Tune,
I agree with you on the trade-off between flexibiliy, work rules, and labor costs. That's why I personally refuse to get all spooled up about contract negotiations. UPS will get some of what they need, IPA will get some of what we need, and a couple of years down the line we'll have an agreement; sooner if both sides negotiate in good faith using the interest-based bargaining process. You are correct, the mediators are pretty savvy about balancing interests and determining what's legitimate. And of course I'm in favor of growth-- because UPSCO is such a young organization, our airline seniority list is growth-driven, not retirement driven. I've been in the industry long enough to appreciate that your pay and quality of life is influenced more by moving up the seniority list and less by the contract you negotiate. But there is a difference between negative growth and losing money. UPS is still highly profitable, just not increasing its profit in the current environment-- who is? I don't think it is good business practice put people on the street when we aren't remotely close to being in red ink. Apparently, many business analysts agree; please see article below my sig. Enjoying our discussion!
Regards,
Z
USA Today Thur, Nov 21, 2002
Poor leadership leads to layoffs
By Jason Jennings
The Business Roundtable last week announced the results of a survey of its
membership - 150 chief executives of leading U.S. companies - that had one
truly astonishing finding: 60% of these CEOs expect their total employment
to decline in 2003. In other words, the top leaders of three out of five
major firms believe the weak economy will continue, that they must cut costs
and that they have no choice but to fire people.
These CEOs have embraced the conventional wisdom of Wall Street analysts: If
you don't have layoffs during tough times, your firm isn't lean and mean,
and you don't have a prayer of becoming highly productive. But what if that
conventional wisdom is wrong?
_________________________________________
Lost jobs
The top three reasons employers cited for extended
layoffs at their companies in this year's third quarter:
Internal company restructuring.
Completion of seasonal work.
Lack of demand for products, services.
Source: U.S. Department of Labor.
__________________________________________
Don't balance books on workers' backs
I recently completed a major research project on the relationship between
layoffs and productivity, and I was surprised to discover that the world's
most productive firms almost never lay off workers. In fact, they make an
explicit promise that their books won't be balanced through layoffs - not
even during deep recessions. Instead, they cut costs and boost demand in
other ways.
After evaluating the finances of more than 4,000 public and private firms
worldwide, my research team and I settled on 80 that topped their peers by
every reasonable measure of productivity. Simply put, these firms sold more,
spent less and made more profit per employee than their competition, year
after year.
The most striking trait these 80 productivity superstars shared was their
passionate opposition to layoffs, even when the economy was in the dumps.
Consider Nucor, America's largest steel maker, which manufactures rolled
steel and steel joists. Nucor has reduced the time it takes to produce a ton
of steel from 11 hours to 30 minutes - while increasing its earnings for 30
years in a row.
More than 40 U.S. steel companies, stuck with high fixed-cost structures
that make it hard to be nimble, have gone bankrupt in recent years. Yet
Nucor continues to thrive. It pays its steelworkers $70,000 to $100,000 per
year, far above the industry average. And it has never gone through a
layoff.
"When business is bad, as it's bound to occasionally be in a highly cyclical
industry like ours, the first thing to go is every executive perk and bonus,
followed by every plant manager and supervisor giving up theirs," says
Nucor's CEO, Dan DiMicco. "Only then are the workers affected. We'll reduce
the workweek to five days and then four and, on rare occasions, even three,
but we don't lay people off."
'Cure' causes more woes
Leaders such as DiMicco don't act this way for altruistic reasons. They
understand that, except in rare cases, layoffs create more problems than
they solve.
When layoffs begin, workers become afraid, distracted and preoccupied with
their own financial security. It's hard for them to focus on doing good
work. Teamwork suffers as they spend more time covering their rear ends and
looking over their shoulders.
Companies that routinely use layoffs to solve short-term problems risk
losing their most valuable workers to more stable environments. A great deal
of institutional memory also is lost.
Firms that downsize when business is bad face huge recruiting, hiring and
training costs to refill jobs when demand recovers. Add the costs of
layoffs, including severance packages, and savings evaporate.
My advice to those elite CEOs of the Business Roundtable contemplating
layoffs: Focus on your shareholders' long-term interests, not the current
quarter's profits. Stop trying to impress the Wall Street analysts by
cutting staff at the first sign of a downturn. Inspire your workers to help
you cut costs and boost demand. And above all, stop talking about layoffs as
if they're beyond your control. Ultimately, layoffs are not caused by a weak
economy, or industry trends, but by uninspiring leadership.
Jason Jennings, a management consultant, is the author of Less Is More: How
Great Companies Use Productivity as a Competitive Tool in Business.