HEC School of Management, Paris and the CEMS (Community of
European Management Schools) were selected by the editors at the Harvard
Business Review to
contribute ideas and international practices for managing workforce
reductions during economic downturns. While such
reductions might be an inevitable occurrence in today's business
environment, they probably have a negative effect on the attractiveness
of working for a firm and on the general level of employee trust
in the company. Therefore executives must balance the need
to survive a recession with the need to retain and
attract top talent. It is clear from the
tag cloud on the
left, generated by content from a popular business magazine, that
this issue is not yet on executive radars.
Two hundred CEOs met during the summer in the United Kingdom
to discuss this problem. You are contributing to this
debate by offering your experience and advice. The results
of the US and European surveys be featured over a series of articles on
the Harvard Business Review website. We invite you to follow the
series and to download the final report.
Thank you for offering us your ideas and advice.
Bookmark this page to return for the current
responses to the principle questions of the survey later this
demographic questions respondents were asked to indicate
their level in the company hierarchy, their level of
perceived responsibility for setting and executing
company business policies, and their authority or
influence regarding common human resource decisions.
were asked to estimate the general level of trust in
society. These are scored and graphed.
|Seven questions were asked to
estimate the general level of trust in the firm.
These are scored and graphed. Apparently the
respondents trusted in the general society more than in
their own firms.
|The two measures of trust had different possible
scores. We measured trust in the boss using a set
of questions validated by many years or research that is
based on 7 to 35 scale. We measured general trust
in the society, again using a set of questions validated
by many years of research, that is based on 3 to 15
scale. We standardized these scores so they could
be easily compared and plotted them below. The results indicate that the majority of
respondents trust a stranger more than they trust their
We also asked a
series of questions asking respondents how interesting
it would be to work for a company described in a typical
company profile. We manipulated one variable in
the description, the level of international diversity
among the top executives. Respondents were
randomly presented with a level of international
diversity of 10%, 35%, or 70%. The level of
international diversity among executives made no
difference to firm's attractivity to recruits.
respondents four typical profiles of employee and we
randomly made one of the options of foreign-born person. All
had consistent performance ratings of either average,
good, or excellent. Two were in their early
thirties, one in mid forties, and the last in late
fifties. Their salaries also varied from low to
high. Below are the choices of whom to fire by the
respondents. The two profiles most at risk were
the average performers with the older of the two the
clear choice for layoff. Whether the choice was a
foreign-born person or not made no significant difference.
|We analyzed the initial
responses (nearly 1,200 respondents) to determine if
their national origins influenced their choices of whom
to fire. Interestingly we found that culture
creates a strong set of biases which led respondents to
fire different employee profiles. For example, the
Latin group (French, Italian, and Spanish managers) were
more likely to fire an older manager, even one with
excellent performance. Their rationale was that
managers near the end of their career spans could take
an early retirement and, because they were generally
well paid, their salaries could save the jobs of two
|If we look at the overall
results of the HBR-HEC Trust and Firing Survey we
can discern three concerns managers must consider when
responding to serious market downturns.
concern, maybe the first for most CEOs, is saving the
shareholders by controlling costs. This generally
means that people will be fired, either individually or
as a result of restructuring where some business units
or subsidiaries are closed or sold.
concern, typically coming from the HR department and
executives in charge of business development, is to
maintain the attractivity of the firm so that it can
continue recruiting the necessary talent during the
downturn or be able to start recruiting again on the
economic rebound. Firms that downsize too
aggressively risk earning a bad reputation among
graduates and other employees in the sector.
last concern, especially for line, sales, and HR
managers is to maintain the attractivity of the firm to
retain its current talent. This group of managers
wants to avoid the scenario where good quality employees
become fearful that will be next on the layoff list and
preemptively leave for more secure jobs elsewhere.
Click on the graphic below to
give your opinion about which concerns should be the
This will take you to a new form on
servers at our partner Chinese University of Hong Kong.
Bookmark this page to see complete results as they are processed
or watch our blog at HBR.
Latest HBR posts on HBR.org
Note for journalists and researchers: You may
copy any of the charts on this page to use in other
publications. You must attribute the chart using the
following citation. Segalla, Michael. How
Europeans Do Layoffs. Harvard Business Review
Website. June 9, 2009.