James Champy

When financial pressures and capital markets demand improved financial performance, the most common reaction is a reduction in force — that’s a layoff. I’m sorry to report that many managers choose layoffs as an expedient way to improve performance and satisfy capital markets. The result for the company is half the people doing twice the work. Capital markets may see some short-term profit improvement, but customers experience service degradation, and employees lose energy and inspiration. Real process change — not just cost reduction — is necessary to sustain real performance improvement. Capital markets should not be fooled by expediency, nor should they be selfish in expecting to be the only beneficiaries of corporate change. Yet that’s what happens when companies choose only layoffs as a way to fix a problem. Customers and employees must also benefit if a change is to achieve long-term earnings improvements.

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