organization. With that goes performance measures, management plans, etc.
RIFs are measures of last resort - and when employed, are never done in a vacuum. At least in my experience.
The real irony in all this is that I have the time to describe the process to a stranger on the internet. Which would tell me that I might be a little too unbillable. And thus expendable.
Carr's story sort of hints at it, but I was under the impression that this was a handy way to circumvent union/seniority rules (is the Journal News unionized?) and try to avoid age discrimination lawsuits, by laying everyone off at once and pretending it's about "skills." I think the WSJ did this recently too with their fashion beat, when they laid everyone off but then some people quietly got their jobs back.
I'd say you're pretty darn warm on this impression.
It's kind of like that episode of The West Wing? When I learned that in our government system? Martin Sheen totally collects all the cabinet members' resignation letters at the end of his first term and then probably accepts none of them.
What if companies just circulated anonymous forms asking who would you most like to work with (top three) and who would you least like to work with (bottom three).
Since humans are pretty consistent about who does / does not suck (even if management is perpetually clueless) you'd end up with a pretty swift measure of who not to piss off with a stunt like this.
If you let the remaining 80% go (and gave them enough severance to cover them for the duration of the rehiring process), you could probably limit the bad feeling dramatically if they returned to find that all the must universally despised people had been weeded out.
That probably breaks at least a dozen laws, and reveals my near-total lack of experience with HR skulduggery and employment lawyers, but hey - if you've got to be brutal, this seems like the least bad way.
We did this constantly at Pfizer. Eliminated roles, made people reapply, and reassigned people to comparable jobs. We did this to comply with a crazy, process-laden severance program written by a team of insane, Machiavellian lawyers.
Do not miss this line of work.
Laurie @ Punk Rock HR