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But when layoffs get too dramatic they can have other effects. Motorola has announced yet another negative earnings forecast and announced yet another round of layoffs. The total has now reached 32,000, a mammoth number of employees. Sometimes when a company has bad news to announce financially they'll couple that announcement with an announcement of layoffs in hopes of convincing the market not to devalue the stock too heavily. But when layoffs get as deep as they have now at Motorola, the effect on the corporation as a whole can be debilitating. At this point, layoffs at Moto are approaching something like 25% of its whole workforce. That has the effect of seriously impeding the people who are left behind. Every workflow in the company will have to be redesigned, and a lot of essential knowledge is going to walk out the door carrying pink slips. A layoff this deep can cause damage to efficiency that can take years to recover from. It also causes demoralization and fear. One of the things that keeps a company going is loyalty. If your people are just working for a paycheck, you're in trouble. You need them to believe in the company and to really like what they're doing, to believe that what they're doing is important -- because that means they'll do more than just the minimum necessary to get a paycheck every two weeks. But people don't make that commitment for no reason -- it's a two way street. People make a commitment to a corporation because they think the corporation is committed to them; it is ultimately selfish. People make that commitment because they think they'll ultimately benefit from it, with promotions and more desirable job assignments. When a quarter of the workforce is laid off, the remaining ones will spend their time worrying about whether they'll be next, if not this year than next or the year after. Why put out extra effort when there's no possibility of advancement because of it? There is no longer a feeling that the company is committed to me so why should I be committed to the corporation? Productivity will fall for this reason, too. But the greatest danger is brain-drain. The advantage of using a layoff for reduction instead of attrition is that it permits you to get rid of the least valuable members of your staff. Attrition usually involves people leaving who have the best opportunities elsewhere, which means you're losing the most desirable members of your team. We'd all like to believe that everyone is equally valuable, but it simply isn't true. For a company the size of Motorola there are two to four thousand people who are the life-blood of the company. These are certain mid-level and senior engineers and researchers, some mid-level and high-level executives, certain marketers and sales folk. Not every engineer, nor every manager, of course. But when times get really bad at a company and there are too many layoffs, these people may decide that the fun is over and that there are better opportunities elsewhere. People like this never have any trouble finding other jobs even during bad economic times; they stay because they want to. And if you lose a substantial number of these critical people (half, maybe) then your corporation is dead, a hollow shell of itself simply waiting to die. That's what happened at Palm; the core group of engineers and managers which made it great left en mass and formed their own company. Palm has been drifting aimlessly ever since, recycling past glory. The creative spark at Palm is gone. I fear that Motorola has now reached the point where this kind of defection will become a real issue. It's not the kind of thing which will be obvious for a long time; design starts by these movers and shakers will continue to emerge for a year or two, for instance. This kind of lobotomy may take a year, and it may take three years for its effects to become apparent. In the long run the way it manifests is as a leveling of growth and an increasing number of failed projects and a rising perception that the company just doesn't seem as vibrant and dynamic as it used to be. Think "IBM before Gerstner" or "Apple before it was acquired by NeXT". I think that is Motorola's future. These two cases are instructive because they do show that it's possible to turn this around. And part of that is to stop using layoffs, so as to rebuild employee morale and loyalty. When the problems in a business are sufficiently serious, they can't be addressed with layoffs. Something more radical is required; the business itself needs to be redesigned. Motorola will need to reexamine itself and decide just what kind of company it needs to become, since it's apparent that the current company is failing. This probably means shedding entire businesses -- selling them if possible, shutting them down if 
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