Are Layoffs Stunting Your Company's Growth?

by Pamela Wasley

Disney just announced they were offering buyouts to 600 executives, over 200 here in Southern California. Other companies that laid off executives since January 1 are Intel, Time Warner, Yahoo, General Electric in addition to thousands of small to mid-sized companies around the country.

Of course it is advisable to review talent and occasionally replace weaker employees with stronger ones but with layoffs of this magnitude, these companies may end up cutting people who will impact company growth. So how do you reduce fixed costs without stunting your company's growth?
 
Last week, a panel that I attended of Venture Capital and Private Equity firms said all companies should be cautious of what they spend but agreed that they should not stop spending altogether.  They went on to say that now is the optimal time to engage talent that has demonstrated the ability to navigate and thrive through turbulent times.  Rather than keeping or hiring employees which affect your fixed costs, look to outsourcing strategic talent that can help you achieve specific business objectives aligned with your corporate goals during these challenging economic times.  

An outsourcing solution that is gaining traction these days for high-level management expertise is Interim Executive Management. Interim executives are a "short term investment for long-term benefit." They understand how to maneuver companies successfully through recessions and have done it many times with companies they have worked with in the past.  With interims executives, there is no expense in recruitment, training, or benefits. They ramp up very quickly and have one track minds set on furthering a company's goals rapidly and expertly. Also, unlike consultants, interim executives are geared to changing a company's DNA through the transfer of their skills and knowledge.   For small to medium businesses, it is often difficult to absorb the cost of a high level executive. Thus, it is extremely worthwhile to review the economics in making the best decision to make your executive staffing recession proof.

Whether filling a gap in your executive team on a part time basis or looking to transform your company to the next level in order to stay ahead of your competition, consider hiring an interim executive who can help you achieve your short and long term goals. Read more on this in Alan Creutz's article in the Required Reading section of this newsletter, Change vs. Transformative Leadership.

One last thought I would like to leave with you -- when times do start to get better, don't start hiring a lot of permanent employees again.  Strategically consider whether you need permanent executives in "hot spots" in your company or whether it would be a better investment for you to strategically hire leadership when and where it is needed.  Leadership on-demand will always help decrease fixed costs while at the same time driving corporate growth and improvement.

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