Tuesday, June 09, 2009

Cutting muscle

Yesterday my company had a round of layoffs. Everything in this post is public knowledge except for my feelings about the people who were let go. I have removed all references to the company itself, per company policy.

This is the third round they have had since I started working there. In the first round, they got rid of dead wood amongst the permanent employees and kept most of the contractors (including me, at the time). I was new to the company and did not know the people who were fired.

In the second round, they cut the weak performers, people who were making a contribution, but whose work was non-essential or whose salary was high compared to their output or who were otherwise deemed expendable. They also cut most of the contractors. I knew several of those people who were good workers.

In the third round, they have cut some people who were indisputably making a genuine contribution, including two members of my team of eight and some managers who had been at the company a long time. Everyone acknowledges that as these people walk out the door, essential operating knowledge leaves with them. The cuts may be justified and unavoidable (and essentially protect the jobs of those of us lucky enough to still have a job), but they were brutal. We still need those people, we just cannot afford them. Brutal decisions like this are what keep companies alive in hard times.

If before they had been cutting fat, today they cut muscle. They just sold off part of the company. The argument is that, with that part out of the way, we will have less work to do and hence, we will need fewer workers. The reality is that, for the next several months, we will have more work to do in transition, we will have longer nights. But we will have the satisfaction of knowing we are helping to keep the company going.

The company's majority investor, has invested hundreds of millions in the company since February. This sale brings in $millions and once the sale is complete those stores will no longer be bleeding cash from our company. I am confident that these steps will bring the company back.

I have no way to judge the worth of our product: I am not a woman and have no taste in clothes besides. I have to trust the talent of those who know the industry and know their customers. I do not know all of the things upper management is doing to make this company profitable again, and some of what I do know I should probably keep to myself. They have replaced a key person with a more talented person. They have streamlined operations and are working to make things more efficient. We are exploiting free, open-source software to make ourselves more productive. The people who are running this company are doing a very good job in a difficult time.

I am surprised that I still have a job. I will not survive the next round. I hope there is no next round, but there is another financial reporting period before the Christmas season and the survival of this company depends on our customers coming back to the stores to spend.

But when I look at the economy and the direction of the country, I am not optimistic. The unemployment trend is atrocious and could have been predicted. Some of this could be blamed on the frightening collapse of financial companies, but some of it is also to be blamed on those who for more than a year did their damnedest to convince the American people they were suffering from the worst economy since the Depression last year: Obama and Hillary, chiefly. Well, now they have their wish, and it is up to them to fix the problem.

Clearly, what they are trying is not working, and let's face it, it never had any prayer of working. If they had wanted to give American industry a shot in the arm, they could have forgiven in taxes an amount equal to the inaptly named "stimulus" plan. How many jobs would have been saved?

They could have put a moratorium on various gov't regulations (e.g. Sarbanes/Oxley) which cost tens of thousands of jobs annually. That would be a stroke of the pen and real jobs saved -- not just phantom jobs as Obama claims to have saved without offering any evidence whatsoever. As many people have pointed out, the gov't does not measure jobs saved, so where does Obama get his numbers, if he is not making them up? He's making them up.

They could have borrowed this year's payroll tax revenue and let the people keep that extra money. People cannot spend what they do not have. Instead, they borrowed and printed the money, but have given it to banks who are not lending it. Even if banks want to lend it, they depend on the borrowers' confidence to repay, a confidence that is clearly absent nowadays.

Before he was elected, I predicted that Obama would be known as Carter 2.0, but now I fear he will take a place beside Hoover. Nothing he promised has come to be except for the thing he droned all last summer: This is the worst economy since the Depression.