Instead of a Layoff

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Those who have read my book, articles, or blog posts know that I do not believe in laying off employees to cut costs.  The long-term damage to the organization resulting from a layoff often outweighs the short term savings in payroll costs (see exhibit 1)

I will admit, though, the last few years has shown that the complete collapse of a company's products or services can dictate drastic cuts as a means for survival.  The questions that need to be asked before implementing something as destructive as layoffs include:  (1) how long do you expect the downturn to last; and (2) has everything possible been done to prevent a layoff.  In other words, a layoff should never be among the first cost-cutting steps.


Even during the last few years, the worst economic period since the Great Depression, there were several well-known companies that did not layoff employees.  Scottrade, AFLAC, Devon Energy, and The Container Store are among the organizations that have never implemented a layoff.  Imagine the loyalty and trust created within these companies by resisting headcount reductions during such a severe downturn in business.

Everyone has a stake in the company.  When a company has a history of layoffs, though, people feel powerless, disconnected, and expendable.  The organization's leaders send a very clear message that employees are not important when jobs are cut in response to a crisis.

Some of the steps every company should take before considering a layoff include:

1. Shortened Work Week:  Although akin to a pay cut, a shortened workweek forces everyone to participate without the loss of jobs.  Also, receiving time off helps compensate for the reduction in pay;
    
2. Unpaid Holidays:  Similar to the shortened workweek, implementing unpaid holidays allow more flexibility in choosing the extent and timing of the cut back;
    
3. Hiring Freeze/Attrition:  Although an obvious step, I have worked with companies that laid off in one part of the company while hiring in another.  Any positions that are critical to fill should be done by transferring and training existing employees;
    
4. Elimination of Bonuses:  Nobody should receive a bonus during a period that people were laid off.  I was in a meeting several years ago with a large division of a Fortune 100 company where managers decided to implement a layoff in order to protect their bonus accruals - a totally unacceptable action;
    
5. Elimination of Dividends:  In spite of what many people believe, the resulting damage to the organization caused by a layoff does not protect shareholders.  By protecting its workforce, companies are actually actually protecting future returns for shareholders.  Studies have shown that companies that resist deep cuts during downturns recover much more quickly than competitors (in terms of earnings and share price);
    
6. Focused Kaizen Activity:  Improvement activities should be focused entirely on reducing costs (while improving or maintaining existing quality levels).  Kaizen activities focused on cost reductions will prevent employees from being idle during downturns and assure that the savings achieved will be sustained once business returns;
    
7. Pay Cuts:  As a last resort, pay cuts should be implemented to save jobs from being eliminated.  I believe in implementing across-the-board percentage cuts with executives being asked to volunteer a larger percentage.

When people see that company leaders are doing everything possible to navigate a crisis without layoffs, they will become much more motivated and engaged in the organization.  The espirit de corps that results will make the company stronger and ready to take advantage of the recovery much more quickly than others that opted to cut workers as an initial step.

The True Cost of a Layoff

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The world of business has become increasingly dependent on layoffs as a response to a downturn in business. There are layoff announcements virtually every day by companies, along with statements about the expected benefits of a reduced headcount.

Does a layoff really result in the savings to an organization that we think it does?

There are hidden costs that are often not considered (or are ignored) when making the decision to institute a reduction in force. These costs are difficult, if not impossible, to measure, but exist whether they are recognized or not.

Besides the severance and social charges associated with a layoff, the hidden costs show up in areas like productivity, customer service, and absenteeism. Since they are not measurable, however, they are easy to debate and not considered relevant in the number-obsessed world of business.

The hidden costs of layoffs include the following:

Increased Fear: Nothing can increase the level of fear within an organization like a layoff. Fear leads to a host of problems including reduced creativity, safe goal-setting, increased health problems/absenteeism, and a lack of willingness to take risks.

Loss of Teamwork: A layoff forces a person to worry more about his or her own situations than that of a co-worker. The atmosphere becomes more competitive as people do as much as possible to demonstrate their personal value to the company.

Loss of Customer Focus: When a layoff occurs, people turn their focus toward pleasing the boss instead of the customer. After all, it is the boss, not the customer, who makes the decisions regarding who will be released.

Drop in Morale: Layoffs make people feel expendable which, along with the loss of friends and coworkers in the organization, leads to a drop in morale. As a result, dedication is lost, and people will be less likely to contribute ideas for improvement or go the extra mile to help the company succeed.

