Win the most that you can...

All of the news lately regarding layoffs and cutbacks in various high-tech, well known, companies has made me think about the layoff "tool" of management. Now, it is a powerful one, especially in these types of businesses where the main cost of business is payroll.

Handing out the pink slip is a very easy way to cut those costs, and is one that Wall Street loves, it shows them commitment to profitability, for the near term. And does trim the company doing the cutting. Unfortunately, this leaves out one BIG part of the equation - the economy is by and large driven through consumer spending.

Consumer spending happens through consumer confidence in their money source (their jobs) and the availability of money to spend.

This reminds me of a game I was recently a participant in, one that I thought showed the basic premise at work here and how it is flawed.

The game is called Win as much as you can, this game involves 4 groups of people, something like 20 is a good amount, so there are 4 groups of 5, and a moderator. Each group is given two cards, one with an X and one with a Y. Now, the teams are given scores, and the moderator will ask the teams to hold up one of the cards, then the scores are recorded. Scoring goes like this

4 teams with X => each team scores -100

3 teams with X => each X team scores +100
1 team with Y => this team scores a -300

2 teams with X => each team scores a +200
2 teams with Y => each team scores a -200

1 team with X => this team scores +300
3 teams with Y => each team scores -100

4 teams with Y => each team scores +100

Now, what happens in this game is that each group tries to be that team to get the single X, hoping that someone holds the Y. After a few turns, the moderator lets one person from each group meet with the others to negotiate.

Anyway, when we played each team went for the X, then, when we all negotiated, it was pointed out that only when we all select Y's do we all gain. After one of these negotiations, all representatives agreed to hold the Y, but when they returned to their group and held up their card, they held up the X...

When the game was over, after ten "turns" the moderator reveals that the score is for the entire group of 20...and the only way for the entire group to win is when everyone selects the Y...if you pick any other combination, it is at best a Win-Lose scenario (and one is a Lose-Lose).

Now, this is the same game that companies engaging in the massive layoff scheme are playing..why...well, those laid off folks are consumers, who now will not have confidence and will spend less. Furthermore, when those jobs are replaced, with extremely low cost wages, else where, those low wage earners will not have the available money to spend, thus, further decreasing the consumer input to the economy.

So, these short cut schemes to show profit to Wall Street through layoffs and outsourcing are the Win-Lose game, which, in the end, makes everyone lose. Unfortunately, the people in the positions that make these decisions for companies are rewarded only for the short term, Win-Lose aspects, acting like those single groups in the game - in fact, there is not one person who gets rewarded when the entirety wins...which is the basic flaw here - when no one is rewarded for this aspect, no one will do it, especially if they are getting rewarded for other, less beneficial behavior - creating a world of haves and have nots.

Henry Ford had the foresight to realize that increasing workers wages would in turn allow those workers to purchase the consumer products that they are making, thus perpetuating the business, in a Win-Win scenario. This is the kind of leadership that is needed in corporate America, however, what we have are Managers and not Leaders. Managers respond to action-able items, Leaders act on their vision. It would be nice to see some Leaders step up and create a positive, powerful vision, and save us all from these Managers - before they manage us all offshore and downsize our country to a 3rd world economy.