Teresa Horscroft's blog

Teresa Horscroft is a PR consultant who helps companies in the information technology and marketing sectors to raise awareness of their products and services and increase sales.

02 February 2009

Surplus to short term profits but what is the long term impact of redundancies

Microsoft joined a distrurblingly long list of companies to make people redundant last week. 5000 people will be served notice in the next 18 months. The news surprised me. Not because of the fact that yet another company is faced with falling revenues, but because this global megacompany has more than $21 billion in the bank, cash. Wow. Could 5000 people really be surplus to profits? As an owner of a small business, I understand the need to make cut-backs in tough economic times. Yet I am troubled that such a global powerbrand is making redundancies to add more silver to its coffers. I have always considered redundancy to be one of the final solutions to a company’s woes. News of redundancy spreads anxiety and panic through an organisation at an alarming rate. And anxious, stressed or unhappy staff can impact productivity as well as customer service. What do customers themselves think about the news? Does it make them feel less loyal to the Microsoft brand I wonder? Shareholders, often the target of such business decisions, may well feel assured by such money saving news, but did Microsoft forget about the opinions of its customers and employees, often forgotten as a company's most valuable assets?

I wonder whether the money saved is really worth the risk to employee loyalty to customer experience and to the long-term future of the company. Those companies that continue to value their customers and staff while focusing on improving processes to make operational efficiencies are more likely to be laying the foundations to future market dominance. Short term profits do not always pave the way for long-term gains.


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