After Layoffs What Next

¶ … Harvard Business Review case named; "After Layoff, What Next" published in September-October 1998, in Volume 76, issue 5-page 24. The paper will apply the six step case analysis whereby it will first identify the problem, justify the problem with facts from the case, list alternative courses of action and then evaluate each alternative. Fifthly the paper will draw a conclusion of the case and a final recommendation, and lastly a follow-up and evaluation of the potential impact of the recommendation will be spelt out.

In order to define the problem clearly, the case examples of three major retailers in the United States can be applied. The Mervyn's chain store, Circuit City chain store and Gottschalk's chain store which were all major retailers in country operating in different states with a branch network of an average of fifty stores each. The case of Delarks merchandising store is in some ways related to the case of these three major retailers, and since the three cases are of recent times they can best be used to explain what happened a decade ago at Delarks chain store.

The similarity in all the four cases was; both retailer chain stores experienced financial difficulties in their business life span and due to these financial difficulties their managements were forced to re-structure all of their business organizations in a bid to survive and in the re-structuring process all of them engaged in a series of closure of non-performing stores such as the Madison store a branch of Delarks chain stores, secondly a big number of employees were subsequently laid off in all of the re-structuring processes. The differences among the four case scenarios was that Delarks stores survived the financial turmoil and it went back to profitability with revenue amounting to four hundred million and a 20% increase in the chain's stock price, and it is due to this fact that the Delarks' chief executive officer Mr. Harry Denton was perceived as a hero at Wall Street for his contribution in saving a dying retailer store giant. As for the other three stores they were forced to close shop and subsequently their assets were liquidatied.

However, things didn't go on smoothly for Delarks after the massive layoff in their re-structuring program and the company's CEO was quoted in the Harvard Business Review saying that the company was in a mess and that he felt everything he had successfully built in past year was crumbling down. The main problem was that employee's morale was down and the company was experiencing high employee turnover which included even the senior managers.

Problem justification

Referring to the Harvard Business Review, the first instance to justify the problems Delarks was facing after the layoffs was the headline in the second page of the Women's Wear Daily, which stated that Delarks merchandising Chief was leaving the company and the same headline posted the question whether other employees of the company would follow such a move.

The other fact that could justify Delarks was facing problems after the layoffs was the report by the company's head of human resource department who informed the CEO that there were rumors going round that at least four to five senior managers and salespeople were apparently planning their departure from the company. The company was posed again to lose other valuable human resources and this time it included even a manager of the most profitable store within the chain store located in Wichita, Kansas.

For the employees they had lost trust in the company's management since everyone was kept in the dark about the downsizing scheduled to happen, even in some cases senior employees like the company's head of HR and the manager of Madison store. The discontent among the staff resulted to low morale and motivation among the staff; this according to Chalofsky (1998, 112-124) eventually results into decrease in sales level and decline in a company's profitability.

List of alternative courses of action

Referring to studies conducted by McLean (2006, 56-77) the first alternative course of action in such a case is to re-call back some employees like Mrs. Collier whom the company can use as a reassurance to the other staff that there would be no more layoffs since the company is returning back to profitability.

Delarks could also contract a HR consultant firm that would best help them in employee motivation and loyalty.

The other move was for the company's CEO to come out clearly and tell the staff what they want to hear as well as assure them that their jobs are safe.

Alternatively the company could increase the salaries of its employees the same way they did for the CEO after the layoffs.

Advantages of each alternative

Re-calling back some former employees has the advantage of reassuring everyone else that indeed the company valued and will value its' employees for their contribution, this move would go a long way in boosting the employees morale, motivation and loyalty. Re-calling back valuable employees like Mrs. Gracia would also guarantee the company of its' improved performance.

Contracting a HR consultancy firm to aid in employee motivation and loyalty would definitely work since they are professionally trained for such tasks.

According to Russ-Eft and Preskill (2001, 77-89), employees are likely to believe in the word of mouth coming from the CEO, if he comes out to reassure them of their job security.

Swanson (2001, 299-312) in his studies noted that salary increment can easily work the magic for employee motivation and loyalty and this would reduce the turnover rate.

Disadvantage of each alternative

Re-calling back employees such as Mrs. Collier who was a low performer would negatively affect the company's profitability, as for managers like Mrs. Gracia; re-calling them back would expose the company as being too much reliant on individuals rather than in the team spirit and this would also mean that its human resource development is inefficient.

Contracting a HR consultancy firms is expensive and it usually results to an increase in expenses for a company.

The re-assurance from a company's CEO would be a disadvantage to him or her since he can't act against promise earlier made and when situations call for drastic measures to be taken like layoffs, the boss's hands would be tied. Swanson and Holton (1999, 12-23) suggest that promises are blunders since no CEO can promise profitability five years to come as the business World is filled with uncertainty.

Salary increment will also be an additional expense to the company.

Conclusion and recommendation

After a critical analysis of this Harvard Business Review it is evident that the main cause of the problem was lack of effective communication from the management and especially the company's CEO. If the employees had been earlier informed about the impending layoffs, even if affected this would have meant that they were valued by the company for their contribution and most importantly they were respected irrespective of their various positions. Such a move would not have resulted to a discontent like the one that was witnessed after the layoffs.