Increased Employee Turnover: Because remaining employees will begin to worry about their own jobs, those who can find other work elsewhere will do so.

Loss of Trained/Experienced Employees: Losing employees means the loss of trained and experienced people to handle the increase in work when business returns. New employees lack experience with the process, systems and customers, and result in increased hiring and training costs (in addition to a higher incidence of quality problems).

What to Do Instead of Layoffs

Many business leaders have come to the conclusion that layoffs are necessary during a downturn in business. There are steps that companies can take to reduce the need for layoffs - even during a recession as deep as the one we've experienced over the last two years. These actions, which equate to cost management as compared to cost cutting, include the following:

1. Shorten the workweek and adjust pay accordingly;
2. Offer unpaid vacations/holidays;
3. Eliminate overtime;
4. Freeze all hiring;
5. Eliminate all bonuses and associated accruals;
6. Cut dividends;
   
7. Focus continual improvement activities on cost reductions.

In addition to the potential savings from the above actions, imagine the loyalty and dedication a company would earn from its employees if it manages to survive the recession without reducing headcount.

Sprinting Into a Death Spiral: Sprint Nextel Announces Layoffs

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Last week, Sprint Nextel announced plans to cut up to 2,500 jobs in an effort to - once again - reduce costs. This is the third round of layoffs since early-2008, when the company announced job cuts of 4,000 (they also eliminated 8,000 jobs in January, 2009). Employees who manage to survive this latest round of layoffs are probably thinking that it's only a matter of time before the next one occurs.

In 2008, Sprint lost 4.6 million subscribers. During the same period, AT&T and Verizon added 7 million and 5.8 million, respectively. Sprint also reported a $4.2 billion loss for the year. I'm thinking that addressing the problems at the company are going to require much more than cost cutting to resolve.

Remember that this is the company that, in 2007, made the much publicized decision to drop customers who make too many calls to customer service for help. Whether or not this decision made sense from a financial perspective, it did a lot of damage to the company's reputation for customer service.

According to their website, Sprint's mission statement is: To be No. 1 in providing a simple, instant, enriching and productive customer experience. Judging by the number of subscribers lost last year, I'm guessing that their customers do not think they are achieving their purpose.

The company needs to get back to the basics and focus on the customer instead of just costs. This means reflecting on its purpose and openly and honestly debating what it means to the company. Do they truly believe in it? Does the leadership team in place feel they can achieve it? If not, there is little chance of getting anyone else to believe in it either. Many companies, especially during the recession, have acted as if their purpose is to cut costs instead of provide value for their customers.

Once it is clear that the leadership team absolutely believes in the purpose and feels confident that it can be achieved, they need to identify the barriers that are preventing the company from being number one and start aggressively attacking them. This will require creating initiatives in critical areas like product & service offering, market development, process improvement, or people development. Chances are, there will be some pretty daunting barriers to overcome, but they need to be addressed for the company to become competitive again.

Ignoring the barriers is not an option - neither is continuing to focus on cost cutting. The company shrinks in size and the culture is damaged with each round of cuts and eventually there will be nothing left to cut without completely shutting down the company . . . which is definitely not the way to become number one.

How Happy Are You?

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How happy are you? If you are an American, chances are you are not - or at least not as happy as you were 30 years ago. You're also not as happy as people in many other countries. There are actually several studies regarding happiness published around the world and most agree that Americans are generally not happy people. How can this be? After all, the term American Dream was coined to characterize the U.S. as a nation with limitless potential for a richer and better life than anywhere in the world.

We have the largest GDP of any country in the world; the dollar is generally accepted as the standard global currency (at least for now); we own 2.2 cars and 2.4 televisions sets per household; and we get pizza delivered to our door. Shouldn't all of this make us happy? Apparently not . . .

The surveys and studies on the subject attribute the lack of happiness in the U.S. to a variety of factors; many of them rooted in the workplace. According to the International Labour Organization, Americans work more hours per week and have less vacation time than those in many other industrialized nations. researchers at Siena University in Italy have surmised that this extra work time negatively impacts our social relationships - an important component of happiness. Working overtime and/or spending significant time in traffic commuting to and from work leaves little time for friends and family. In other words, our drive to succeed and stay on top has resulted in a lack of balance in our lives. People are social by nature, and a lack of interaction can lead to unhappiness and depression.

