BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Tech Observer >  

Big Job Losses Early Good Or Bad

Tech Observer

by Kevin Maney
Main
What We Can Learn From Chinese Techies, SARS, and Canadians   Andreessen-Backed Qik to Stream to BlackBerry's

Recent Blog Posts

Links

Oct 27 2008 9:48am EDT

Big Job Losses Early -- Good or Bad?

Kevin Maney notes: Economists are worried and even a little puzzled about the mass layoffs and deep job cuts this early in a down cycle, The Wall Street Journal says. Most of the time, the weakest labor situations come at the end of a recession, not when it's just starting. The story is based on numbers from the Bureau of Labor Statistics, and they do look pretty scary.


But then I got thinking about that slide presentation VC firm Sequoia gave to its portfolio companies. Part of the advice was to ruthlessly cut staff now, preserve cash and climb back up. Waiting too long ultimately damages the company more. Other VCs are giving their companies the same kind of advice -- or orders.

I've also heard big-company CEOs talk about this over the past year. Perhaps this is a new lesson that's seeping into managers' consciousness -- or maybe it's a course at business schools or something. But the accepted wisdom now seems to be: when trouble starts, immediately cut as deeply as you think you need to in order to survive the whole crisis, keep your core best people, and rebuild.

But this leaves some important questions on the table. Does that strategy only work if you're the ONE smart company that does it while all your competitors drag their feet? If every companies does quick, hard layoffs, will that plunge us into a deeper overall recession -- or set the stage for getting us back to prosperity more quickly?

Any economists out there with answers?

...

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

Slideshows

500 Startups Hits New York

Dave McClure's brainchild makes its way to New York and introduces East Coast money folks to some intriguing new companies. View Slideshow