You can thank businesses like where my wife works for the recession

[Crazy Dave]

A year and a half ago things were going great where she works. She and the rest of her coworkers were very busy and working a few hours overtime every week. Then the media starts talking about how bad the economy is and how many companies are laying people off, etc. What does her company do? They start laying people off and cutting back employee hours just to follow the trend. Everybody else is doing it so shouldn't' we was their thinking. It was a corporate not a local decision.

What has happened since then? Her stores customers got tired of waiting four hours or even until the next day for their orders due to the shortage of workers when they used to get them in two hours or less. Within two months her store lost 18% of their customers to different competitors and they had to lay another person off. Now they can't compete with the competition or persuade their old clients to come back because corporate refuses to let them hire the help they need "until the economy gets better" even though the customers told my wife's boss, "if we can get our orders as fast as we did a year ago we'll come back".

Instead corporate is spending big bucks retraining managers and employees. Making them go to seminars and watch videos on customer service and production.

Yeah...that's what we all need to do to get old customers back and help economic recovery, watch videos and listen to some motivational speaker getting paid with our bonus money.

[Phoebe Loosinhouse]

1. Some upper management have their heads up and locked

You gave a really interesting description of a company retrenching when they did not in fact need to, although front line viewpoints might not give the entire view. Maybe some of the companies investments went south and the uppers weren't going to get the bonuses they expected or something. So when you cut, you cut the bone first, right?

I always think of Circuit City being the stupidest corporation that ever lived. When they decided to cut, they consciously let go THEIR TOP PERFORMING salespeople because they felt they were earning too much in commission. Hey! You don't GET commissions unless you first have SALES!!! A lot of them who were interviewed said they were never even offered the option of working for less, they were just terminated. So the company, by it's own hand, is left with the worse performing salespeople. And of course the company died a long slow lingering death when customers decided that they didn't want to shop at a store with low staffing levels and poor customer service and knowlege.

Motivational speakers - ugh! I've had a lifetime's worth of them.

If your wife doesn't know about this site, it's a real picker-upper after being subjected to being "motivated". Get her a coffee mug!

http://despair.com/

[CrispyQ]

11. Love those motivational posters!

I'm still :rofl: at some of them!

[Phoebe Loosinhouse]

13. yeah, there are some real winners in there.

If only life were as easy as putting up some posters and playing the Rocky theme all day long.

:donut:

[snagglepuss]

18. Great site . thanks for the laughs. nt

[4_TN_TITANS]

27. Despair used to be a customer of mine

when I worked for an American picture frame company. They sell quality stuff.

[KharmaTrain]

2. The Gambling Casino Economy...

In the 90s many corporations switched their compensation deals to their stock price...CEOs and others could make far greater money by driving up the stock price and this detached many corporate earnings and operations from actual earnings to the money they could make with their stock price. When the market began to crash in 2008, many of these corporates got stuck on a downhill ride as the real estate bust drove down all prices...as stock prices fell so did company net worth and the belt tightening began. In many cases companies tries to prop up their stock values by laying off and closing locations as they could spin this on Wall Street as a "prudent move". This set up a chain reaction as when you let go of people you also take away money that goes into the consumer market that will lead to lower sales that will drag down the stock price that leads to more lay offs and the cycle goes on.

[redqueen]

16. Wow... that is unbelievably stupid. (nt)

[rucky]

32. Their vision of the "new" economy:

And the rationale for awful decisions like this: Companies that run on their perceived (stock) value. Goods and services of actual value are secondary - treated like a front - and viewed as overhead. If the consumer and worker is cut out of the picture, then everybody (worthy) in America can just invest in stuff, play the market, and make their money that way - as long as we all agree to buy into the ponzi scheme, it'll work. Companies that succeed are the ones who can pitch future value the best.

It's obvious to everyone else in the world why this is not a sustainable business model, but i don't think they're interested in sustainability. The ones in power are enamored with making the quick buck. They don't even realize that what they're doing is fraudulent, and why should they? The FTC gives their tacit approval to this. It's common practice for public companies now, and the reason for our latest market rally.

