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>The article doesn't spend 1 second explaining the answer promised

Actually it does, it's one of the first things in the article:

>Whenever a task is automated, the employee who performed it is trained for another one worth equivalent pay.

The issue is that this only covers one small way an employee could be made redundant. You could apply the idea of retraining to other companies and other layoff scenarios, but it doesn't help if your entire industry is falling part or the company simply isn't viable.

For Zildjian, it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool that the original employee could have just learned in the first place. It's not a company secret that CNBC managed to pry from the Zildjian CEO, it's just common sense. This is why I say that the article's reason is hardly a reason for Zildjian's no-layoff practices, because this sort of common sense is applied in many companies where layoffs are still present. The most significant reason (among other contributing factors) is the "increasing workload during recessions" practice that I described.

> it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool

If this was so self-evident, though, everyone would do it. In practice, a lot of companies don't even try to "teach new tricks to an old dog", preferring to go through the layoff/hiring churn instead. That's probably got more to do with the traditional link between pay and seniority, than to anything really related to skills: a relatively small disruption in productivity is handsomely offset by a big net cut in salary expenses, as the younger employee will likely command a much lower wage.

Can you give an example of a situation where a company has laid off, hired, and trained, when re-training would have been equal or less effort?

Just pick any big company that announced large-scale layoffs in the last 20 years. They start re-hiring almost immediately. In some cases they even announce hiring plans while they announce layoffs - and the percentage of workers being retrained or moved internally during these events is usually pretty low. It's difficult to believe that tens of thousands of workers cannot be retrained, when corporate roles are increasingly described as "bullshit jobs" anyway.

> when re-training would have been equal or less effort

That's the issue, isn't it? You cannot meaningfully measure that effort at scale[1], and even if you could, it's an effort that product/line managers would likely have to make. Whereas firing and hiring is basically zero effort, because most of the donkeywork is done by HR. So as a line manager, you take the hit of a short disruption in operations, cash in a lower wage bill, and your job is done.

[1] if we could meaningfully measure training effort vs results, we wouldn't have a market full of e-learning products that are invariably terrible but super-expensive.

I don't believe your experience that big companies almost immediately re-hire after layoffs, for jobs that require training from square one (after firing square-one employees).

In the tech field, I've seen plenty of re-hires right after layoffs, but the companies are always replacing them with engineers/developers/factory workers who possess an entirely different skill set that is well beyond the scope of what the company is responsible for training them for. E.g. firing your jQueryers to bring in a team with 2+ years of modern web framework experience, laying off data analysts to bring in machine learning experts, letting your financial team go and bringing in a diverse team of accountants with experience in international finance. I've never seen a direct example of a company removing their electricians because they don't have "Acme high voltage" certification and hiring other electricians with the plan to give them Acme high voltage certification.

Outside of tech, you've got me. I have no idea. If this is specifically what you're talking about, I'll have to take your word for it.

>You cannot meaningfully measure that effort at scale

Sure you can. "Do you have experience with our aluminum hydraulic press tool? No? What about you, potential hire? No?" Then the probabilistic expected value of time/money to train would be equal.

> firing your jQueryers to bring in a team with 2+ years of modern web framework experience

We clearly have different opinions on what retraining means. If you think "jqueryers" cannot be trained to use more modern JS frameworks, or accountants cannot learn international finance principles, then you are basically saying that retraining is not possible at all. It's a very sad view of the human brain's potential.

> I've never seen a direct example of a company removing their electricians because they don't have "Acme high voltage" certification and hiring other electricians with the plan to give them Acme high voltage certification.

Indeed: the point is that a company will now hire somebody with that certification already in the bag, avoiding the cost and effort of giving the chance to obtain it to their existing workforce.

> the probabilistic expected value of time/money to train would be equal.

You have a very simplistic view of what a job entails. There is a lot of related business knowledge that goes with jobs, even some of the most trivial ones: why you have to produce so many widgets at this or that speed can be as important as how you actually operate the necessary tools to achieve that result.

>We clearly have different opinions on what retraining means

Well, this post is about training people to hammer out cymbals.

>Indeed: the point is that a company will now hire somebody with that certification already in the bag, avoiding the cost and effort of giving the chance to obtain it to their existing workforce.

Then that is not what I was asking two messages ago after you claimed

>a lot of companies don't even try to "teach new tricks to an old dog"

Sorry, but then I honestly don't think you are arguing in good faith here. Have a good day.

Layoffs are financially deceptive, because it's hard to put a dollar value on skills and experience. Training new hires is usually a lossy process. The job still gets done, but the overall effectiveness of your workforce is diminished in ways that are hard to quantify.

Off the top of my head, the best example I can give is Circuit City, who pretty much committed suicide through layoffs. Throughout the 2000s, they laid off their more expensive retail staff, initially replacing commission-based sales people with hourly workers, then laying off older workers with seniority pay and replacing them with new hires. It saved money, but sales suffered as a result, particularly for big-ticket items. They wilfully disposed of their key competitive advantage over online retailers - experienced, knowledgeable sales staff.

https://www.stereophile.com/news/11569/

http://www.washingtonpost.com/wp-dyn/content/article/2007/05...

Hmm, I followed the Circuit City layoffs a while back, but it seems that they didn't trade untrained staff for other untrained staff with the intention of making them better employees than who they replaced, but they traded already trained staff for cheaper untrained staff---and then kept them untrained.

