The night of the long knives

After a period of expansion, my company has needed to rein in its expenses by a certain extent. In the IT department, we've been spending money left, right and centre, most of which went to a central storage facility which was greatly needed. For the time being, our budget is being cut; this isn't too bad as some of the work which I am doing used to be farmed out to consultants at a non-trivial price. In fact, for years I've been trying to measure my work as a function of how much money I save.

But that isn't really what I wanted to write about: another source of saving is making people redundant. One group of people is being replaced by a sub-contractor (what we would call 'outsourcing' in the computer industry), whereas others are simply being sent home. Of the names that I have heard, several have a very low return on investment index (in other words, they don't contribute very much but cost a lot) and so by letting these people go, the company won't lose much productivity whilst saving money.

The most painful cut is that of a close colleague of mine, a young lad of 64. In the pre-merger days, he was one of the most important figures in the company, but since then his job has been continually downsized until now he too is costing a fair amount of money whilst contributing less. I say that he is "geographically challenged": had he be living in a different city, where his group's activities are based, then possibly he wouldn't have been the one to go.

Such acts of making people redundant cause fear and worry throughout the company. Everyone starts wondering whether they are contributing enough compared to their salary. Will there be more redundancies? What would I do if I were made redundant?

Someone came to talk to me this morning, another spring chicken of 60+ years. He was worried that he too might fall under the axe. I tried to convince him that as far as I see things, he is an essential person, even more essential than I am. Anyone who fired him would be committing business suicide.

Making people redundant might save a certain amount of money in the short run, but it tends to be a counter-productive move. The amounts saved are normally not very much, especially when compared to the savings which could be made by getting an additional 1% discount on all raw material purchases, for example, or decreasing the discounts which are given to customers.