Why do companies wait until they're out of money to lay off?

[THespos]

Sis called yesterday. She was hysterical. It’s been a rough few days for her.

Sis works (worked) at an art gallery. She was hired a couple months ago to program and maintain their website, and run their auction program on eBay. On the day of the NBC anthrax incident, she was right across the street at Christie’s, picking up some paintings that the gallery had purchased at auction. While she was there, several people from her office called her on her mobile phone and told her to get out of there because of the anthrax scare. Sis, not knowing how anthrax is transmitted or whether or not she was at risk, had a giant freakout. She did manage, though, to gather her wits and bring back the paintings.

Yesterday, she was called into her superior’s offices by an assistant and was laid off, along with most of the staff of the gallery. The firing had nothing to do with how she reacted to the anthrax scare. She was told that the gallery was basically out of money and that they were laying off the entire staff. The laid-off staffer got paychecks for last week and were promised to be paid for Monday at a later date.

Sis quit another job in order to take this one a couple months ago. It was her dream job.

As a dot commer, I see a lot of people getting laid off without much notice. What I can’t understand, though, is why people who work in New York seem to get hit by layoffs without any prior warning or indications that layoffs might be coming. It’s as if the CEOs of quite a few companies wake up one day and say, “Oops, we don’t have enough money to make payroll this week. Better lay everybody off.” Where is the foresight?

How do situations come up in which someone gets hired to do a job, and then is cast off less than two months later when the company runs out of money? Why can’t CEOs do revenue projections to find out how many people they can reasonably support with their payroll?

Granted, recent events in NYC may have contributed to a slowdown in my sister’s business, but she says that paintings were selling online and that money was flowing through the organization. And if a company is about to run out of money, what the heck are they doing bidding on paintings at a Christie’s auction?

I guess I’m really pissed off that someone can be assured of a company’s financial health, quit a job to take a job there, show dedication by doing their job well (even running into a biological warfare zone to get the job done) and still get fired because some dipshit wasn’t watching the books carefully enough.

Please excuse the rant, but if any Dopers would like to throw some theories my way as to why so many companies don’t take action until they’re literally out of money, I’d love to hear them.

[Tretiak]

Sure it’s frustratoing, but the company has to be careful about how they portray themselves to their employees. If they started sending out memos stating “To all employees: Please remove the pennies from the ‘take a penny/leave a penny’ cup near all the registers and send them to the Controller’s Department. And if you are out at lunch and see those things at the Deli of restaurant you are at, please take the pennies and forward to the Controller’s Department. Thank You. P.S. We are not runningout of money, we are perfectly fine. Please do not go looking for another job.”

When a company is in trouble a lot of time they use the strategy to take themselves to the brink hoping to find a solution before blowing up the whole situation. Otherwise it is difficult to keep your employees as they might start jumping a sinking ship. However, if your sister was hired under false pretneses there may be something she can do.

[Morgyn]

How about a company that has already MADE A PROFIT this year with stock that is only internally traded (so no stockholders or SEC to bitch about things) but is cutting salaries and jobs in order to make the same profit margins this year as last year. With an employee-owned company, you’d think we could take a lower profit and keep people on, especially since we are already pared to the bone–we’re having trouble meeting our contracts NOW, and today we lost another two people from our team (told today their last day is Friday–and I’m fairly certain that’s illegal). Nope, nope. Someone in the higher echelons (meaning, I’m sure, that they haven’t seen anything but the pretty lights in their navels since sometime in the mid-60s) has mandated that we have to have at least the same profit margins this year as last, so the company is laying off thousands of people (no joke–495 today, 495 tomorrow, on top of several hundreds since May or so) and cutting almost everybody else’s salary (which, mind you, we were told were being cut so that we wouldn’t have to have any more layoffs!).

One theory is that the owning company (also “employee-owned”) is demanding this because it doesn’t understand or realize that the industry my company is in, unlike theirs, tends to be filled with peaks and valleys and we just need to ride out this particular valley. Another theory is that if we hit those profit margins, then the Chief Executives will get their bonuses this year (no one else will, that’s for sure). Quite a few of us are betting on this theory.

So to the people who wonder why the employees are depressed, unenergetic, angry, have no company loyalty, and no interest in doing their job, let me hand you a clue-by-four upside the head:

Your bottom-line mentality has done nothing to help the company.

You have forbidden people from buying the tools they need or implementing the processes that could improve our products or workflow because it would “cost too much money”. Upfront, yes, but in the long run these things would save us time (time is money, remember that old saying, dunderheads?), improve our efficiency (saving us time, again) and improve the quality of our product (maybe getting more people to buy it–and hey, maybe we wouldn’t have lost that 2 or 3 million dollar contract at the beginning of the year if we’d gotten our act together, you think?).

You have fired (no euphemisms here) people with valuable experience and knowledge in the name of the bottom line, thus ensuring that our products will be delayed (time penalties, remember those? your salesmen agreed to them in the contracts) and may not even work (more penalties). When the industry goes back up, you won’t have the people you need to do the work that must be done to earn the money the company needs to survive. More, the people who are still here will leave in droves as soon as the opportunity arises because of your ham-handed handling of layoffs, layoff benefits, and the general work environment. None of us appreciate being lied to, and we’re bright enough to know that you ARE lying to us.

This employee is hoping that you (collectively) put your (individual) foot in a pile of fresh dog shit every time you get out of your bed for the rest of your life. Also every time you climb into it. I hope that you are afflicted with static cling forever and that everytime you’re in a meeting to close a several-million dollar contract, you discover one or all of the following things after you’ve made your closing presentation: [list=a] [] there’s a nice lacy bra attached to your belt [] you forgot to tuck your shirt in [] when you bent over, your crack showed [] the last time you went to the bathroom, the used toilet paper got stuck in the waistband of your underpants and has been bravely flapping in the breeze every time you turned around you forget to tuck in and zip up and you’ve been exposed the whole time. [/list=a] You’ve given us nothing but lies and evasions, and I hope you sink in them and rot.