Some governments, recognizing the massive damage layoffs create, have written laws protecting employees against them. In 2008, Nokia did have the right reasons, but it still suffered because of its process. And when we say “wrong reasons,” we mean done to achieve short-term cost cuts instead of long-term strategic change. Consequently, they were seen as unjust and took a steep toll on Nokia’s reputation and sales. The job cuts in Bochum ignited outrage because Nokia had generated so much profit the year before. By “bad,” we mean layoffs that aren’t fair or perceived as fair by employees and that have lasting negative knock-on effects. She has seen that all too frequently companies do bad layoffs, do layoffs for the wrong reason, or worse, do both. One of us, Sandra, has spent eight years researching best practices for workforce change in global multinational companies. This time, Nokia implemented a program that sought to ensure that employees felt the process was equitable and those who were laid off had a soft landing. Chastened by their experience in Germany, Nokia’s executives were determined to find a better solution. That would involve laying off 18,000 employees across 13 countries over the next two years. In 2011, when Nokia’s mobile phone business tanked, its senior leaders decided they needed to restructure again. The firm’s market share in Germany plunged company managers estimate that from 2008 to 2010 Nokia lost €700 million in sales and €100 million in profits there. Ultimately, the shutdown cost Nokia €200 million-more than €80,000 per laid-off employee-not including the ripple effects of the boycott and bad press. The news was filled with pictures of crying employees and protesters crushing Nokia phones. Unions called for a boycott of Nokia products. German government officials launched an investigation and demanded that Nokia pay back subsidies it had received for the plant. A week later 15,000 people protested at Bochum. “It was a totally hostile situation,” he recalls. As he addressed them, the crowd grew more and more agitated. Juha Äkräs, Nokia’s senior vice president of human resources at the time, flew in to talk about the layoff with the plant’s 2,300 employees. For management, the choice was clear: Bochum had to go. Meanwhile, labor costs in Nokia’s Bochum plant in Germany had risen by 20%. Yet competition from low-cost Asian competitors had driven Nokia’s prices down by 35% over just a few years. At the beginning of 2008 senior managers at the Finnish telecom firm were celebrating a one-year 67% increase in profits. Some companies, however, have realized that they need a new approach.Ĭonsider the case of Nokia. Typically, they turn to episodic restructuring and routine layoffs, but in the long term both damage employee engagement and company profitability. To keep up, many organizations have had to rethink their workforce strategies, often making changes that are disruptive and painful. Two great forces are transforming the very nature of work: automation and ever fiercer global competition. Most successful approaches begin with a philosophy that spells out a firm’s commitments and priorities, establish methods for exploring layoff alternatives (such as furloughs, retraining, and reassignments), and determine options for three scenarios: a healthy present, short-term volatility, and an uncertain future.Īs firms like AT&T, Michelin, Honeywell, and Nokia have learned, thoughtful planning helps organizations address workforce transitions and cope with a shifting economic landscape far better than layoffs do. This article looks at better ways to handle changing workforce needs that make sparing use of staff reductions and ensure that if they do happen, the process feels fair and the affected parties have a soft landing. Too often, they’re done for short-term gain, but the cost savings are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation, which hurt profits in the long run. Yet research shows that job cuts rarely help senior leaders achieve their goals. Today layoffs have become companies’ default response to the challenges created by advances in technology and global competition.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |