Many lessons have been learnt from the harsh methods used by employers cutting staff in the 1990s' recession. So how do today's employers face up to the task of downsizing, especially the effect it can have on remaining staff? Jane Lewis reports
Corus, Vauxhall, Ericsson, Motorola, Marconi… you don't have to look too far to see that redundancy is squarely back on the agenda in many sectors - and many more are bracing themselves for the return of the corporate axe. With 2,000 jobs already lost in the City this year, some commentators believe a second wave of cuts is inevitable - something's got to give, they argue. For example, staff numbers at global giant Merrill Lynch rose from 38,300 in 1991 to 72,000 last year as the bank expanded around the world. "We were hiring people all over the place, often in completely irrelevant places", one Merrill banker told the Financial Times. "When I look down the directory I can see almost 5,000 names that could go without even trying."
Inevitably comparisons have been drawn between this latest round of cuts and the often vicious corporate blood-letting that characterised the UK's last major recession of the early 1990s.
The central question is what lessons have been learnt from that experience. One difference already emerging is timing - evidence from the US suggests that many of this year's lay-offs were taken as preventative measures rather than as reactions to existing troubles. Sophisticated IT systems mean companies were able to forecast the coming slowdown faster and take "ameliorative" action to counter it. One of the easiest ways for chief executives to calm a nervy stock market in the short term is to announce a cost-cutting programme with lots of redundancies.
But what is the danger of cutting too deeply? How many companies emerged from the last recession too emaciated, demoralised and drained of core skills to take proper advantage of the eventual upturn? Some never recovered. It will be interesting, this time around, to see how many business leaders are prepared to stand up against market pressure to slash and burn. "They should tell investors true shareholder value will be built by sticking to our guns, and not making unnecessary, damaging cuts to the very heart of our business," says one commentator.
New EU rules on employee consultation -