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April 11, 2006

Trivia Ranting

Layoffs as a Stock Booster

I came upon yet another news article saying, essentially, the best way to improve an ailing company's stock price (hence value) is to lay off employees. It seems to be "conventional wisdom" in the quarterly profit driven business world. This is stupid.

What are the ways to increase profit? Cut costs, or increase productivity. The easiest, and sleaziest, is to cut headcount - a layoff - to reduce costs. The low end employees are shoved out the door. Problem is, when you do that, you also cut productivity. The workers that are usually cut are the ones actually engaged in producing product! Do this too many times, and you have only a pathetic shell of a company, inhabited by lots of entrenched managers and no one with any spark of creativity left.

Now, if you really want to cut costs by reducing overhead, you don't cut production staff, you cut executive staff! Eliminating one $5, VP is the equivalent of sacking 1 $5, widget makers! But it doesn't look "good" to Wall Street anal-ists if you just chop dollars, not lots of bodies.

Other cost cutting measures might work just as well, but aren't as flashy. Like, say, tying executive salaries to profitability. If the company doesn't make money, the CEO only gets $8,/year, and no stock. Essentially, put executives on commission - no profit or no growth in the year, no bonus. Cutting jobs to boost profit is "ungrowth", so even if there is an increase in profit, they get docked for shrinking the company. You could also reduce the amount of travel allowed, and stop catering lunches for meetings.

You also could increase productivity, but that involves real, long term, effort. You need to analyse your processes, find the inefficiencies, and encourage all of your employees to come up with "a better way to build a mousetrap". You need to be willing to experiment, and pilot test your solutions. But this isn't a quarterly process, so it doesn't play well to Wall Street.

Buzzwords and Hype

We've all heard/read it. Phrases like "User Generated Content", "Web 2.", "Interactive Network", "Blended Multimedia Content", and other such cruft get thrown around by marketing people, and picked up by astroturf bloggers (people who just regurgitate press releases). A large number of these terms are either redundant, or oxymorons.

Reading some blogs is like reading some advertising flak's rough draft - all fat, no meat. Pompous, at best. I swear some of these idiots post just to see their drivel in print, and since they have nothing real to say, just spew the same crap they read elsewhere!

Mind you, the only area worse than the tech sector on this is the political blogosphere. One "big name" dittohead regurgitates some think-tank's propaganda, and all of the other similar dittoheads echo it. I guess these twits think that if you say the same thing a magic number of times, it must thereby be true. Sorry, guys, up is still up, down is still down, and calling lies "truth" does not make it any less a lie.

Now, I admit, it isn't possible to come up with something "original" or "profound" every day. I can't. On the other hand, I don't post every day. I don't tend to post unless I think I have something real to say. (You may not agree with my assessment, but that's expected.) Maybe if this was a group blog, with lots of contributors, it would have a daily post with decent content. But it doesn't.

So, if you really want profound, real insight, don't read hype sites. Take everything you read on somebody's blog with a big grain of salt, and run away when it reads like marketing puffery or propaganda. Your brain and sanity will thank you.

Posted by ljl at April 11, 2006 11: AM