In the midst of the current US economic slowdown it is clear that the good old days are over. At least for some chunk of 2008, more likely for the whole year, we are in for some gloomy times.
Companies are being forced to cut costs and let people go. Some smart people aren’t sitting around waiting to be downsized – instead they’re jumping ship and hopping aboard another.
Whether you are let go or you leave on your own, there is an impact. Of course conventional wisdom says that everyone is replaceable. That may still be true, but the really important question is: at what cost? Is the cost of replacing someone today the same as it was 10 years ago? Just because technology is cheaper and more abundant it does not mean that it is cheap to replace people.
The fact is that we are increasingly becoming a real-time information processing society. Because of that, each one of us processes an increasingly large amount of unique information on a daily basis. Knowledge-based workers are very different from workers on a factory line, and the cost of replacing them is also very different. While companies save money in the short term, the longer term impact of losing a person is not so clear. In this post we look at the impact cutting jobs has on modern companies and try to figure out: are YOU replaceable?
Somewhere In Corporate America 20 Years Ago…
Story 1: Sorry Bob, you’ve been wonderful, but we will not be needing your services any longer. Here is Jack, fresh out of college, his salary is 25% of yours. Please train him in the next two weeks to do what you do.
Story 2: Hey boss, you’ve been wonderful, but I found a job that pays twice as much. Here is Jack, fresh out of college, his salary is 25% of mine. I will train him in the next two weeks to do what I do.
The aftermath of both stories is the same: Bob trains Jack in two weeks and then leaves. And even though Jack is very bright and had a 4.0 GPA in college, it is impossible to learn Bob’s job in two weeks. It takes about two months for him to become productive. And this is quite a find. The long term cost is substantially lower and company benefits from the employee churn.