Monday, June 04, 2007

Downsizing at Dell

Apparently, Michael Dell hasn't gotten the word that lay-offs really don't work as a means for shoring up stock prices in the long run, ensuring long run survival, or improving sustainable profitability.

In a Bloomberg wire story last week (picked up in The Boston Globe), I read that Dell would be cutting 8,800 jobs.

Apparently, The Street hasn't gotten the word yet, either, that lay-offs aren't the path to real glory. After the lay-off announcement, "shares rose 5.9% in extended trading." We'll just see where it settles in.

Despite the evidence that lay-offs don't do much for a company - other than leave people without work, drain companies of resources that could be used to grow business, and demoralize the remaining workforce - they certainly seem to have ongoing appeal.

I think that's because deciding to cut the work force is an obvious decision to do something. (Axe-wielding CEO's are brave, courageous, and bold.) Plus it's pretty easily doable, and tangible.  No waffling about what is or isn't the new strategy, no namby-pamby "looking to grow" or "hoping to improve." For men (and women) of action, the decree of "off-with-their-heads" is pretty binary. Heads rolled - or they didn't. It's provable, tangible, visible. Everyone gets to see the glum faced workers when they're given their notice. Everyone gets to see the teary-eyed, sniffling pink-slipped haul their cartons out to their cars. Everyone gets to see it happen.

See! I did something! I'm serious. I mean business.

The backdrop for Dell's cuts is higher sales, margins, and profits than were expected. Maybe Dell doesn't believe that the higher prices that yielded the higher profits are sustainable. What's likely, though, is that when lay-offs come hand in hand with higher profits, the demoralization is felt more sharply. ("Gee, we did everything we could do increase profits, and look what they do in return.")

Maybe Dell has a lot of deadweight. Maybe their halls are crammed with fat.

I've sure worked at places where there seemed to be an awful lot of people who either did nothing or did makework.

But 8,800 jobs lost. That's an awful lot of hurtin' in Austin and everyplace else that's impacted.


And maybe it's all for nought.

Which makes it even sadder.


Anonymous said...

If I remember correctly, Tom Peters ("In Search of Excellence")wrote about HP refusing to use layoffs once-upon-a-time, opting for reduction in hours/pay, or whatever else was necessary...a real "we are all in this together" kind of thing.

Anonymous said...

Unfortunately, the truth of the matter is that they are letting go of people that aren't part of the "fat". They are letting go of veteran employees that have been standing up and refusing this new world order. The sheeple are left behind because they dont voice their opinions like the old timers that remember how things were and how they should be now. As a individual contributor, its hard to sit by and watch management make the same mistakes over and over, year after year. They never learn and the individuals get to reap the mayheim...