In yet another in a long line of silly ideas that may great sound bites, a prominent economist is calling for the Obama to plea with Fortune 500 companies to cease their layoff plans for months in an attempt to allow for the stimulus plan to take effect and to help in the recovery of the economy. This plan is both ill-conceived and would put American companies at further disadvantage to other, more nimble competitors. This is as bad or worse than the proposed caps on executive compensation.
What has is come to in America that now companies cannot adjust their workforce to economic realities?
Is this Europe?
- First of all, a voluntary call from Obama is not going to result in a unanimous moratorium on layoffs. As conditions worsen the losses at companies continue to mount, is that the time to continue to take on excess payroll and benefits as plants sit idle and inventory builds? How could one possibly expect a publicly held company to stand by and hemorrhage money to retain employees that are not needed? Publicly held corporations have a fiduciary duty to optimize returns for shareholders and that does not include carrying employees in what would amount to a national welfare program.
- I think this famed economist forgot that America is no longer the sole economic power in the world. This is a global economy. As American companies hemmorage cash while more nimble overseas competitors size their workforce according to the current economic climate, American companies are quickly moved further and further into a long term economic disadvantage. Heck, it would entice overseas companies to acquire American companies on the cheap and then summarily lay off the same workers we’re trying to protect since they would not be subjected to the same philosophy.
- Chimerine claims to have discussed this idea with a number of CEOs and he believes there would be widespread support for the idea. These are likely CEOs that have already laid off and would love to see their competition burdened with excessive headcount…Or Worse…This could send companies into a mass-firing spree as momentum builds, so they could “beat the clock” and get their layoffs out of the way before the idea was fully enacted.
- He claims this should be a “few month initiative” to allow for the stimulus plan to take effect. What if the economy takes years to recover? The main tenants in the stimulus plan like building roads, infrastructure, green energy projects, etc. will not see the light of day and translate into true stimulus for years! Correlating the timing of this plan with stimulus recovery is nonsensical.
The list goes on; this is just a plainly ill-conceived idea that has no place in a capitalistic society.
What are your thoughts? Should companies abide by this request for the greater good?
If you enjoyed this post, you can get free updates through RSS Feed or via Email whenever a new post is published. Rest assured that you can unsubscribe at any time via the automated system and your information will not be sold, archived or utilized for any other "nefarious" purposes.