Layoffs Aren't Working The Way They're Supposed To

Downsizing continues, but many companies aren't pleased with the results. A recent survey of some 1,800 companies by tpf&c, a Towers Perrin subsidiary, reports that 47% have reduced their work forces this year, and 20% say they anticipate further staff cuts next year. Yet another Towers Perrin survey of more than 300 major companies indicates that half are dissatisfied with their restructuring programs.

"Typically, management views layoffs as a quick fix for the bottom line," explains a Towers Perrin official. "But unless it cuts work at the same time as it cuts people, it inevitably adds costs for subcontractors, consultants, and other staff." In addition, many companies have been hit by higher-than-expected costs for severance pay, outplacement services, and legal fees.