The Cost Of People
Toyota was one of the first companies to implement the notion of “Lifetime Employment.” Of course, that has since faded but the rationale for offering it for the amount of time they did has not. Toyota sees all employees as either “Value Adders” or those who support Value Adders. They take time and energy to develop problem solvers, and that represents an investment. The more time an employee has been at the company, the more valuable they are because typically you have invested more, and they have become better employees. And Toyota does not see the logic in parting with that investment except in difficult situations. “Respect for People” is written into their culture. Unfortunately, this type of People First culture is waning or absent in many footwear and apparel companies today.
Several companies are announcing additional layoffs that began in 2023 continuing into 2024, and seeing a significant amount of experience and talent being dismissed. (https://footwearnews.com/business/business-news/biggest-footwear-retail-layoffs-2023-end-of-the-year-review-1203566340/). To be sure, it’s not just Footwear and Apparel (https://www.wsj.com/business/layoffs-2024-companies-tracker-list-6acb4e95) but this is the industry that we work in, and it’s the one that hits long-time colleagues, friends and family. And it makes us think … what is the “Cost of People”? How do we do the accounting?
This notion of “Human Resources” is problematic. According to Wikipedia, “Resource refers to all the materials available in our environment which are technologically accessible, economically feasible, and culturally sustainable and help us to satisfy our needs and wants.” So, if we apply that definition to “Human Resources” … the phrase itself becomes very cold, distant, and lacking in empathy. A much better phrase is “Talent” which emphasizes the skills, knowledge, and value that talented people contribute to an organization’s product, culture, and bottom line. Resources are things we manipulate to get what we want. Talent has far more value. And letting go of value is what companies need to be thinking about as they go into these decisions.
To be clear, we’re not saying that any company takes layoffs lightly. Not in the slightest. These are hard decisions. But layoffs seem to be happening at such a pace these days that the world is desensitized to them. It’s just part of reality. Part of doing business. But doing root cause analysis as to WHY the layoffs became necessary, understanding all of the other options that could have alleviated the profitability pressures, that’s where we hope that Corporate Leadership is spending their time. It’s important to consider the pressure that shareholder and market expectations place on companies, resulting in Talent being translated to Numbers (or dollars), ignoring the human element.
The strength of a company is in the PEOPLE. “What makes a company special is the team.” “Leadership is the key but the team is what matters.” All of this adds up to a “culture,” a system. And what does it mean to a culture and system when parts are let go? What message does it send? “A company doesn’t care about you. That could be you next. They will get rid of you as soon as it’s in their interest.” Cultures and systems are fragile things – it only takes a bit of doubt to spread distrust and begin to erode what could have been a strength. We have to ask ourselves: What is the cost of weakening a system or culture?