One More Look at Layoffs During the Great Recession

In an article written for the Harvard Business blog, Michael Segalla takes “one more look at layoffs during the Great Recession.” Here is a somewhat lengthy excerpt from that article. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

Michael Segalla

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Here’s a brief update on some research we’ve been doing on layoff practices.

For a decade we tracked who was likely to be fired in Europe during an economic downturn. Surprisingly, it was not generally the least productive managers. Over 40% of European managers said they would layoff an older manager even if that manager was a high performer. Twenty eight percent said they would fire younger workers even if they were cheaper or better performers than others. Less than a third of the Europeans surveyed since 1999 said they would fire the employee we called the “weak link,” the older, expensive, average performer.

But the Great Recession seems to have changed Europe’s attitudes to layoffs. Over the summer of 2009, we asked 700 international managers the same set of questions. This time, nearly half of respondents targeted the weak link, the older, expensive, average performer. Second, 42% said they would choose to fire a younger manager, even if he was cheaper or better. The older, more expensive but high-performing managers were targeted for layoff the least, by only 10% of the responding executives.

Notably, younger managers were always more likely to fire older managers. But respondents over age thirty-five were about twice as likely as younger managers to fire a young, good, and cheap employee. The overall message seems to be: Work well, don’t cost too much, and avoid middle age.

We also looked at layoff practices across cultures. In the previous research, we found managers in Anglo-Saxon cultures typically fired the weak links, the least productive, mid-career stage managers. Germanic countries overwhelmingly laid off the youngest managers even if they were cheaper or better performers. Latin countries preferred to fire older managers, even if they were excellent.

In this most recent round of research, though, things have changed. Average performers are being targeted more across all cultures. The top two targets for layoff this time around were the older, expensive, average performer and the younger average performer.

Drilling down, the Dutch, Indians, and Germans are the most likely to target the average performers. The Italians, French, Austrians, and Polish were less likely to fire the so-called weak links. Americans, previously noted for ruthlessness in firing weak performers, now fall in the middle.

When it came to laying off high performers, though, cultures diverged. The younger excellent manager was the more common target in Germany, the U.S., Poland, and France. The older excellent manager was the more common target in Italy and India. If you’re young and/or good, head for Holland or Italy.

Comparing these results to our previous results, the Great Recession seems to have focused businesses’ firing practices more on performance, and less on age and cost. We saw less divergence in layoff attitudes and more agreement (though not total agreement) that weak links — highly paid average performers, especially older ones — should be the first to be laid off. More managers were willing to retain high-priced employees if those employees were high performers.

Michael Segalla is a professor and researcher at HEC School of Management, Paris.

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To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

Mastering the Rockefeller Habits — practical counsel from Verne Harnish

I just read a very useful book, Mastering the Rockefeller Habits by Verne Harnish.  I learned of it a couple of years ago, and finally read it.  It is a true, “this is how to get it done” book.  Yes, I recommend it, especially for its practical value.

The book builds on the very precise habits followed by John D. Rockefeller, arguably the most successful business leader in history.  (In the book Outliers, Rockefeller tops the list of the wealthiest persons in the history of the world, at $318 billion in today’s dollars).   Harnish takes Rockefeller’s habits, and fleshes them out into practical “this is what you actually do” steps for business leaders.

Rockefeller’s top habits:

1)    Priorities (Harnish recommends a “Top 5)
2)    Data (know the numbers, really, really well)
3)    Rhythm (have daily, weekly, monthly, quarterly, yearly meetings – “with a structure, time limits, and specific agendas)
(by the way, Rockefeller ate lunch with his leadership team –every day – for 19 years!)

This is the kind of book to keep open as you plan which steps to take to build your business.  It is filled with good advice, and useful quotes.

And, after reading it carefully, here is my favorite quote from the book:

Recurrent customer and employee hassles cost your employees 40 percent of their time, not to mention what it’s costing your company in lost customer and revenues…  What makes people hate their jobs?  What makes them non-productive, complaint-happy deadwood?  The answer:  recurring problems and hassles.

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Note, with valuable link:

Verne Harnish summarizes much of the best wisdom in the book into a practical “One Page Strategic Plan.” It is in the book, with a really useful “sample” completely filled in, but you can download a copy and go to work on your own one page strategic plan. Just go to the Gazelles download page here.

