The Prose & Cons of Downsizing


This week, a former employer of mine announced plans to cut 1,500 jobs across the country – about 13% of its workforce. News articles quote the company as pointing to changing technology pressures and price sensitivity for the “restructuring”, which it describes as “difficult but necessary”. The same company posted net profits of $2.64 billion in 2016.

Now, with that opening, you’re probably thinking that I’m about to rail against the soulless pursuit of profit that characterizes the average corporation. I’m actually not going to do that, though… Sure, I’ve mentioned elsewhere that corporations – as robotic, non-sentient entities – have plainly sociopathic tendencies, but if I ever bring up any alternative, it’s typically only in the context of a thought experiment. As much as I’m inclined to imagine (and try to build) a business that doesn’t seek to maximize profit, there’s no sense losing sleep over the fact that most do and always will.

Here’s what I notice, though, in the context of this recent story about corporate layoffs: whenever these things come up, they’re talked about in tones of inevitability – as though the forces behind the job loss are somehow naturally occurring and beyond anyone’s control. Media outlets and popular sentiment, while not typically pleased with news of layoffs, don’t – I think – do a very good job of spelling out the reasons for the event. It’s this incongruity of tone and reality that interests me.

In some cases, of course, layoffs are the result of a business shrinking. If a company begins posting losses, then it more than likely has neither the revenue nor the work to support its staff base. In such cases, where not slashing expenses would cause a downward spiral into bankruptcy, I think there is probably less confusion as to the reasons for job loss.

However, in other cases – as in this week’s example – job loss has little or nothing to do with a shrinking business. Notwithstanding Great-West Life’s modest year-over-year decline ($2.64 billion down from $2.76 billion) in net earnings, not increasing profit is not the same thing as actually losing money. It’s in these cases where you to start to read soundbites full of vague, trite language… A company might be “restructuring” due to “competitive pressures” and the desire to continue to provide “best-in-class solutions” to its clients, etc. Just once, I would like to see a press release that looks like this:

Uh, hey. Look… our company is run by a board that’s elected by shareholders. Shareholders like money – wait, no, they *demand* it. This wouldn’t be a problem if they were cool with receiving the same amount every year. Unfortunately, they happen to demand progressively *more* profit every year. So here we are: if we don’t find a way to continue to increase profits, they will start firing us (or cutting our salaries – no way we’re letting that happen lol). We’re a pretty huge company in a market with not much room to grow, so unfortunately the only way for us to make more money is to spend less money. That’s why we’re getting rid of a bunch of people. Sorry…this is just the way things work.

As far as I can tell, this is the crux of what’s going on in the case of GWL. For PR reasons, of course, the company will never describe things so bluntly. But if you pay attention to what you read (in this case or others like it), you will quickly note that reduced expenses are expected to lead directly to higher profits – a fact which is conspicuously absent from the carefully crafted statements of solemn executives as they deliver the news.

People are free to construct their own emotional response to the fact that companies slash jobs because they’re not increasing profits enough – like I said, that’s not my goal here. If the political spin of an employer’s press releases had left you with a different impression of what was going on, I suspect the unvarnished truth is less to your liking. Either way, I do find myself wishing that we could at least call a spade a spade: for better or worse, it’s often the case that corporate layoffs are a direct result of the need (read: desire) to maximize profit. Could or should things be different? I don’t know… But it would be easier to begin that debate with a common understanding of circumstances, right?


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