Responsible Restructuring

6The Virtues of Stability

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While it is currently fashionable to lay off employees as a way of becoming “more competitive,” some companies have steered an alternate course. In their view, there is virtue in providing stability and employment security.

Do you recall the research described in chapter 2 on the financial consequences of employment downsizing from 1982-2000? In that study, Stable Employers, those whose complement of employees did not fluctuate by more than plus or minus 5 percent, were more profitable in the year of the announcement of the cuts and in the ensuing two years than Employment Downsizers. This finding held up even after adjusting for the performance of the industry in which each firm competes. A second finding was ...