The Final Throw of the Dice?
CEOs are forced to look towards layoffs, but layoffs are not the final throw of the dice; rather, they are a means of streamlining operations and 'rightsizing' rather than 'downsize'.
It is often wise to re-evaluate the objectives of the company and its departments, and the strategy that is being followed to achieve the said objectives. In such a re-analysis, it would often become clear that the company can be more efficient by trimming some fat, streamlining operations and resources. Often, a streamlining of resources results in less bureaucracy, and greater flexibility in the 'time to market' for a company. This also forces employees to take important decisions and rely on themselves and on smaller teams, rather than an assortment of assistants. For most global companies, this is often something that is looked towards in order to be increasingly competitive and profitable.
Steve Stanton, from the office of the CFO, Shuaa Capital in the United Arab Emirates articulates a consistent role of the CEO, "CEO's should always be looking to streamline business processes, automate routine tasks, and leverage technology to replace sweat." As the strategic decision maker behind the company's direction, it is indeed vital for the CEO to be exactly aware of the pros and cons of a particular headcount, and its resultant effect on productivity and profitability.
"Every CEO should always be looking to cut any staff that costs more than he/she earns in terms of revenue generation, cost savings, or risk mitigation," Stanton says.
CEO's Eye View,/h2?
C-Level executives, supporting the CEO, particularly the CFO along with help from the HR, become vital in ensuring that the correct decision is made and the right direction embarked upon.
Howard Berkson, vice president sales and marketing at online arts dealers Art Exchange, in Dallas explains the situation, "It's not generally the CEO alone who makes the call to shrink or not-shrink if the layoff decision is being considered on the basis of a downturn in business." He goes on, "It's usually more like the CFO telling the CEO that the company will bleed money too quickly if spending isn't reduced and that turning the thermostat down and (just) going to single ply toilet paper won't be enough."
It is not a simple decision for one person to move the company into downsizing; rather it is a combined decision of the strategists of the company. In the case of global companies, it is often a direction that is handed down from the company headquarters. The direction can be in terms of cost reduction targets, or headcount reduction targets in unstable economic times. In such situations, there is little that a CEO can do to change the fate of employees that need to go. A bank, for instance, might get directions from the top about cutting down on employees. There is little then, that that the local country manager can do except to choose the best resources to keep.
Before the decision is made, either by the local or global management, it is vital for the C-level decision makers to know exactly why they have chosen a particular course of action. It is also paramount for the decision makers to realise that their decision needs to be thought through in terms of long term implications, rather than short term tactical solutions.
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