This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Are Layoffs Worth It?: Opinion

Stocks in this article: HPQ

NEW YORK ( TheStreet) -- Thirty or 40 years ago, when the local plant announced a layoff, it was often temporary until business picked up.

Back in the '90s, we shifted to a more permanent notion of layoffs. Since then, we've gotten so used to layoffs, they're actually considered sound, strategic decision-making.

But are layoffs worth the unintended consequences?

In September 2011, Meg Whitman became Hewlett-Packard's (HPQ) fourth CEO in a little more than a year.

Her first dramatic effort is to disrupt 27,000 families because HP isn't sure how it's going to revive the listless behemoth.

Sure, HP investors get excited when any costs are reduced, especially personnel costs, which can represent more than 70% of a company's expenses with salary, taxes, insurance, pension and benefits. Layoffs reduce costs but raise other issues.

Layoffs do the following:

  • Punish people for doing their jobs and being loyal.
  • Reinforce the union mantra that management sees workers as disposable.
  • Discourage worker loyalty and morale.
  • Increase fear, uncertainty and doubt.
  • Reduce productivity.
  • Inspire sabotage, rumors and gossip.
  • Increase mistrust of company leadership.
  • Violate implied security or reward for performance, obedience, or hard work by employees.
  • Are seldom part of a well-thought-out strategy or master plan.

This 27,000-person layoff represents 8% of the HP nation. If 8% is good, would 12% be even better? How do you pick the right number?

Perhaps Whitman picked the right number.

Perhaps this will begin the rejuvenation of this tired, strayed giant of a bygone innovation era.

Perhaps this is the first of more layoffs under Whitman, who became HP's CEO after a brief eight-month stint on the company's board.

I ask, "When will boards realize that constantly assessing talent-management risk and alignment, as a component of strategic planning, is always critical, not just when the company is in trouble?"

Layoffs aren't what they used to be. Are they still worth it?

Then again, maybe I'm just being too naïve. After all, everybody does it, so it must be a good thing.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,062.39 +8.68 0.05%
S&P 500 2,093.07 +4.30 0.21%
NASDAQ 4,809.58 +2.7210 0.06%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs