Our time is now!

IIPM - Admission Procedure

The time to ‘Do’ is here and now…

Don’t blame me for that gregarious statement, blame the CEOs of leading companies of the world, who have dramatically increased shareholders’ wealth and even employee satisfaction manifold in one electrifying shot by the simplest of simple strategies – by royally kicking out thousands of their employees! Astounded at the paradoxical statement? Eat this: When HP decided to cut 14,500 jobs by the end of 2006, its share price continued rising by more than 50%. And the scenario has been the same throughout recent history since 2000. Honeywell International threw out 6,500 (5% of their workforce). Lucent Technologies – 20,000 workers! Kodak – 37,000 jobs. The highly profitable AT&T – 24,500 workers! And the father of all retrenchment drives, “Neutron” Jack Welch, threw out a soul stopping 500,000 people from GE and subsidiary firms (Multinational Monitor data); GE is the only corporation that has ever featured continuously in the Fortune 500 list ever since its inception in 1955, having contributed the maximum regular returns to shareholders internationally.

So how in heavens does one resolve the utterly confounding relationship that an increase in the number of layoffs increases “employee satisfaction” by leaps and bounds; which consequently makes the shareholders’ wealth skyrocket? Firstly, the connection between employee satisfaction and shareholders’ wealth has been proved through innumerable surveys – with the undisputed authority being the benchmark annual 2006 Sirota Consulting’s Enthusiastic Employee report (Wharton School Publishing) with a hugely statistical dataset compiled since 1972 till date, comprising “millions of employee responses” from predominantly Fortune 500 firms. In one splendiferous research on 750,000 employees, the survey reveals how, in 2005, firms that had “higher than 70% average employee satisfaction” showed shareholder value increases that were more than the industry average by a colossal 240%. And those that had low employee satisfaction gave shareholder returns that were despicably 188% lesser than the industry average (In 2004, the figures were a positive 267% and a negative 170% for high and low employee satisfaction corporations respectively). Even the world renowned Watson Wyatt survey proved how “employee satisfaction mattered” too significantly to increasing shareholder value, and how “companies that ignore it, do so at their financial peril and that of their shareholders.”

But what froze me right in my tracks was the incredibly chilling and mind moving study of Stark and Mallory (Harvard Business School, Working Knowledge) – now considered a totem pole for HR heads worldwide – which, once and for all, proved that “employee commitment and employee mobility are NOT inversely related” and that even with high levels of turnover, an organisation would and could still consist of highly committed workers. “How’s that?” you might exclaim! The ever referred to research, The New Workforce Reality (now considered a commandment on factors affecting employee satisfaction), a collaborative study by the Simmons School of Management, showed how a stupendous 80 to 90% of employees in organisations globally considered four factors – “rewarding of good performance,” “the organisation treating everyone fairly,” “opportunities for promotion,” and “learning opportunities” – as being the most important factors defining their “Ideal Job”. Astoundingly, ‘job security’ did not even find a mention in the massive study! So where’s the connection? Gut wrenchingly, excellently performing companies don’t even give priority focus on employee satisfaction (KPMG 2005 International Survey; pp 24), rather, simply on ‘fairly’ rewarding great performances and providing learning and promotion opportunities! Because outstanding CEOs know very clearly that for productive employees, those are not the financial salaries and monetary perks that keep them satisfied; but a fair and logical assessment of performances, not just their’s but of everybody around them, where promoting or protecting an incompetent employee – however ‘committed’ the ‘unproductive’ employee might be – results in mass dissatisfaction.

Therefore, excellent CEOs continue, ruthlessly, to throw off unproductive yet committed employees, year after year. GE throws out the bottom 10% of its workforce every year. Think that’s high? Consider this: forget retrenchments, even the voluntary annual turnover rates of US firms now touch over 30% (Manchester Consulting study). So what’s the learning my dear CEOs? You heard me right the first time. TO HELL WITH ALL THOSE EMPLOYEES... err, just the unproductive ones, if you don’t mind :-)

Edit bureau: Surbhi Chawla

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!