04-14-2016, 01:13 PM
Quote:Time was, layoffs were seen as an emergency strategy, the last resort in a downturn or crisis. Today, however, layoffs are a standard tool for doing business. As the economy continues to heal and job indicators improve, a number of firms have announced a fresh wave of layoffs — Nordstrom, Sprint and American Express among them — citing the need to improve profitability. Studies have shown that layoffs do not generally result in improved profits. And yet, firms continue to keep the pink slips at the ready. Why? It’s about the triumph of short-termism, says Wharton management professor Adam Cobb. “For most firms, labor represents a fairly significant cost. So, if you think profit is not where you want it to be, you say, ‘I can pull this lever and the costs will go down.’How Layoffs Hurt Companies - Knowledge@Wharton