Fitting that this was a casino in your example. They like to gamble - they'd just rather do it with other people's money.

[CoffeeCat]

3. I'm wondering...

...if the company--as a whole--began suffering as a result of the recession--and they made across-the-board cuts that
affected the store in which your wife works?

I am sceptical that a business would just "follow the trend" for absolutely no reason. It sounds like the company
made really stupid decisions--but I bet the corporate cuts that caused understaffing at your wife's location--were
legitimate cost-cutting attemps--that weren't thought out well.

They probably cut labor a certain percentage across the board.

[AllentownJake]

5. Don't be skeptical

Companies are pretty dumb.

Remember the Japanese got into the American Car market because GM purposely started making worse cars thinking that if the car fell apart after 5 years that Americans would have to buy another one of their cars in 5 years.

[pokercat999]

7. I worked for a major player in the auto repair aftermarket

(not car dealers) with over 1000 retail locations. It was amazing to me to see the middle management continuously lying to department VP's and even the CEO. Telling them just what they wanted to hear, that their programs were simply genius and were saving the company. At the bottom of a very short ladder in the operations department I found the way to get out of doing stupid crap was to simply mention that I was thinking about sending an email detailing the lies to the CEO, presto new assignment. Finally so much of what we were doing was useless self promotion, just patting one another on the back, I just left. I still have friends in the company and even 18 year veterans are putting together resumes.

[AllentownJake]

14. In my opinion at some point Too big to Fail

becomes too big to succeed.

[Odin2005]

25. That's because the ones that state the facts get fired, or never get promoted.

[Crazy Dave]

28. That's happening where I work

Losing dozens of clients and laying off people and shutting down different departments month after month.

The company refuses to adapt or change to the changing consumer, their demands and the newer technologies available that our competition is using and gaining market share with.

They want to do business the same way they've been doing it for over 30 years and instead of changing things for the better and out of necessity, it's easier to blame and punish people at the bottom for why the loss of business even though they're not the ones making the self destructive decisions.

Kind of like our politicians. They create problems for us then campaign against them.

[Prism]

23. Many corporations tend to do this sort of thing

If they have reason to believe business will slow in the foreseeable future, they'll often try to get ahead of potential losses in profit by trimming costs, downsizing, and streamlining. It's definitely a corporate thing. They only see numbers on paper and calculate accordingly.

Smaller businesses, where they see and know the people who work for the company every single day, tend to try to hold onto employees as long as possible and only let them go when there's very little choice in the matter.

Depressing, but it happens. It's a difference in the business environment.

[bertman]

4. Was your wife in a position to know (not hypothesize) that the business was in a good

enough state to not need layoffs?

Being a business owner I find that my employees, though good people who work hard and are honest, have NO CLUE about what it takes to run a business.

Last year at a business meeting, my business partner and I told our employees how much of our cash we have invested in the business as our part of owner capitalization. They were floored. None of them had any idea that we had ANY money invested in our own company and that we could lose our asses if the economy tanked.

[Crazy Dave]

22. Her store always exceeded quota and it wasn't her manager's idea to cut staff

It came from a board room hundreds of miles away. Old clients keep telling her boss they're willing to do business with them again if they can get the same service they had a year ago when the store had a full staff. That would mean more business and making quota more often but her boss keeps getting told by corporate he can't hire more people until business picks up first.

They've only made quota once in the past year since the staff cuts and client migration elsewhere.

[Ian David]

6. Laying off people makes the company more valuable on paper.

It's possible the company was doing well, but the stock holders weren't getting enough of a return on their investment.

So, they laid-off employees to make the company's stock more valuable.

