Sunday, August 17, 2008

Dealing with Layoffs

Before you freak out that I lost my job, I haven't.  My company however did just have a round of layoffs.  I've been part of a company that was a slowly sinking ships and went through many rounds of layoffs, so this is no big deal for me.  In fact, I'm not at all worried about my own job or the financial health of the company.  Perhaps that just comes with having seen much worse happen.

It is funny how companies react to layoffs.  There are many concerns that companies go through.  One of the toughest is dealing with those left behind.   You have to deal both with survivor's guilt and with survivors jumping ship.  Survivor's guilt is the reaction of those who are left behind.  There is a natural tendency to be sad for those who didn't make it but relieved that you were not affected.  This can actually have a singnificant psychological effect and hinder employees ability to work.

The second problem is a significant one.  People don't like being part of sinking ships.  Those that are most talented, and thus the least you can afford to lose, tend to start looking around for another job.  Dealing with this situation is extremely tricky and I'm not sure if there is a right way to do it.  Most companies will try to get employees to focus on the positives and start talking about all the initiatives that will bring the company back to the growth curve.  However, this can often feel like a sell job and smart people really don't like being "sold" to.

I believe the best way to handle this is to be short and breif.  Acklowledge the difficult situation, but then let each person deal with it in their own manner.  In these types of situation, there is often time a grasping for the right thing to say.  But therein lies the problem.  There really is no right thing to say.

Lucky for my company, I still have no plans to leave.  I actually don't mind dealing with difficult situations like this.  Sure, there is greater risk that I might someday lose my job and the company goes under.  But with greater risk comes greater rewards.  It's kind of like value investing.   The best time to get into a company is often when it is at it's lowest point so long as there is not a structural problem.  In such a situation, the only direction is up, and if you can be part of that, the rewards can be good.  It's probably one of the reasons I consider myself more a value investor than anything else.  It may also explain why I'm starting to think the market looks good in places given it has been so beat up in the last few weeks.


  1. Layoffs could be the sign some employees are waiting for to start looking elsewhere. Imagine you've been working for the same company for 5 years, your growth is probably slower since the first promotion, but more importantly you're feeling the rut of the work and company politics. Thoughts of looking for options have occurred to you, but you're also comfortable. You see layoffs and think... if I stay, what's my growth potential now...

  2. It's better for those "marked" colleagues to leave as soon as possible. This benefits both parties. If those colleagues are not wanted, why should they stay? What are their chances of advancing? What kind of job satisfaction can they get if they stayed? Move on. Now, I hope they were able to receive some severance to ease their transition and job hunt....

  3. [...] in this rally.  I look around, and I see weakness all over the place.  I see weakness at work, hence the layoffs, and I work in a market segment that should be ahead of the economy.  I see weakness when I just [...]

  4. [...] About two weeks ago, my company just went through a second round of layoffs.  This is happening about six months after we already had one round of layoffs. [...]