Innovators, Break Down Those Silos

In an article published in BusinessWeek (February 8, 2010), Saul Kaplan urges innovators to break down the silos just as Ronald Reagan once urged Mikhail Gorbachev to tear down the Berlin Wall.

Here is an excerpt from that article and a link to the complete article:

http://www.businessweek.com/innovate/content/feb2010/

Saul Kaplan

The most effective way to achieve meaningful change in business is to enable collaborative innovation across cubicles and industries

How many capabilities are locked away, underleveraged in organizational or industry silos? Who hasn’t suffered a severe case of innovator’s envy, coveting access to information and capabilities that seem so tantalizingly close?

Most innovation doesn’t require inventing anything new. It is often just a matter of combining and recombining capabilities across disciplines, organizations, and sectors. The problem is that those capabilities are often impossible to access. The biggest opportunities in health care, education, security, and energy lie in the gray areas between silos. We need to think and act more horizontally.

In doing so, we’ll connect unusual suspects in purposeful ways. Take spies and environmentalists. Recent news of the CIA reviving its MEDEA (Measurements of Earth Data for Environmental Analysis) program and providing access to data from national intelligence assets for environmental research really got my attention. What a great example of the power and politics of collaborative innovation.

More Data Sharing

With no security risk, disruption of agency activities, or incremental cost, the CIA has opened up a treasure trove of valuable data to scientists from academia, government, and industry for environmental research. To replicate the capture of this information would be silly and cost-prohibitive, and I was encouraged that the data were being shared to make progress on an important social issue. But then naysayers and politics entered the conversation. Instead of garnering praise for the program, as I would have expected, the CIA was criticized for mission creep.

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To read the complete article, please visit http://www.businessweek.com/innovate/content/feb2010/

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Saul Kaplan is the founder and Chief Catalyst of the Business Innovation Factory. BIF is a non-profit real world laboratory exploring systems level innovation. He also founded Innomodels to help organizations realize the value of business model innovation. Previously he was the Executive Counselor to the Governor of Rhode Island on Economic Growth and Community Development. Saul also blogs at It’s Saul Connected.

Nine Ways to Research Prospective Employers

In an article published in BusinessWeek (October 27, 2009), Liz Ryan offers some especially valuable advice to those in need of more and better information about a prospective employer. Here is an excerpt. Here’s a link to the complete article:

http://www.businessweek.com/managing/content/oct2009/

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Do this advance work and you’ll be set for a smarter interview—and have the knowledge to make a smarter career decision

It’s a great to spot a job opportunity that sounds like a match for your talents. Unfortunately, the typical job ad doesn’t tell you much more than the company’s name. You need to know: What sort of place is it? Is the organization profitable? Does the company hire smart people and give them room to grow? Is the CEO a tremendous leader or a dysfunctional tyrant?

Following are nine ways to learn about your next prospective employer both before and after you enter its recruitment and selection pipeline. The research will require an investment in time and clever stealth tactics on your part, but the information you’ll gain will merit your efforts. Your enhanced knowledge will allow you to make better decisions and ask pithier questions during the interview process. This not-quite-insider knowledge will give you extra confidence as you deal with company reps, too. And who couldn’t benefit from an extra dose of that?

1) Build Your Dossier

Of course you’ve read the organization’s own Web site thoroughly, focusing on “About Us,” “Management Bios,” and “Investor Relations” (if it’s a publicly traded firm) as well as information about the company’s products and services. That’s just a starting point. Business information sites like ZoomInfo.com, Hoover’s, and BusinessWeek’s Company Insight Center will add breadth to your research. Targeting public companies? The EDGAR database is packed with filings, forms, and comment letters on public firms. Dig in!

Note: Here are the other strategies she recommends and then briefly discusses. If you wish to read the complete article, please visit http://www.businessweek.com/managing/content/oct2009/.

2) Who’s On First
3) Get the Dish
4) Get on the Network
5) Soak Up the Ambiance
6) Get a Different Perspective
7) Call in Your Posse
8) Investigate the Product or Service
9) Join a Group

Liz Ryan is an expert on the new-millennium workplace and a former Fortune 500 HR executive.