When Layoffs Cost Money

associate layoffs cost money.jpgThis weekend, the New York Times explored the cascade of sadness left behind after massive layoffs. Aside from fear, the Times noted that there can be a productivity downgrade that shows up in real economic terms.

Too often, their anxious and overworked remaining employees become risk-averse and unproductive, or leave for other jobs. As companies hire new workers or turn to outside vendors to compensate, the short-term savings from layoffs can evaporate.

The National Law Journal also has some stern advice for layoff-happy firms. According to Bruce McEwen of Adam Smith Esq., “law firms that slash associate numbers in hopes of keeping profits-per-partner high may be headed for trouble.”
What else law firms can try, beyond going to $190K, after the jump.

Gauging associate demand for firm jobs is “somewhere on the spectrum between astrology and numerology,” according to Morrison & Foerster Chairman Keith Wetmore. Sometimes layoffs are used as a method of course correction.
But are law firms sufficiently taking associate morale into account in their business models? Or are they just creating a corps of dispirited employees who will leave as soon as a happier opportunity comes their way?
There are no easy answers, but USC professor Warren Bennis said that it comes down to one word: respect.

[Bennis] decried bureaucracies that “lay down edicts” about cutbacks and treat employees as if they were invisible or indistinguishable — the opposite, he said, of respecting them, which in essence means seeing them clearly and individually.

How much does respect cost nowadays?
After a Downsizing, How to Motivate? [New York Times]
Fast cuts could lead to regrets [National Law Journal]

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