HBR's 10 Must Reads on Managing in a Downturn (with bonus article "Reigniting Growth" By Chris Zook and James Allen)

Layoffs That Don’t Break Your Company

by Sandra J. Sucher and Shalene Gupta

TWO GREAT FORCES ARE TRANSFORMING the very nature of work: automation and ever fiercer global competition. To keep up, many organizations have had to rethink their workforce strategies, often making changes that are disruptive and painful. Typically, they turn to episodic restructuring and routine layoffs, but in the long term both damage employee engagement and company profitability. Some companies, however, have realized that they need a new approach.

Consider the case of Nokia. At the beginning of 2008 senior managers at the Finnish telecom firm were celebrating a one-year 67% increase in profits. Yet competition from low-cost Asian competitors had driven Nokia’s ...