The Fear of Layoffs

Another factor contributing to the lack of happiness is increased stress in the workplace. The fear of layoffs is always present in American business (even during good economic times), which adds pressure from a lack of job security. Add to this a weak system of social programs for the unemployed and an extremely expensive healthcare system, and the result is a feeling that losing one's wealth is a very real possibility.

Workers in Europe are much more protected than American workers. Layoffs in continental Western Europe occur much less often than in the U.S. and when they do happen, require a fairly significant severance to be paid. In the U.S., these types of laws do not exist, and when severance is paid to fired workers, it is often very temporary and fairly insignificant (laws obviously differ from state to state).

To make matters worse, the current downturn has put additional pressure on those who were not laid off to demonstrate increased value in the workplace, leading to more hours and even less time for social relationships.

Remembering Maslow

Virtually every business school around the world includes a something about Maslow's hierarchy of needs in management classes. In general, Maslow theorized that people need to achieve their basic needs (physiological and safety/security) before moving up to the more satisfying needs (love/belonging, self-esteem, self-actualization). he referred to the basic needs as deficiency needs, because not achieving then can result in negative feelings (stress, depression, etc.), while satisfying them does not necessarily create positive feelings. In other words, as long as we are worried about losing our job or financial security, we will never be happy. This situation will also prevent us from striving for the higher level needs, which can lead to increased happiness.

Since we have all been educated on Maslow's theory, I can only assume that many American leaders either do not believe in it or do not see the value in having happy employees. If they did, they would stop the practices that keep people worrying about their jobs and financial security. I have actually worked a CEO who believed that the fear of losing one's job was an effective motivator. This CEO also told me that he was working to cut back on the vacation time the company offered to employees.

It's a Question of Balance

I don't feel we will ever be happy unless our culture undergoes a fundamental shift toward a better work-life balance. I also feel that unless we start valuing and focusing on increasing the level of happiness, U.S. businesses will continue to decline, eroding our standard of living in pure economic terms (leading to a further decline in happiness).

The cost of labor puts U.S. businesses at a distinct disadvantage when competing with companies that have overseas operations. We have seen hundreds of thousands of jobs move offshore for this very reason. How we can compete, however, is by continually improving the products and services we offer, and by finding more efficient methods with which to produce and deliver them. This requires a high level of innovation and motivation throughout our workforce because to succeed, everyone has to contribute ideas for improvement. People will not be creative or motivated to contribute ideas, however, when they are stressed overworked, and worried about their jobs.

Is GDP a Complete Indicator?

There has been a debate among economists regarding whether or not GDP is a sufficient indicator of a nation's success because it does not include a quality of life component. In terms of pure numbers from the IMF for 2008, the U.S. ranks number one in the world, accounting for roughly 24% of the world's GDP, and is almost triple that of Japan, which is ranked second on the list.

We have to ask ourselves, though, if being number one really means anything if we are not happy. Are we better off than The Netherlands, for example, which is ranked 16th in GDP but much higher in the happiness index than the U.S.?

I truly believe that if we don't improve our happiness in this country, it will eventually sink us. We have got to change our lifestyles, which includes improving the workplace, to enable us to become a happier nation.

Improving our level of happiness will be a long process, but we have got to start making it a priority before the situation deteriorates to the point of severely impacting our prosperity and our lives. The components of a plan to increase happiness must include, among other things, improving job security, making the workplace more enjoyable, and improving the work-life balance. We may never totally self-destruct economically because of the sheer size of the U.S. market, but that is no reason to ignore the situation.

I had a conversation with a Swedish citizen recently who, based on what he's witnessed in the news media, characterized Americans as "grumpy people." I have to admit that it was difficult to argue with him.

The Declaration of Independence states that the pursuit of happiness is an unalienable right. This does not mean, however, that it is guaranteed. That part is left up to us.

Managing Costs Instead of Managing the Business

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If there is one thing certain as a result of recent events, it is that the world of business is going to change. After a fairly long period of economic growth, companies are finding themselves in the midst of shrinking markets, increasing costs, falling profits, and a highly competitive environment. The choice for a company during these times is either to be defensive by implementing cost cutting measures, laying off employees, and shrinking in size, or go on the offensive and use the slowdown to attack problems and become more focused on innovation and improvement of products, processes, and services.

An offensive strategy is actually nothing new to business. Companies like Toyota, Samsung, Honda, Apple, and Nucor Steel have used innovation and improvement for years as a way to strengthen their abilities to compete. For a variety of reasons though, most other companies have had little success with these philosophies or rejected them altogether. Over the last few decades, American business leaders have increasingly taken the easy route and implemented cost cutting moves to deal with economic challenges; announcing the layoffs as if there was no other alternative. And recent actions have shown that the response to the current recession is magnified, but no different.

