In Stikkee Situations we’ll try to take a humorous look at a lot of different serious business topics.
In this episode we poke fun at the wonderful world of downsizing.
Employees hate workforce reductions (aka downsizing), but some CEOs (even in profitable companies) seem to love these traumatic events as a tool to save their job and to drive short-term movements in the price of a company’s stock price, often coming on the heels of a company missing their earnings estimates.
But the positive short term stock price effects of an across the board workforce reduction come with heavy consequences, several of which greatly affect the innovation capacity of the organization, including:
- Destruction of trust within the organization
- Reduction in collaboration in the organization
- Loss of forward momentum on project work
- Loss of some of your best talent as they proactively find themselves jobs elsewhere
- Reduction in passion, creativity, and engagement among those who remain
- Elimination or reduction in the organization’s commitment to innovation
Now of course sometimes workforce reductions are necessary to avoid bankruptcy or for strategic realignment (removing human resources from business areas you are exiting), and they can be potentially healthy for the organization.
But, when downsizing is done purely to please wall street and in an untargeted way, in the long run I would assert that the organization suffers more than it benefits because any reduction in forward innovation momentum is an invitation to competitors and startups to speed past you.
So, keep innovating!
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