During the recession, Alcoa (NYSE:AA) was among the top companies for cutting workers, and once the recession is over, the question becomes whether they've cut their work force too much, and how that will affect their performance, and retention rates of existing workers, who will ultimately want changes.
Alcoa spokesman Kevin Lowery said, "We essentially eliminated 30,000 jobs. ... The way we look at it, is we have about 60,000 employees left,"
The point is in the eyes of Alcoa, they had no choice if they wanted to survive as a company during the worst of the recession.
Lowery added that the other way to look at it is they were trying to preserve the jobs of the 60,000 remaining employees in order to "have a business that would be sustainable moving forward."
Long term, history has shown a lot of companies cutting too deeply can take much longer to recover than counterparts who didn't cut as deeply. Too deep of a cut is usually defined as 20 percent or over of the workforce, which Alcoa was much higher than.
Productivity and earnings are always a benefit of those willing to make the hard decisions in the short term, but it the toll it takes on employees who feel overwhelmed and burned out, can reduce productivity over the long term, and good employees could end up leaving the company.
Short term this is definitely a benefit to Alcoa, but only time will tell if they'll end up being hurt by it once demand significantly returns in the market for aluminum.
1 comment:
Many companies have made cut backs in order to survive in these trying time times. How can we try to ensure that these cut backs don’t form a pattern of a continuous downward spiral vs. positing for growth? Can companies like Sara Lee and Alcoa climb back to the top?
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