In the HBR case study and commentary The Layoff, we are introduced to Astrigo home-improvement stores. Astrigo is facing the pressure of the recession and has missed its earning estimate by 20 cents a share. Profits have dropped and Astrigo is losing sales to its’ competitors. Robin Astrigo, the son of the founder of Astrigo and current CEO, is faced with the difficult decision of how to implement a 10% layoff and has asked members of his executive committee to research and make recommendations on how to implement the layoffs. Other than direct mention of the recession, the study provides us with limited information on why the company is performing so poorly. However, a brief introduction to some of the key players on the executive committee as they discuss their suggestions on how to handle the layoffs, gives me an overall impression that individuals in the company may put themselves and their department head of the general welfare of the company.
With in the executive committee, four standard ideas for handling layoffs were suggested. Morris, the CFO of Astrigo and the one who determined a 10% workforce reduction would generate enough savings to keep Wall Street happy, championed the “first in, first out” approach. His decision was based on the belief that the companies’ long- time employees had been treated well and were most likely able to afford a retirement. He also assumed older workers were probably dead weight. Interesting approach, based on the fact he came to this conclusion with no supporting evidence from questionnaires or employee feedback. He used his bias to make a big decision and displayed little concern for his employees. When Morris shared his idea with his partner Lisa, her main objection was the possibility of an age discrimination lawsuit against the company. Lisa suggested a performance –based layoff, or “rank-and-yank”, although she had no ideas on how to fairly and comprehensively evaluate employee performance. The two remaining suggestions provided by the executive committee were a “last in, first out” option and to eliminate a unit.
I was shocked as I read this study, that no one on the executive committee tried to save the jobs of their employees. Only the PR guy seemed to care about the workers and had enough conscious to appeal to the CEO to consider other options in order to save jobs. The options that were presented by the analysts were all feasible, my favorite being from Jurgen Dormann, who advocated that Astrigo act in alignment with its’ mission on treating employees well. He explained how being transparent with the employees about the crisis the company was facing & soliciting their ideas on where they could cut costs, rather than cut jobs, would be a good solution.
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