As many entrepreneurs and executives know very well, when a company’s workforce is simply too large and sustainability is compromised, downsizing must occur. Pulling the trigger is a tough decision to make, but at times layoffs are imperative, which is the predicament Yahoo! Inc. finds itself in.
Ever since Yahoo announced letting 600 employees (4% of its work force) go, newspapers and websites are blowing the story out of proportion like it’s the end of the world. Think again.
From a financial standpoint, if a company cannot find ways to make more money they’re forced to spend less money — it’s as simple as that. Yes, laying off 600 employees really sucks, though isn’t it better than having the entire company fold and 13,500 more people being out of jobs? You betcha. When Yahoo’s last round of layoffs took place back in 2008, Jerry Yang — co-founder and chief executive of Yahoo — said: “The steps we are taking this quarter should deliver short-term benefits to operating cash flow, and substantially enhance the nimbleness and flexibility with which we compete over the long-term.”
The reality is, Yahoo has now positioned itself for growth and there’s a good chance the 600 employees that were laid off will be back in action soon. According to Stanford Professor Jeff Pfeffer, “…the majority of the layoffs that have taken place during this recession—at financial-services firms, retailers, technology companies, and many others—aren’t the result of a broken business model. Like the airlines’ response to 9/11, these staff reductions were a response to a temporary drop in demand; many of these firms expect to start growing (and hiring) again when the recession ends.”
Aaron Schoenberger is Founder of The Brainchild Group — a Search Engine Optimization (SEO) and Social Media Marketing company in Los Angeles, California. He’s known for his work with celebrity clients, top restaurants, automotive manufacturers, professional athletes and Fortune 500 companies.