One of the biggest problems with a defensive approach is, when the recovery does begin to occur, the companies that have ‘cut to the bone’ will not be able to quickly respond to the growth. When they do finally catch up with the increased level of business, they will do so with the same level of inefficiency and waste that they have in the past. Those organizations that go on the offensive, however, will be in a much better position to take advantage of the recovery to profit and grow quickly.

As an example, the U.S. automakers have been shedding massive amounts of workers in an effort to show Congress that they are managing their costs. Unfortunately, by losing tens of thousands of workers, they are also losing the experience and knowledge that the people have in these companies’ processes and how to improve them. Those who manage to keep their jobs will likely not have the time (or the enthusiasm) to work on improving operations. It is amazing that Congress has no problem giving taxpayer money to companies that manage costs instead of managing their businesses. Rewarding organizations to layoff workers only increases the number of people who will cut back on spending, thereby increasing the length and severity of the recession. If anything, bailout money should go to those companies that choose to not lay off their workers.

One of the positives that could result from the auto bailout, however, is that the Detroit 3 may be forced to reduce the current level of outsourcing work to low cost countries and bring jobs back to the U.S. If this does happen, they will have no choice but to find ways to innovate and improve in order to compete with foreign automakers.

The Difference Between Talking and Doing

Knowing that innovation and improvement are necessary for survival and actually doing them well, however, are two different things. Continual improvement and innovation require more than training people in the latest methods and then telling them to go innovate and improve. Most organizations require a drastic cultural shift in order to enable improvement to take hold and become a part of the way the company operates.

There are unfortunately very few people in business who truly understand that lean manufacturing and kaizen are business philosophies rather than sets of tools to reduce waste. Managers read about the success of the Toyota Production System and rush to copy the tools instead of looking deeper at the company to comprehend how the system was developed and why it works.

It’s In The Culture

Changing a company’s culture is a complicated process because of the psychological and sociological issues – both of which are rarely taught in any depth in business schools. When you startup a company and are the only employee, culture is not an issue. As soon as you add one person, though, the culture gets more complex and the complexity grows exponentially as more people are added.

So how can an organization’s leader change the culture to make it more likely to succeed with improvement initiatives? In effect, we need to rewire western organizations in order to continually identify and remove the barriers to improvement. And, just like changing a personal habit, once a barrier is removed, it must continue to be watched to make sure it stays removed.

There is an organized way to approach the cultural aspects of improvement. The key is for the leader to be serious about the need for improvement, and understand that it will require work on the indirect or softer issues in an organization. A leader who writes off psychology and/or sociology as too theoretical and not practical has little chance of implementing a change initiative of this magnitude.

The Necessary Elements

The elements that are necessary for initiatives like lean, six sigma, or kaizen to be successful in achieving sustained levels of improvement are listed below. Assuring that these components exist within the organization requires constant effort to prevent returning to old patterns and behaviors. You must continually strengthen and develop the elements until they get to the point where they build on themselves.

None of these elements are new to the world of business. They have been written about in one way or another for many years. Unfortunately, many leaders both don’t believe in their importance or find them to be too much work and abandoned or ignore them. It is common to write these issues off as too theoretical because they are not easy to manage. In reality, however, those companies that have been successful with improvement and innovation have spent considerable effort to align their cultures with their visions, thereby setting up the organization to succeed.

In no particular order, the items that require continual reflection and focus include the following:

• Clear Purpose An understanding of why the organization exists and what its future holds;

• Consistent Values A clear understanding of the team DNA and screening new hires to assure they share the same values;

• Enthusiasm for improvement People within the organization need to be obsessed with improvement and possess the humility to realize that there is always a better way of doing things;

• Openness A culture where people feel comfortable telling management when decisions and actions conflict with the purpose and/or values;

• Trust Workers must trust that nobody will lose their job as a result of the improvements made. Also, management must trust in the knowledge, experience and intelligence of workers;

• Focus on People/Processes/Customers More attention must be given to people, customers and processes than spreadsheets and financial reports;

• Training & Development of People and Teams Training and developing of team members must be a high priority within the organization. Leaders need to be developed from inside the company rather than hiring in from the outside;

• Pride Throughout the Organization People must be proud to be associated with the company and truly care about its success;