If I remember, they did this in response to their impending doom, but it was not the original cause. It was their attempt at a short term problem, but it was not enough to counter the declining trend of retail appliance sales, so this decision ultimately wouldn't have affected them. (But anyway, not really important for this discussion.)

> That's probably got more to do with the traditional link between pay and seniority, than to anything really related to skills: a relatively small disruption in productivity is handsomely offset by a big net cut in salary expenses, as the younger employee will likely command a much lower wage.

Not really. Large scale layoffs are way more disruptive and expensive than the savings by rotating into lower seniority people. Every company we work with aggressively hires from its transitioning employee pool to save institutional knowledge and severance costs. Some even provide a multi-month working period to give them time to find something internally. A surprisingly high percentage get rehired.

But the simple fact is that most companies don't employ a workforce that can be "trained on a new machine" and be just as productive as someone who has years of experience with it. Its not like learning another programming language. Skills gaps are real.

Source: I work for a company who helps people who lose their jobs to layoffs

it looks like cymbals are spun, meaning rolled over a mandrel spinning on a lathe by manual force. its not rocket science, but spinners do have a craft and you wouldn't trade an old hand for a pimply faced youth without good reason. one of the real tricks here is having a knack for distributing the material so that you end up with an even thickness.

>There are two options a company will do to cope with this situation. 1) Lay off X% of their workforce, shielding their existing employees from the financial "downs". 2) Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits.

Or, you know, keep some money around to pad for financial downs during financial ups.

If those are periodic and not final (eg. not that the company / industry is doomed) that's an option as well.

Companies pay lip service to "investing" in their people all the time. This would be an actual investment in your people -- taken from your margins...

> Or, you know, keep some money around to pad for financial downs during financial ups.

For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure. It's better to have to fire some people in pruning a line or reducing scale at the next negative market shift than to have to fire everyone when the firm fails.

I mean, sure, if shareholders are extracting value from the firm via dividends, you could in principle reduce those to provide the reserve fund—but most firms have shareholders realizing value by stock appreciation driven by perceived future scale, not current dividends.

>For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure.

And then getting bought up by some competitor who _did_ keep some cash on hand.

Exactly.

I've seen this happen some 8 years ago, when the financial "crisis" hit, as the (larger) company that I worked for managed to not only stay afloat, but actually acquire at a very steep discount some of the smaller and more "efficient" competitors that went under as soon as reality diverged from their market assumptions.

3) Reduce expenses via means other than layoffs. Companies often have ways to do this. If not, there is the tried and true management takes a 10% pay cut. In my 30+ year company, I've done it a couple of times.

I know this article was written 5 years ago and all, but I wouldn't exactly call that industry stable now.

If you've been going to NAMM the last several years like I have, you'll notice some big changes like certain huge vendors (mainly the ones that don't get the majority of their business from school districts) not even showing up with booths the last few years. Gibson did this right before declaring bankruptcy, in fact.

The industry is in a fair bit of turmoil because of all of the red on Guitar Center's books right now.

The other option to cope with an extended period of lower revenue is to make sure you have enough cash in the bank to ride it out.

Right, that's the "don't let it happen" option. But the options I listed are for when it does anyway.

Victorinox, maker of Swiss army knives, does this and claims to have never laid off an employee.

3) Lay off 0%, everyone agrees on decreesed salary temporary. Or that's not an option?

There's only so far you can go down - plus, modern day companies like Amazon and McD's are already competing to pay as little as possible to their employees.

Most people in this industry are contractual employees so that's usually not a legal option. If their pay was any less, it'd be approaching minimum wage laws. But if not, it's a bad option because instead of the algorithm "filter out the least passionate ones so we can increase expectations of the remaining" as in (2), it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry.

>it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry.

Actually, wouldn't it be the inverse? Those who have other options would go, and the less cushioned / wealthy ones would agree to stay and take the hit...

No, I think I stated it correctly. Those with more savings/assets would stay and be able to withdraw from their savings while their pay isn't enough. Those who need every penny for the next utility bill would be forced to leave.

Well, how about considering the inverse:

Those with more savings/assets would be able to live off of them while looking for another job if the pay isn't enough.

Those who need every penny for the next utility bill (but still make it, even if barely, with the reduced pay) will stay with the company, as they can't risk getting off employment for any length of time.

All 4 options could be at play. Which is why people barely making, still keeping at jobs despite horrible pay cuts. It's because they don't have any safety net to go look elsewhere.

It's an option that is very common in Germany. Factory workers will often agree to short-time working or temporary pay cuts in preference to layoffs.

Where my father works (furniture warehouse) they did this somewhat, albeit in a more fair fashion (no salary decrease). Employees were asked to volunteer taking off a couple days a week rather than laying off staff

My father also works in a furniture warehouse and it was the same, especially during the recession. Factory was basically shut down on fridays and everyone worked 4 hour weeks

There's also 4) Use company savings to survive an economical "draught" and build up saving once you're making a profit again.

That's what davegardner above mentioned as well, but something like the 2010-11 recession was too much for many companies to "coast" over, so they ultimately had to choose 1, 2, or 3. And sometimes this conservative method doesn't work for risky businesses. Sometimes if you don't pour everything into investments to stay on top of close competition, you might be destroying your company (in which case everybody gets laid off).

Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits.

If you do that with a product like cymbals, the quality crashes and so does the companies reputation.

Why would the same number of people need a bigger workload during downturns? Wouldn’t there be fewer sales and products built during a downturn?

A downturn doesn't always mean lower demand. But if there was lower demand, employees can work harder to bring those up by offering new products or cheaper products.