Online advertising has devasted classified advertising. Why buy an ad in the newspaper to sell your stuff when you can put it on Craigslist, or a help wanted ad when you can post it on Monster? Auto dealers list on Carsoup, and so on and so on.
Despite being online, you still have to pay the costs of newsgathering. And because the Internet has fostered a resistence to paying strictly for content, pay-for-play models aren’t working either.
In my experience, employers tend to wait before laying off, or they lay off because they lose a large order. Either way, you aren’t just laying off the people who directly do the work, but also the support staff (payroll, HR, logistics, etc.)
I’ve been in somewhat the same situation, and I thought being a jack-of-all-trades would save me from being laid off. It didn’t.
You would think so, especially since you can target readers better and get good metrics on your results. But there is a perception (true or not) that online ads are much less effective, and so the cost is much less.
Kunilou was right about the outlets competing for ad dollars (and I’d add job sites like Monster.com, which have killed another entire segment of classified advertising), but the real problem for all ad-supported media is the economy. When retail sales are down, retailers stop advertising. Whee the housing market dries up, so does revenue from real estate ads. When the auto industry tanks, or has their stock wiped out by a tsunami, the local dealerships stop buying ads.
In my experience at newspapers, when reporters are cut, their beat no longer gets covered… or it’s a part-time assignment for someone else.
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Why does it seem so many companies will lay off staff, and then hire (sometimes, exactly the same) people as contractors at nearly twice the rate?
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Because the benefits often cost more than paying twice the rate. If you lay someone off you don’t have to pay insurance, don’t have to pay for leave or myriad other things that you’d have to pay for if they were your employees.
It might seem that way from the outside, but if you were actually looking at the balance sheets it probably doesn’t look that way at all. Believe that if it didn’t make economic sense to do it then companies would do something else that DID make economic sense.
“Nearly twice the rate” might still be a savings, depending upon benefits. Even if it’s a wash from the standpoint of dollars per staff person, there are savings in administration, because there’s a lot less bookkeeping to do for contractors.
I’ve actually worked in exactly that same situation, and I can tell you that getting double the rate doesn’t mean I got a big raise either…quite the opposite.
True, it can happen that contracting at twice the rate is a loss, but after the severance pay - it must be rather a sudden hit to layoff and re-purpose as contractors - especially when you decide two years later to let the contractors go - and suddenly everyone is employees again - and then 5 years later … contractor time again!
And I don’t believe what companies do make any economic sense except to the shareholders, for a very short time while those shareholders grab some cash & leave. To me it seems like they play shell games.
That’s called “maximizing shareholder value,” and I’m convinced it’s the only thing any publicly-held business cares about any more. Not making quality products, not giving a good goddamn about employees, but making money for shareholders.
In the US, there is no guarantee of severance and most never get any - so payouts are not an issue.
Unless covered by a union contract (less than 9% of private workers) most, if not all of the US uses ‘at will employment’ where either employee or employer may sever the working relationship with no liability. Often a two week notice is used, but that is usually convention, not law.
You say that as if it’s a bad thing. I’m not convinced it is. If demand is higher for low quality products of lower price, why is it bad if the company aims to supply that?
Duh? If you are going to start a business, your primary goal is to make money. Sure, there are people who do it for the love of whatever they do, but no one loves to make toilet paper.
“Making money” is not “maximizing shareholder value.” “Making money” involves having some degree of foresight, making quality products that will sell again and again and again to repeat customers. It includes the old idea that a good car dealer doesn’t sell one car to a customer, he sells him 5 cars over 30 years.
“Maximizing shareholder value” is the shortsighted squeezing of every drop of blood from any customer that comes through the door without any consideration whatsoever to where next year’s money is going to come from.
“Maximizing shareholder value” has degraded the mentality of business leaders to the point that “making money” is no longer sufficient, success is measured now almost exclusively by how much growth is occurring in profits. It is no longer enough to make money, you have to make more money this quarter than you did last quarter, more this year than you did last year.
Then you don’t know much about businessmen. It’s hardly obscure that some companies start navel-gazing and die from it. It’s also not even remotely true that “short-term” focus is the cause of it.
