Are Layoffs Too Expensive?

From Computerworld, May 4, 2009...

Maybe some IT jobs will be saved if enough executives read a March 8 research note from AMR Research Inc.'s Phil Fersht and then are able to convince the top brass of the sense of Fersht's argument. Which is this: The cost of laying off an IT employee may exceed the benefit to be derived.

He says that should the economy recover in 2010, a company might derive only $50,000 to $100,000 in savings from each IT layoff, after all costs have been incurred. Then Fersht asks how those savings stack up against the cost of replacing the laid-off employee once conditions improve. "How can you put a price on replacing the inherent business knowledge of that staff member when you rehire a replacement?" he writes. "It may take another year or two to get the replacement up to speed, and will not only end up costing you more, but may also impede your executives from accessing critical data in a timely fashion. The overall cost of replacing that staff member could easily be three times the costs saved by laying her off. And these easily-identified direct costs are only the beginning; the costs incurred to your culture and morale can prove even more damaging."

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