Who's Afraid of the Big, Bad Recession? - avoid layoffs in downturn - Brief Article

For many employers, there's no bogeyman worse to have hiding behind the closet door than an impending recession. An underperforming stock market, the crash of more than 130 dot-com businesses, and a gloomy economic forecast from the incoming presidential administration have many companies pondering selective layoffs and scaling back recruiting efforts.

Which may be a terrible mistake, if you listen to futurists Roger E. Herman and Joyce GioiaHerman. The Hermans, authors of the widely read weekly advisory Trend Alert and the book How to Become an Employer of Choice, express concern over employer jumpiness in recent days, indicating that rash measures might backfire and end up damaging business in the long run.

"If employers panic at the thought of a recession downturn," they write, "and begin selective layoffs, their other employees may leave, fearing for their job security. Workers already have a lot of choices of employers, and many are being courted by recruiters already. It won't take much of an effort on the part of nervous employers to motivate a significant number of their people to accept other employment."

In other words, the labor shortage is hardly over, and dumping resources during a possible slow period is a bad idea. Indeed, the much-heralded dot-com crash had less impact on the job market than anticipated. Although 130 online businesses folded, there are still approximately 10,000 up and running, nearly 3,000 of which were acquired by larger, wealthier companies. In the marketing field alone, there was an increase in demand of nearly 48 percent at the end of 2000, according to B to B Magazine. The nearly 8,000 jobs lost in that arena barely keep pace with the ever-increasing number of open positions. The job losses in the entire Internet field pale beside the closing of Montgomery Ward, where 28,000 employees are being phased out as liquidation proceedings continue. While the closure is a concern, the Wal-Mart and Target chains, which put the venerable department store out of business, continue to grow and will likely provide employment opportunities. Similarly, General Motors is making an effort to relo cate many of the employees of its soon-to-be-defunct Oldsmobile division elsewhere within the company. At the time of this writing, unemployment remains at roughly 4 percent, scarcely up from more optimistic times.

"Economists suggest," say the Hermans, "that the slowdown that some call a recession is just a temporary slowing of growth. The growth curve is not dropping; it's just moderating. 'Reduced growth' is not a sharp economic downturn, just a reduction in the rate of growth. The underlying economy is strong and will pick up again soon." Employers who reduce their costs might find that takes a toll, threatening the companies' potential, they say. Recovery will be slow, or even impossible.

"This period is not the time to be losing workers who are so valuable, so essential to employers' success in the competitive world of today and tomorrow. On the contrary, in these jittery times, wise employers should strengthen their efforts to keep good people--providing strong leadership, training, and a supportive environment."

COPYRIGHT 2001 ACC Communications Inc.
COPYRIGHT 2001 Gale Group