The Effects of Layoffs on a Business

A recent mass layoff at my company has given me a fresh perspective on layoffs. Normally, as an investor, we see layoffs as a courageous way to drive profits forward by shaking off some areas of weakness. I have personally invested in companies shortly after a mass layoff if I believe that such changes will benefit the profitability of the business. From a purely financial perspective viewing a company as a machine is an easy thing to catch one’s self doing. However there are some soft costs involved in layoffs to a company culture that I wasn’t really aware of until the week after I witnessed fellow employees walking out the door for the last time:
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Competitive Paralysis

This article originally appeared on The DIV-Net

August 4th, 1954 two world record holding sprinters Bannister and Landry squared off in a one mile race at Commonwealth Stadium. The two men had a close race with Landry leading coming into the final few lengths. Knowing that Bannister was sure to be close, Landry looked over his inside shoulder to check his position. Bannister, following closely behind, saw the move and used Landry’s shoulder check as an opportunity to pass on the outside and ultimately win the race.
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