Richard Gottlieb

Dumb companies

In my last blog posting I compared laying off veteran employees to a company suffering an institutional stroke. In one fell swoop, they have wiped out a big part of their institutional memory. There is no longer anyone there who remembers what happened more then two or three years earlier.

Let me give you a couple of real life examples of how companies suffer when they in so many words get “dumber.”

A large toy company decided to move all of its shipping to a new location in another state. In doing so, they decided to let the existing staff go.

Well, it seems that the old staff knew all of the rules and guidelines for the company’s retail customer base. They knew how to mark the cartons, what freight lines to use, how to pack the pallets and more.

The new people knew none of this so everything went haywire. Shipments were late, carton markings were wrong and customers were furious. It took them months to correct the problems but by the time they did they had devastated their customer relationships. They are still struggling to get back on track.

In another example, a number of years ago, a retailer (who by no coincidence no longer exists) decided to let all of the longest serving sales clerks go. These people made the most money and were seen as complacent because they had been working for the company for so long.

What the retailer failed to think about was that these people had, over the years, developed relationships with many of the consumers who visited the stores. As a result, long time customers ceased to visit.  Why, because the charm was in going to a place where someone knew their names, remembered how old their kids were and understood what they were looking for.

When the company fired these clerks they lost that company memory and with it a big part of their customer base.

In times like these, when the need to cut staff becomes, in some cases, a matter of survival, companies need to think clearly about who they are letting go and what the results may be. Are they killing some company brain cells? Better figure that out now before becoming to dumb to figure it out later.

Posted by Richard Gottlieb on March 26, 2009 | Comments (0)