Iron Law of Layoffs

John Sterman, MIT Sloan School of Management, co-authored an article that, in part, discusses the 'The Iron Law of Layoffs.'  The authors discussed about how Process Improvement (e.g.: LEAN) improves capacity and the pressure for layoffs. And the involvement of several factors such as increased sales plus labor attrition.

To the point where if you institute an Iron Law of No Layoffs, then sales increase does not happen and the attrition rate drops over time, you may have to think about slowing your improvement efforts.

Leadership is tough, and so is followship. Especially when everyone sees the waste and has a passion for making things better. It is very hard on everyone to 'leave money on the table.' However, if people are truly the company's most important resource (to be trite), then protecting that resource outweighs the waste in other parts of the organization.

The article is from people in the field of System Dynamics. As Peter Senge describes it, think of 'cause-and-effect separated by time.' So, be forewarned, it is not an immediate, 'How To' type article.

'Overcoming the Improvement Paradox'
European Management Journal , Vol. 17, No. 2, pp. 120-134, 1999
'The Iron Law of Layoffs' - Page 29 (pg 31 on the pdf)

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