Another Round of Job Cuts and Cost Saving Initiatives Underway

Having spent many years in corporate America, this author has seen the reactions to economy up swings and down swings many times. The results of a down swing have become very predictable in a business world focused on the short run, not the long haul. If you are not already aware of the standard practices that kick in during an economic slump, read this article, be enlightened and be prepared.

Stock holders and owners want profit not loss, so when sales or cash flow begin to fall away they react quickly to keep things in the green. What is the first predictable cut? Salaries. Companies will rarely ask employees to take a pay cut, as in the case of Delta's reorganization. Rather, they will simply target the people making the most money, but not the guys at the very top. They are the ones doing the cutting and they certainly aren't interested in cutting themselves. Long term employees are usually the first to be "let go." So don't think for a minute that because you have been with a company for many years and are perceived to be a valuable employee that your head won't roll, if your salary is juicy.

Once the bigger salaries have been sheered off the bottom line, annual increases will be decreased or frozen. Hiring freezes will follow. Heck, you can do the job of two people can't you? Most companies expect 50-60 hours per week of salaried employees anyway, so what are a few more late nights and skipped lunches. It's only your health that will suffer. Oh, and by the way, they are changing health benefit coverage; you'll be paying the first $2,000.

The next predictable cut is travel and expense accounts. There will be a push to communicate by phone, email and teleconferencing. Company cars will disappear and you'll be asked to use the bus instead of a car service or cab. Hey, better yet, use your own car, maybe they'll pay you mileage.

Next to get whacked is the training budget. Most training departments are merely a reflection of the corporate "flavor of the month," which gives training a bad name and a bad rep, because it is simply throwing "speak" at problems. Being certified in Accelerated Learning Methodologies, I have to admit that some of these trainers and training organizations really do need to be whacked-but they should be replaced with people who know how to develop quick hit training that gets the job done and doesn't waste time or money. The sad thing is that in the corporate world, no one seems to be able to justify training dollars against profits. Training costs the company time and money, but it doesn't directly improve the bottom line, so it must be something that has no value. Chop, chop, chop. Hey, there go 8 more jobs. The company is starting to look good again-on paper.

As a consumer, you will see the results of all this cutting and shaving, whenever you deal with this organization. Customer service takes a direct hit, first because the people who had the most company and product knowledge are gone and have been replaced by young kids who don't know the company or the products, other than what they read on their cue cards. Add to that the fact that they have no customer service skills and are not getting any training to make them more skilled or knowledgeable. Customers begin to shift away from companies with poor customer service and the whole moronic cycle begins again.

What companies never seem to acknowledge, in these situations, is what they loose in the long haul. Companies routinely shoot themselves in the foot with these reactive practices. Next time they are in an upswing, maybe they should spend some time planning for the next downswing. Oh, but why bother. The guys reacting probably won't be around for the next round of cuts. They will have moved on to another company. Even if they are still around, they have their golden parachutes. Geronimo!