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Are Layoffs Worth It?: Opinion

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.

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