[chemp]

8. My company did the same thing

I work for a contract company that works for the state. For the three years I have worked in my current unit, sales and profits have increased dramatically every year. My unit alone has increased from a $8.4 mm per year account to just under $12 mm per year.
Yet, when the economy started to falter, and our sales remained steady to a slight increase, it was mandated to cut the staff, cut labor and reduce hours. This is making my workers work much harder for the same menial pay they always get (or less if their hours were reduced). That was last year.
Now MY BUDGET calls for further reductions in labor, and an increase in sales, or, in other words an increase in sales per labor hour.
My sales went up 15% across the board last year. My labor went down. My boss gets a 20% bonus, I get the usual 4% raise. My (union)employees get the shaft. And everyone wonders why the rank and file are getting fed up.

[SammyWinstonJack]

9. Greedy bastards!

x(

[ProfessorGAC]

10. Standard Short Term Thinking

So worried about the next quarter that they seem to have completely forgotten about next year and the one after that.

This just screams "Duh!"
GAC

[Canuckistanian]

12. A lot of these companies are killing themselves off doing that

Manufacturing companies can't afford to warehouse surplus goods, so they cut back drastically on production, even BEFORE the slowdown actually hits.

And the result is major shortages, backorders and lost sales. Some companies need a steady supply of goods and can't wait for backorders. And consumers tend not to wait for goods, but rather buy what's immediately available. So, they're forced to go to another company or go overseas.

That's the big problem with these "Just in Time" models. It assumes that the supplier can maintain a steady supply of goods at a certain rate and a certain price with enough "headroom" for production spikes.

And ONE company that drastically cuts off production prematurely causes a slowdown of the whole manufacturing chain and ultimately, a whole industry.

And the results are unsatisfied customers, massive layoffs and non-circulating capital. It's a self-defeating system.

[SteelPenguin]

15. Let me play Devil's Advocate

Firstly, it sounds like the business let it's current business actually suffer from this, which is kind of ridiculous.... BUT...

They were following a recession survival playbook. What you're describing is NOT unheard of. Business is doing fine, recession hits, they're still doing ok, but they cut people anyway. Now most people would look at that and say "How Ridiculous!" but there is actually a reason for it. It's been shown that in previous recessions, the companies that made cuts, trimmed down to bare bones, survived longer. The company was probably trying to be proactive, and trim off anything they absolutely didn't, in order to reduce their payroll, and protect themselves from future effects of the recession, to better escape it.

Of course if you cut people from a working line that is already at over 100%, or from long term research projects you're gimping your company.

Basically to me it sounds like they were trying to do the right thing (for the company long term survival) in laying people off, but they laid off the wrong people, and kinda fucked themselves. That's a botched management decision right there...Not the laying off of people, but which people they laid off. The managers and people being retrained should have been laid off, not the people on the line working 110% hours.

[Lydia Leftcoast]

17. You can put people through an MBA program...

...but you can't teach them common sense.

In fact, MBA programs teach people to forget common sense and work according to formulas and trends.

[Name removed]

19. Deleted message

Message removed by moderator. Click here to review the message board rules.

[letmebefrank]

20. You're only looking at the situation from your side

As co-owner of a service business for over 21-years, I can tell you that anyone who thinks these companies are laying people off "just because everyone else is doing it" or for any reason other than survival, is flat wrong.

Our company made many strategic adjustments during 2008 because we saw the problems looming on the horizon. However even with all of our plans in place, we had no idea our sales in January would be down by 45%. Those of you who don't operate a small business, you don't understand what it's like to maintain employment for 20+ people when your revenue suddenly declines by almost half.

On top of that - in 2008 - we had more bad debt write off than in the prior 20-years of our business COMBINED. Again, for small businesses who are already operating on wafer-thin margins, I cannot emphasize enough how awful the current business climate is.

We adjusted immediately by cutting back to 35-hour weeks and eliminating paid holidays. It sounds harsh, but we were able to avoid laying anyone off - SO FAR. However we are still struggling, and there is NO CREDIT available in the marketplace. Larger vendors are cutting back on terms and credit lines as well. It's horrible.