• Understanding Internal Customers/Suppliers Everyone must clearly understand their role in the company, including whom they serve and what these people need. Whatever the company provides its customers defines its main processes (whether it is a product or service). Anyone who is not directly involved in a main process is in a support role and his or her purpose is to serve those who are directly involved;

• Walking the Talk Improvement initiatives require attention, commitment, and involvement of executive managers;

• Aligned Measurement & Reward Systems Reward systems must support improvement initiatives. This requires rewarding teams instead of individuals, and tying promotions to success, enthusiasm and commitment to improvement and change initiatives;

• Proper Organizational Alignment The process focus required for improvement initiatives is difficult to achieve within a traditional functional organizational structure;

• Clear Objectives Without close alignment to organizational objectives,
  improvement projects will be fragmented and have very little chance of succeeding;

• Patience Changing culture takes time. People tend to want change to happen rather quickly, but in most organizations, it just doesn’t happen,

People tend to be much more open to change during a recession than at any other time. The willingness to try new things and not be looked at as standing in the way of change increases dramatically when people are worried about their jobs and the jobs of their coworkers. In other words, if you are a leader and ready to implement lean manufacturing, kaizen, or any type of improvement initiative, your chances of success may never be higher.

Do Layoffs Make Sense?

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The lead story in today’s Wall Street Journal is about companies accelerating layoffs in response to the recession. According to the story, companies have laid off about 600,000 workers since October 1. The list of companies shedding workers includes AT&T (which recently reported a 5.5% increase in 3rd quarter profit), Adobe Systems (which actually projected an 18%-21% increase in 4th quarter profit), Viacom, DuPont, Avis, Whirlpool, Motorola, GE, and many other high-profile businesses. Spokespersons for these companies blame falling revenues as the reason for the layoffs.

Looking at this situation from a macro perspective, it appears that companies are setting themselves up for a self-fulfilling prophecy by implementing layoffs. When people lose their jobs, they generally cut spending and only buy absolute necessities. They don’t buy cars, appliances, electronics, or apparel, and stop spending on services that are unnecessary or they can do themselves. When this happens, revenues for companies that produce cars, appliances, electronics, apparel, and offer services fall. These companies respond by laying off more workers, thereby increasing the number of people who reduce spending, and the cycle continues. This cycle actually worsens as it continues because people who remain employed start cutting back on spending because they are worried about eventually losing their jobs.

The problem is, by laying off workers, companies are actually adding to the problems they face. Until an executive (or board) at a major company makes a statement by not laying off workers in response to falling revenues, the situation will continue to get worse. In short, until consumers feel comfortable enough to begin buying again, the economy will continue to decline.

Our government is in the process of giving away our unprecedented amounts of money to companies in order to help them survive. Looking at the companies that have received bailout money (and those who are hoping to get some), it appears that one of the stipulations for receiving government money is to lay off workers. From this perspective, it looks like our officials are rewarding companies for firing workers (i.e., adding to the unemployment rate).

Bailout money should only go to companies that make a commitment to keep their workers employed. If a significant number of companies make this type of commitment, consumer confidence would slowly increase and buying would return, thereby increasing company revenues and preventing the need to lay off workers.

During the Great Depression, SC Johnson (makers of Johnson Wax®, Pledge®, and other household products) did not lay off a single worker. Instead of producing products though, workers washed windows, improved landscaping, and painted factories to keep busy. The courage and commitment shown by SC Johnson management by keeping their workforce intact during this rough economic time resulted in an immeasurable amount of loyalty and gratitude from their employees. Imagine how you would feel today if your company was to show you the same level of commitment.

CEOs today are like captains faced with guiding their ships through a dangerous storm. When a ship captain faces this type of situation, though, he uses the crewmembers to help guide the ship safely and does not throw them overboard in order to save the ship.

Since corporate executives are obviously not going to take on the responsibility of getting us out of the recession, it is up to the government to focus actions and bailout money on activities that will get consumers buying. Without this type of focus, the economic death spiral that we are currently in will continue well into t

Circuit City Unplugged

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Circuit City has now officially joined the list of faltering U.S. companies facing severe financial troubles. In a series of announcements over the last few months, the company has disclosed plans to close 20 percent of its stores and layoff thousands of workers. Increased competition from Best Buy, Wal-Mart, and others, along with a deep U.S. recession are being blamed for the company’s troubles. I don’t agree. Like so many companies that have entered a death spiral over the years, it is obvious to me that Circuit City was just another company suffering from bad management.

