From: Harvey Newstrom (mail@HarveyNewstrom.com)
Date: Sat Sep 01 2001 - 09:35:08 MDT
The problem, as I see it, is that these CEOs don't deserve a raise for these
layoffs. The logic is that cost-cutting makes the company more efficient
and raises profits. However, these layoffs aren't really cost-cutting.
True cost-cutting occurs when a new efficient method is found to produce the
same services cheaper. If a company were to announce some major
breakthrough technology that allows them to do more with less, this would be
true cost-cutting. They then could cut jobs while maintaining productivity.
This would decrease the cost-to-benefit ration and product more profits.
But when a company cannot compete in the market or spends more to produce
its services than they are worth, this company is failing. Such a company
is destroying resources without adding value. Simply laying off employees
without a new methodology won't change the cost-to-benefit ratio. By
cutting resources and using the same methods, these companies are cutting
costs and benefits. These CEOs are in effect saying that since they
destroying value rather than creating value, the best course is for them to
do as little as possible. They aren't making more with less. They are
making less with less to minimize the impacts of their value destruction.
Such a company is destroying resources with no net benefits. Such a CEO is
failing at the job. Claiming that this course of action is "cost-cutting"
or "profit-making" is simply fraud. Such a CEO is defrauding the
stock-holders and is driving up debt to line his own pockets.
-- Harvey Newstrom <http://HarveyNewstrom.com> <http://Newstaff.com>
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