I've been through the early 90's recession, the dot-com bubble burst, the post-911 decline: Nothing has ever compared to this cycle. You have no solid proof that people went somewhere else because their orders weren't filled fast enough. I know many small businesses who would have been able to survive if their revenue had fallen only 18%. Take a drive around your area, look at the strip malls and downtown offices. The vacancies are skyrocketing.

Also you should keep in mind that, depending on how you define "small business", that we provide employment to somewhere between 70% and 90% of this country's workers. When small business is suffering, the country is suffering. "Corporate", too.

Improving remaining staff with training and seminars makes perfect sense to me. Most of the other business leaders that I know are trying desperately to put their best foot forward. It's called survival of the fittest. Sorry but I do not agree with the tone or topic of your post. You and your wife should probably be thankful that the opportunity still exists, and perhaps with a better attitude her branch could turn things around internally. It's amazing what can be done with a positive attitude and some hard work as opposed to complaining and second guessing management decisions.

[JANdad]

21. I'm calling bullshit...

It's amazing what can be done with a SKEPTICAL attitude and some not so hard work (checking google) as opposed to complaining and second guessing management decisions.

From the SBA website: Small businesses employ just over half of U.S. workers. Of 119.9 million nonfarm private sector workers in 2006, small firms with fewer than 500 workers employed 60.2 million and large firms employed 59.7 million. Firms with fewer than 20 employees employed 21.6 million. While small firms create a majority of the net new jobs, their share of employment remains steady since some firms grow into large firms as they create new jobs. Small firms’ share of part-time workers (21 percent) is similar to large firms’ share (18 percent).
Source: U.S. Dept. of Commerce, Bureau of the Census: Statistics of U.S. Businesses, Current Population Survey. http://www.sba.gov/advo/stats/sbfaq.pdf

So please; stop listening to the unholy trinity (you know "in the name of Rush, Sean and Glenn")and stop breaking your arm patting yourself on the back for being a small business owner. AFAIK, small businesses are the WORST kind of employers...the pay is for shit, the benefits suck, there is NO accountability and quite frankly the owners are more lucky than smart...

[Abq_Sarah]

33. What a lovely description

You've just laid upon America's small business owners.

At least I employ people. And I pay above industry standard. My employees get paid before I do.

You want to talk about accountability? Run your own business. Contribute something to your community and this nation and then get back to us.

[Crazy Dave]

24. Yeah...that's why 18% of the clients left...no positive attitudes

It wasn't having half the employees they once had plus making them work 10 hours less a week which made orders take longer to get out the door so clients went elsewhere.

Think about it, half the people working less hours means less product out the door you tool.

I know....you can't understand the math since you're one of those George Bush children that got left behind.

[Ikonoklast]

26. Hahaaa!! Really?

...and perhaps with a better attitude her branch could turn things around internally. It's amazing what can be done with a positive attitude and some hard work as opposed to complaining and second guessing management decisions.

That's the funniest load of pure management happy-talk bullshit I've heard in years, and I was in management for twenty years.


Cut their pay, and expect your employees to retain a 'positive' outlook.

Expect employees to work harder for less money and benefits.

Blame employees' attitude for lack of customers, not the lack of cash in customer's pockets.

Training and seminars are the quickest way to get rich...IF you are a training and seminar pitchman selling your moonshine to gullible business owners.

If you don't know how to give excellent customer service already, having an 'expert' tell you how to do it ain't gonna work. You are already sinking.

And many of the failures in small businesses is a direct result of poor management. They get arrogant, and will not accept sound advice from their employees, who know their jobs and can tell where economies and improvements can be made.

Sometimes they need to be second-guessed.

[varelse]

30. They can't sell product that isn't THERE

Ass.

[PassingFair]

31. +1

Thanks for putting it so succinctly!

That poster has NO problem with cognitive dissonance.

Yep, DEFINITELY management material!

:rofl:

[rucky]

29. Self-fulfilling prophecy.

I suspected some of that was going on. Who are these idiots in the boardrooms? It's just another example of how the upper classes are completely out of touch. I doubt they've learned their lesson, though. They're probably just blaming the economy and not connecting labor with value.