Companies will time layoffs to get a better profit in the next couple months to report better quarterly or yearly earnings reports. How those earnings reports turn out directly affects the stock market performance, which in turn makes the shareholders significantly more money.
This is most effective if somebody’s trying to pump the stock value before jumping ship in the most egregious cases.
Often companies have layoff packages that pay workers X months of pay as a severance agreement, doesn’t that mean they would be paying triple wages for some number of employees? Wouldn’t that bring their costs up?
The timing is quite important. Other things to consider are tax periods, bonuses, and nature of the markets. That can all be racked up as cost of doing business if the long-term benefits outweigh the long-term costs.
Especially if they are having a bad year or quarter, performing layoffs can show promise of a better next quarter since severance is basically a fixed cost to the number of employees you have.
There isn’t necessarily one size fits all but the bottom line is dropping employees saves money as human resources are always one of the largest costs of operating.
Companies will time layoffs to get a better profit in the next couple months to report better quarterly or yearly earnings reports. How those earnings reports turn out directly affects the stock market performance, which in turn makes the shareholders significantly more money.
This is most effective if somebody’s trying to pump the stock value before jumping ship in the most egregious cases.
Often companies have layoff packages that pay workers X months of pay as a severance agreement, doesn’t that mean they would be paying triple wages for some number of employees? Wouldn’t that bring their costs up?
Good points!
The timing is quite important. Other things to consider are tax periods, bonuses, and nature of the markets. That can all be racked up as cost of doing business if the long-term benefits outweigh the long-term costs.
Especially if they are having a bad year or quarter, performing layoffs can show promise of a better next quarter since severance is basically a fixed cost to the number of employees you have.
There isn’t necessarily one size fits all but the bottom line is dropping employees saves money as human resources are always one of the largest costs of operating.
Thanks for the explanation