Few companies had a longer view than GM. Few companies have embarased themselves more - and despite someone’s comments earlier, GM is still a disaster and kept afloat mostly by accounting, not worthwhile products or sales. Meanwhile, I could name a dozen medium and large compnies which are and remain profitable year after year, despite a short-term focus. it all depends on the company, the market, and the culture betwen them. Some companies can, and should aim to cut staff or make cheap products because there is a need or market there. Frankly, these days a company is unlikely to outlive its founders. And yet, that’s a source of strength. New companies grow faster and meet more needs.
Your view is naive, because you clearly don’t understand business.
If you feel the need to differentiate these terms, then you shouldn’t use them interchangeably.
Investors, generally, aren’t stupid. They aren’t going to buy into a company that doesn’t have a long term goal or prospects. If a company is burning long term prospects for short term gain, they are going to see their stock price go down in the long run.
I see. Thanks. I guess I’ve been over here so long I just take these payouts for granted. Employers must pay them here, based on length of service and capped at something like 10 months’ pay, somewhere short of a year’s worth I think, plus an extra month’s pay if the layoff comes at less than a month’s notice.
During the global economic crisis of 2008, there were massive layoffs in Thailand, and employers had to pay out so much in compensation that I had to wonder if it was really worth it. Ironically, now that the economy has improved and the same companies are hiring again, there’s a labor shortage. Many workers made off with enough to start up their own modest businesses. Usually nothing fancy, maybe a clothing stall in a market or just a street stand selling grilled pork, but they’re getting by well enough that they don’t have to return to factory drudgery.
As a manager of a manufacturing plant, I have done layoffs. I would let inventory pile up as much as I could get away with and do some clean up and painting and even let people choose not to work until i had no choice. It was a union plant. It was a small enough plant that I had to face the people being laid off. I did not enjoy it.
As others have pointed out, there really is no other option. If you have a company with 100 employees who produced $X worth of revenue a few years ago, and the economy takes a hit to where those same 100 employees are now only producing $X/2 of revenue, then something has to happen. The first obvious solution is that since the economy is bad and demand is so low, you do not need, nor can you afford to pay 100 employees when 50 are capable of producing the required output (gross oversimplification). This is true whether the reduction is revenue is temporary or your whole business is in trouble.
I think that the OP is saying that by cutting back to 50 employees, you are screwing yourself because now you can’t get back up to that $X level of revenue with less employees. That’s correct, but when you see the opportunity to possibly get back to that level, you start hiring again.
It is a kick in the teeth to morale and your best employees might start looking for other jobs, so that is why you allow some slack. If your revenue drops to $.9X, then you don’t start laying people off for this very reason even though going with the strict math, you would be better by doing so.
The biggest room for cuts and most likely permanent ones are seen in middle management. In the late 90s when growth was seen as only limited by how effectively you could penetrate the market, companies nationwide hired a bunch of middle managers under various strategies of implementing policies to increase efficiency and response time to make the company better than it’s competitor and giving them market share.
Today, these positions are absolutely worthless. They add no value. They were created on a 1998 view of the economy that will never return. Those people typically have high 5 figure salaries and are ripe for the plucking.
So is “maximizing shareholder value” actually. The key being that shareholder value is also based on expected future income, and what you can expect to be able to sell you stock for in 30 years.
Investors can be stupid, more often emotional. There aren’t that many stock traders who are looking 30 years ahead.
Stock trading behavior has changed in the past several decades. There are still many investors who use a “value stock” approach, looking for companies with good fundamentals and a strong outlook for the future where their value is not recognized by the market. Warren Buffett is the classic example of the guy who is in it for the long haul, and has made a fortune doing it.
However, there are also many stock traders who use highly speculative approaches, execute “day trades,” and are looking solely at patterns of the stock price for short-term profit opportunities without any regard to what the company is actually doing. Online trading has allowed the numbers of this type of trader to grow dramatically to where they are today.
This is the dark side of being a publicly traded company. The company has executives making operational and strategic decisions but the company is owned by the people who hold the stock and the executives are accountable to them. In some cases this leads executives to do stupid things to make their numbers next quarter, get their bonuses, and increase the value of their own stock options.
I worked for a domain registrar in the late 1990s to 2003 and for quite a while the market valued such companies based on number of domains registered, rather than company fundamentals. So we did stupid things to get a bunch of names registered, like entering into partnerships with web-hosting outfits who would register names in large numbers for which we made nearly nothing or even lost money. Profit went nowhere, stock price went up. Eventually the market got smarter about how to value the company, and the company behavior changed.