06/19/2020

Run Your Business So You’ll Never Need Layoffs

Don't act rashly and then pay for it later

The recent “Open Letter to Business Leaders,” written by three Harvard Business School students and cosigned by 1200+ MBAs and counting, appears to ask the impossible of the Fortune 500 CEOs to whom it is addressed. “Put your employees first now,” it urges. “Retain them, re-deploy them if needed, and most importantly, pay them.”

Such advice runs counter to customary U.S. business practice, which is to let employees go at the first sign of trouble. Boeing, for instance, regularly furloughs large numbers of people in response to the business cycle. Its response to the current pandemic? Ax 10 percent of the workforce. At the end of May, Forbes magazine compiled a list of companies that had cut staff as of that date. No surprise here: it goes on for page after page.

But the MBAs are on to something — something that most of those companies on Forbes’s list are missing. The best companies have already prepared financial buffers. They have built a workforce that can cope with a crisis. Most of these firms don’t need to lay off anybody.

Please select this link to read the complete article from Harvard Business Review.