As we head into this new world I think one thing is going to remain the same but I still think is not understood: what is a company or corporation actually worth?
You have the obvious things based around capital like cash, investments, real estate and, in the case of American car companies, private jets. You have things like patents. And you have your product lines.
But the biggest thing a company has are it’s people. And the knowledge / energy that they posses and use for the good of the company.
This to me is obvious but it amazes is that it is still not fully understood. If you fire people you are essentially removing a chunk of your value. But for some reason the stock exchange reacts in a different light and usually increases the value of the company on the stock market as they are only focusing on the resulting reduction in OPEX.
There are I believe various times when it makes sense to fire staff:
1. they are shit and so deserve to be fired – but this is usually one off and not mass layoffs. It is highly unusual that you have a whole department of losers.
2. the product / area they are working on is no longer needed or being phased out.
3. the company change some process which streamlines the way work is being done thus removing the need for some of the people.
RARELY do I see any of the above being given as reasons for mass layoffs.
It is usually done in an irresponsible manner endangering the existing customers / products and remaining staff. Surely the value of a company should go down and not up if people are fired…
Infact, often AFTER a mass layoff you see the effect that the reasons 2 and 3 stated above are done retroactively. i.e. the processes have to be changed or products have to be dropped due to missing key personel.