Here’s a cost-saving idea: pay your best employees to leave the company. Sound dumb? More than 20 newspaper companies have done just that during the past year.
Buyouts are a popular alternative to layoffs because they’re voluntary and they avoid a lot of anguish. From a management perspective, though, buyouts are a terrible idea. They reward the employees who are the most ambitious and whose skills are the most marketable. The people who apply for buyouts tend to be the people who are confident they can find work elsewhere. In most cases, these are precisely the people a company should want to keep.
A layoff is a far more effective management tool than a buyout. It’s a way to slim down the organization from the excesses brought on by past prosperity. During good times, organizations tend to grow fat and inefficient. Growth masks a lot of problems and no one wants to cut staff when they don’t have to. As a result, organizations are inclined to hold on to marginal performers and sustain questionable jobs because the alternative is too painful. Nearly every company does this. It’s human nature to tolerate a certain level of inefficiency in order to avoid the emotional turmoil of depriving someone of his livelihood.
Invariably, a slowdown comes and companies have to cut back. This hurts, but it’s also an opportunity to make adjustments to the organizational structure to prepare for new growth. It’s a way to get rid of under-performing employees and unnecessary jobs while also redoubling the commitment to top performers. Good companies reward their best people even during difficult times. Across-the-board cutbacks make no sense because they penalize your best people. Why would you want to do that?
A buyout takes bad management to a new level. In effect, the company is saying, “You’ve taken initiative to develop skills that are in demand in our industry. We’ve paid you to do this. Now please go away. And take this bonus with you.”
Buyouts are very popular with ambitious employees who are seeking new opportunity. Who can blame them? Wouldn’t you rather get paid to look for a new job than do it in your spare time? People actually slept in the lobby of the San Diego Union-Tribune this week in order to take advantage of a limited buyout offer. Those are motivated folks. Could management possibly find a more productive way to harness that ambition?
Sorry if this sounds calculating and insensitive, but businesses aren’t charities. They need to run as efficiently as they can, particularly at a time like this. Buyouts are simply a way of dodging unpleasantness by paying good people to leave the company. They’re bad management.
They’re piling on the ailing San Francisco Chronicle. Clint Reilly digs up some past dirt about the early days of Hearst ownership. Of course, this happened eight years ago, so keep it in perspective. One passage did strike a chord, though: “I repeatedly witnessed bizarre behavior at newspapers that no other business would ever allow. Some reporters and columnists were frequently drunk or on drugs on the job. Such conduct was not simply tolerated, it was condoned. These third-rate Hunter Thompsons screwed up appointments and scrambled facts but were never called to account for their mistakes, incivility or disruptive behavior.” Sound familiar to anyone?
The Wall Street Journal is redoubling its commitment to print with plans to launch WSJ. magazine this weekend. The coming-out party gave new Journal managing editor Robert Thomson the chance to take a shot at the rival New York Times and to use the word “eschatological” in a sentence.
Here’s a little good news for magazine publishers: rich people are actually reading more magazines. Research by Ipsos Mendelsohn shows that folks making more than $100,000 a year said they read 15.3 publications on average compared to 15.1 in 2003. People who make more than $250,000 read an average of 24 print publications. Favorite titles: People, National Geographic, Sports Illustrated, Time, Newsweek and Southern Living. Four in five rich folks also shop at Wal-Mart.
Is the Raleigh News & Observer really seeking to cut 40% of its staff? That’s what this short item in Editor & Publisher appears to say. If so, this would be the paper’s third round of job cuts in the past year. Oh, and it’s a buyout.
This entry was posted on Thursday, September 4th, 2008 at 7:42 am and is filed under Business News, BusinessModel, Layoffs, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.