It is difficult to pick up a newspaper or listen to a business news broadcast without being greeted with the announcement of another massive corporate layoff or cutback. The economy catches a chill and, as a result, the corporate world catches a profits "cold." Before long the pink slips begin to fly. We have come to accept this as the inevitable employment cycle. Is it any wonder that employees feel so little loyalty toward their employers?

On the other hand, corporations seem to have no alternatives. With the squeeze on profits, and stockholders and analysts anxiously watching, company leaders feel that they must act quickly or bear the wrath of Wall Street. They understand that their response may in fact be a little shortsighted, but investors have short fuses when it comes to waiting patiently for earnings statements to turn around. However, without viable alternatives, corporate executives seem doomed to repeat the same pattern. Is there any alternative?

The answer is both "yes" and "no." In the short term, some cuts may be essential, but it is far better to do so by the use of a scalpel, rather than an ax. Why? Because your organization's long-term future may well be on the line, and its future profitability may depend on the way you respond to the present economic downturn.

Positive Benefits that Accrue from Not Cutting Staff

There are numerous direct benefits to either not cutting staff or, if cuts must be made, to minimizing them. And if cuts are necessary, highly selective surgical cuts should be utilized wherever possible to remove only under-performing or marginal employees rather than implementing massive across-the-board cuts. The benefits to following this course of action, to name just a few, include:

customer and vendor relationship continuity;
recovery of sunk recruiting, experience and training costs;
higher morale and efficiency;
personnel knowledge base retention;
containment of sensitive information, such as customer data, proprietary processes and methods;
marketplace responsiveness;
continuing organizational development; and
the potential for innovation

However, in the long term, I believe the greatest advantage in avoiding across-the-board job terminations is in fostering a strong, pervasive and healthy corporate culture that is unique, very visible and highly regarded throughout the organization as well as by its customer and supplier base. In the last three decades, many corporations have demonstrated a singular disregard for any development of their corporate culture. Fixation with leanness and repeated cycles of mass hiring and firing were justified as the means to achieving high profits and maximizing stockholder return on investment. However, in his books Built to Last and Good to Great, Jim Collins points out that even the most touted of these corporations have failed to achieve the returns of other, less mercenary organizations that have chosen to pursue a longer-term vision with a people-centered path to achieving greatness.

Developing a pervasive and positive corporate culture encompasses far more than merely vocalizing a series of platitudes. It demands a continuing commitment to pursuing greatness as an organization, even at the cost of more immediate near-term success. Leader