Will thousands of job-cuts really save the organization? Many business executives seem to prioritize their decisions based on personal achievements or advancements, the protection of their salary and other retirement benefits, their personal and family security, their social standing and acceptance and finally, the preset goals and objectives of the organization, despite the fact that they may hold economic power over many subordinates.How would this particular decision reflect upon the executive’s legacy (how they are remembered) or prospects for advancement (padding their résumé)? The quest for power is human nature, the more you have is the more you want. Any executive with self-worth crazes success and bases decisions first and foremost on prudent analysis of self; they must own that decision forever. The popularity of the decision will directly affect that individual’s family and future employment opportunities. So any decision that may result in the laying-off of thousands or resigning (firing one-self) cannot be taken lightly.
How does this painstaking decision affect the executive’s salary and other retirement or separation benefits? By the time an individual in the private sector reaches both the competency and experience levels required for the executive suites, they would have accumulated a strong and sound personal financial portfolio able to generate annual returns that equal or exceed the annual salary of the post presently held. This portfolio would include a healthy set of short-term cash deposits, direct investments in other non-competing business operations, a diverse stock portfolio and a wide ranging set of medium and long-term bond instruments. The executive remuneration must be able to attract and keep proficient individuals always being pursued by the competition with bigger and better terms and conditions and offer a separation package or exit cause that addresses the fact that this individual may be unemployable, because of age or knowledge of trade secrets, after holding this position. Hence, an independent long-term analysis on the very survival of the business may show it to be cheaper to send home thousands of low pay employees than one executive.
How would this decision affect the executive’s personal and family security (popularity both internally and outside the organization)? A high profile post makes the individual in that position a target of concern to anyone who may disagree with an executive decision and therefore a security risk. The security expense increases directly with every unpopular decision and even more so with mass lay-offs. Consequently, it may cost the business less to protect its well-known executives and their family than the cost associated with funding a loss-making division employing thousands.
How will this decision play in the executive’s establish social circle? The executive can maintain their personal image, by giving back to the wider society, by continuing to sponsor cultural and sporting events. Lecturing, writing and consulting and to a lesser extend getting involved in politics and lobbying have been the more traditional tools for popular ex-executives to uphold professional status and preserve their social standing. As a result, sporting and social clubs are filled with volunteering and networking high profile formal executives.
How would this decision advance the organization’s goals and objectives? It is all about profits, for only through profits can business survive, to keep and create jobs, pay its social obligations and serve as that vital link in the economic chain. Hence, a decision to cut thousands of jobs must be clearly justified via the business plan and communicated to all stakeholders as to how this business will regain profitability from this action.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
