As he addressed them, the crowd grew more and more agitated. Juha Äkräs, Nokia’s senior vice president of human resources at the time, flew in to talk about the layoff with the plant’s 2,300 employees. For management, the choice was clear: Bochum had to go. Meanwhile, labor costs in Nokia’s Bochum plant in Germany had risen by 20%. Yet competition from low-cost Asian competitors had driven Nokia’s prices down by 35% over just a few years. At the beginning of 2008 senior managers at the Finnish telecom firm were celebrating a one-year 67% increase in profits. Some companies, however, have realized that they need a new approach.Ĭonsider the case of Nokia. Typically, they turn to episodic restructuring and routine layoffs, but in the long term both damage employee engagement and company profitability. To keep up, many organizations have had to rethink their workforce strategies, often making changes that are disruptive and painful. Two great forces are transforming the very nature of work: automation and ever fiercer global competition. Most successful approaches begin with a philosophy that spells out a firm’s commitments and priorities, establish methods for exploring layoff alternatives (such as furloughs, retraining, and reassignments), and determine options for three scenarios: a healthy present, short-term volatility, and an uncertain future.Īs firms like AT&T, Michelin, Honeywell, and Nokia have learned, thoughtful planning helps organizations address workforce transitions and cope with a shifting economic landscape far better than layoffs do. This article looks at better ways to handle changing workforce needs that make sparing use of staff reductions and ensure that if they do happen, the process feels fair and the affected parties have a soft landing. Too often, they’re done for short-term gain, but the cost savings are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation, which hurt profits in the long run. Yet research shows that job cuts rarely help senior leaders achieve their goals. Today layoffs have become companies’ default response to the challenges created by advances in technology and global competition.
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