I truly feel bad for the workers who have lost (or will soon lose) their jobs at the company. What is really sad, though, is like so many other companies that have been in the same situation, the people responsible for the troubles - the executives – get to keep their jobs while thousands of workers lose theirs. It is not the salespeople, accountants, warehouse workers, and cashiers who led the company into decline. In fact, I cannot even think of a situation where a salesperson or cashier can cause company to go out of business.

Back in 2007, the company laid off 3400 of their higher priced salespeople and replaced them with lower-paid workers. In justifying the move, Circuit City spokesman Jim Babb was quoted as saying, “All companies at one time or another need to go through and make sure their cost structure works with market conditions.” Being the employee-focused company they are, Circuit City did allow these workers to reapply for their old jobs at a lower wage (and after a 10-week waiting period), but they were not given the option of staying at a lower wage. Just for comparison, according to the company’s 2008 proxy filed with the SEC, Circuit City CEO Philip Schoonover received in excess of $6 million in compensation for the year (and each member of his executive team received compensation in excess of $1 million). Imagine what these people would receive if the company had actually been successful this year. It is really sad that the Circuit City executive team is accepting this level of compensation while throwing thousands of people out of work – especially in today’s economic climate.

Besides the obvious morale issues caused by this type of action, the company gave up on its customers by firing their trained and experienced salespersons. Circuit City had the reputation of having among the most knowledgeable people in the retail electronics industry. By ridding the company of the high level of expertise that customers had come to expect, Circuit City eliminated the only advantage it had over companies like Best Buy and Wal-Mart. They treated the products they sold like commodities and became just another discount electronics store. The problem with this strategy is that they did not have the cost structure to compete as a discount store.

In their 2006 annual report, the company formally announced its “three parallel areas of work.” These were: UPGRADE the current business through talent, processes and systems; EVOLVE the core business to grow revenues and profits through fundamental change; and INNOVATE to grow new business with new consumer values. Like so many, the parallels comprise another very catchy and creative slogan that lacks substance. In mid-2006, the company’s stock was trading at $30.75 – it closed today (11 November) at $0.13.

Further on in the report, Schoonover writes, “I embrace the opportunity to lead Circuit City as we continue the transformation of our company to better serve our customers, Associates and shareholders.” Looking at the performance of the company since 2006, there is little evidence that Circuit City has served anyone well . . . except Best Buy and Wal-Mart.

The American Auto Industry Does It Again

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Here we go again. General Motors announces further plant closings and layoffs. It makes one wonder how much longer this can go on. Eventually, GM executives will run out of plants to close and people to fire and have to look in the mirror at the true cause of the problems they face.

A manager’s ultimate responsibility is to build the health of the organization so that it can withstand the external pressures that cause decline. Just like people, organizations have an immune system. A weakened immune system may go unnoticed as long as there are no external influences or stressors that can cause disease or decline. Organizations and people with compromised immune systems may even feel strong and healthy as long as the environment is friendly. Once exposure to an external event or stressor occurs, however, disease sets in and decline begins. At this point, drastic measures need to be taken (e.g., layoffs/plant closings for an organization or surgery/chemotherapy for a person) to attempt to stop the decline. It is during times like these that people realize how much easier – and enjoyable – it is to work on improving health than fighting disease.

General Motors and Ford claim that legacy costs and an unexpected shift in demand to fuel efficient cars are the causes of their problems. After all, both were fat and happy a few short years ago when they ignored the market signs and raked in huge profits from SUVs and trucks.

Things have gotten to the point where Toyota is also facing declining sales in the U.S. market. A first for Toyota, they are responding by closing down their truck and SUV factories for three months in an effort to reduce the inventory of large, slow-moving vehicles. The difference? Toyota is NOT laying off any of the 4400 employees affected by the closing. Instead, they are keeping workers on the payroll and using the time for productivity, safety, and quality training.

Imagine the loyalty that Toyota is gaining from its workforce by taking this action. This gives the workers the feeling that they are just as much a part of the company as management. Do you think GM and Ford workers that remain after the layoffs and plant closings feel the same way? Do you think that Ford and GM executives care what the workers think?

An executive who continues to layoff workers because of economic problems is like the captain who runs into rough seas and throws crew members off the ship. Isn’t this the type of leadership we used to see in stories about pirates?

It’s no secret why Toyota continues to improve and innovate in its manufacturing process while Ford and GM continue to . . . well, be Ford and GM.