Lincoln Electric Story - Are Layoffs Necessary?

Here are some of the destructive consequences of mass layoffs, from the point of the view of the book we've been looking at "Spark" (Koller, 2010).

Laid off workers make less money at their next position, often never climbing back to their original payscale level.

Laid off workers have been casually shown to have shorter life spans. This stems from the lower-class (SES) difficulties of health care problems, mental health problems and general stress

Organizations suffer the ironic fate of being underemployed and having to rehire to be adequately staffed.

Short-term economic gains for the organization may not create long term gains. Further organizations may suffer from retraining costs, and the lost of talent from employees who want to quit before getting the laid off ax.


Layoffs are almost completely acceptable now. We hardly flinch when we hear about mass layoffs in the news. Starting as a phenomenon in the 1970s, it has quickly become a reality. It could be because it is so commonplace, that organizations accept it as the norm. What is deemed a good idea comes across as so short-sighted.

The last half of the book "Spark: How Old-Fashioned Values Drive a 21st Century Corporation" shows a huge disparity between the way American businesses are running, and how their competing global adversaries are taking the market by actually focusing on the employee. In India and Japan, the rise of solid and reputable companies has been possible because of process improvement and an investment in employees.

Koller writes toward the end of his book about the exceptional employee centered company Lincoln Electric:

"The business model that Lincoln Electric has built over the past 114 years have proven phenomenally successfully by any measure used to gauge success in the American economy"(208).

Current CEO John Stopki is quoted (p.210).

"We believe that guaranteed employment is a good for all of our stakeholders - shareholders, customers, and employees. I think that is very important in understanding why we work so hard in trying to do the things we do. There are a lot of policies which you could implement, such as layoffs, terminations, all the things you hear about, which are good for one or another of those constituencies, but generally not good for all three at the same time.
If we are proven to be right and can go through these very troubling times while keeping our core people energized and committed to the company, as we have done many times before, it is pretty easy to see how our shareholders and customers will benefit from that".

As a young worker, consider the reputation of the organization you want to work for. Are you willing to work for a company 20 years, and then be comfortable with being laid off. This is a reality for millions of Americans, but we know it doesn't have to be this way. I encourage young people to explore new options. Consider that success is more than a short-term profit. Consider that when you start your own company, value what makes your company exceptional.