Revolving Door Policies Hurt Morale and Profits

During economic slowdowns, too many companies treat their employees like any other asset. These companies lay people off, only to hire replacements within a few months. This is not only short-sighted and cruel, but it is also very expensive to the company.

[USPRwire, Tue Dec 04 2007] As more and more signs appear that indicate the economy is slowing, many businesses are considering laying off employees in an attempt to cut costs. According to Business Expert and Author Alan Stafford this is a misguided philosophy that usually backfires on the downsizing companies.

“It's really quite expensive to recruit, hire, and train new people,” explains Stafford. “A company that reduces head count loses that initial investment in the new hires. Then, when the laid off employees are eventually replaced, the company bears the high cost of new hires all over again. The people-and their skills-who were let go are lost forever because they find new jobs with other companies.”

Just as detrimental is the effect on morale of the employees who were not laid off. Productivity suffers even as the remaining employees are asked to do the same work with fewer people. Research has confirmed that these employees feel just as much stress as do the people who were laid off. This stress results in diminished enthusiasm, lower morale, and in even unintended workforce reductions. Some of the layoff survivors will change companies to avoid being next on HR's hit list.

“Amazingly,” notes Stafford, “many so-called employee friendly companies will actually lay off people in December, right before the biggest holiday of the year. This shows an appalling lack of sensitivity and brands the company in a negative way. It then becomes more difficult, and more expensive, to recruit and hire new people in the future.”

The answer is that it is cheaper to keep employees than it is to replace them. Unless a company is facing imminent bankruptcy, reducing employee turnover is good not only for the corporate image, but it is also good for the company's bottom line.

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