In non-Dilbertian terms: Layoffs.
Paradoxically, it costs a lot of money to let people go (in the U.S., at least). Time-Warner recently announced it would cut 1200 jobs. According to the company, the RIF will cost an estimated $100 million.
The true costs of a RIF to a company go well beyond the termination pay and other costs associated with getting rid of someone. The real costs include:
- Brand equity costs: How much does it hurt a company's reputation as a "good place to work" when it announces layoffs?
- Morale costs: Employees who survive the cut are often demoralized and fearful (with good reason).
- Rehiring costs: Eventually, when (and if) things turn around, some positions will need tobe refilled.
- Sales-disruption costs: Deals may fail to close, or a company may be eliminated from consideration during a procurement effort, if the company in question is perceived as "in trouble" due to a painful cost-cutting exercise involving layoffs. These days, procurement teams are justifiably "skittish." They want to avoid going with a company that might be perceived as a risky choice.
What if you're Sun? Or Novell? Or Vignette?
The answer is pretty simple. Responsibility for a company performance ultimately rests with executive leadership: the folks at the top.
A company's success is a team effort, obviously. No one person causes a company to succeed or fail. But strategy -- and its execution -- begin at the top. It all cascades down from there. This is why the folks with CxO after their names are paid the Big Bucks. Isn't it?
Therefore, when I see a company like Sun (which is overflowing with good technology and good people) do poorly over a protracted period of time -- going back before the current recession -- I can't help but wonder why folks like Jonathan Schwartz get to keep their jobs.
Mind you, I have nothing against Schwartz. I know someone who has worked closely with him, and by all accounts he's a really nice guy. But guess what? He has failed at his job.
The same can be said for Ron Hovsepian at Novell. I know him to be a heck of a nice guy. He's smart, he's dynamic, and his heart is in the right place. But he, too, has failed miserably at his job.
The list is long.
I don't know about you, but I think people who fail in their jobs (no matter how smart they are or how personable or how great a job they did in prior lives at other companies) need to be put on probation, then ultimately (as conditions warrant) replaced. This is how it works at the bottom. This is how it works at the middle. It needs to work that way at the top.
Sure, it happens. But it's not happening fast enough.