February 10, 2009
Publix Just Says ‘No’ to Layoffs
Maybe it’s because it
is an employee-owned company but when it comes to discussing layoffs,
Publix would just as soon lay off the topic altogether.
The grocery chain has
never engaged in mass layoffs even in the most trying times in its 79-year
history and that is unlikely to change during the current economic downturn.
Dwaine Stevens, a spokesperson
for Publix, told WOKV that workers don’t need to be concerned about
losing their jobs. Of founder George Jenkins, Mr. Stevens said, “One
of the things he wanted to do was to take care of his associates the same
way he takes care of his customers, so it’s really not rocket science.”
While workers at Publix
may feel secure, the same cannot be said for many others in retailing.
According to estimates from Challenger,
Gray &
Christmas, the retail industry lost 54,000 jobs in January.
Faced with some harsh
realities, retailers and other businesses are seeking cost-cutting alternatives
to mass layoffs including match reductions on 401K plans, furloughs, pay
freezes, reductions in executive compensation, etc. These tactics, which
can help at the early stages of decline, are of no use when a company has
fallen so far that liquidation is the only answer.
Discussion Questions:
Are companies resorting to mass layoffs too early? Are there other viable
alternatives that retail businesses should be looking at first?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Being more purposeful, careful and responsible when hiring should be the first order of business. It reveals the personal and thus corporate values when a company hires with the thought in the back of their mind that they can just downsize if they over-expand, grow outside of their core competency, or what the heck ever else they want to do.
This commitment buys Publix a lot of respect, sentiment and support from the very people who shop there. One of the precepts of management should be making truly more responsible and accurate decisions about growth and growing only to the degree they can sustain their commitment to their associates and suppliers over the long haul. It may be that the economy would worsen or the market dynamics would change to the point that a company could not avoid restructuring and mass layoffs, but it is also true that they could do a lot better by trying harder in many cases.
The current economic downturn has public companies in a no-win situation. If they don’t trim overhead, profits sink and stocks tank. If they cut overhead too early or too far they run the risk of diminishing customer service to the point of business going to the competitors.
What to do? One solution may be pay reductions commensurate with the loss of business which could retain the majority of employees. While not perfect, this solution can aid the reduction in the volume/profit equation while holding customer service levels. All of this is dependent on pay cuts across the entire organization (including executive pay and bonuses) and a good job of communicating to all employees in a transparent fashion the need for the cuts, the benefits of keeping customers satisfied and the promise of reinstatement of pay and benefits when business improves.
Is this too Pollyanna in nature? Maybe, but these times require creative solutions, excellent communications and teamwork.
As for Publix, I don’t see them facing any harsh realities. This is a time of feast for them as they watch their greedy competitors close up shop. Because the average Publix employee is superior and more productive compared to its competitors, Publix is not overloaded with redundant workers.
Every retailer has developed their own individual labor models. Some retailers seem to hire a lot of warm, unproductive bodies. Mass layoffs are just a form of thinning the heard of unnecessary workers and moving towards having a more efficient labor force. Other times it’s simply a need to conserve cash to stave off bankruptcy. So each case is different.
In some cases yes. Publix is a great example of how companyies should follow the basics regardless of the market. Publix was built during the depression. During those tough times, they learned the importance of hard work, sacrifice, customer service, loyalty, and conservative decision making.
When the market heated up, they did not lose themselves. They were never afraid to turn down risky opportunities when the market was hot.
Now, with the market being down, they are in much better position than their competitors. Before other retailers start layoffs, they should consider every opportunity and make sure they are headed in the right direction.
Whether mass layoffs are required is dependent on a company’s overall health. Those with the resources to weather the storm are in an excellent position to increase the gap between them and their competition. Investing in the business when the competition doesn’t is a great way to get ahead but only works if the business can sustain the short-term downturn. However, many companies are not large enough to sustain a prolonged downturn, so they must be proactive and reduce costs just to survive.
I think the snapshot of the result of the ongoing poll is interesting. Certainly, prevailing market conditions have a role to play in companies rolling back their store footprint, cutting headcount, etc. But management teams at public companies that are blaming poor performance on a trough in the market that is beyond their control, have also been quick in taking credit for riding a wave that is not of their making.
As I think I’ve said earlier–success has many fathers, but failure is the neighbor’s baby.
Mass layoffs in retail is a short sighted solution that gives a false sense of security. The fact is that sales associates are crucial for increasing amounts per transaction through up selling while improving the shopping experience.
Does that mean Publix is on the right track? While the goal may be noble, the fact is that overhead costs may be a factor if revenue falls below a certain point. At some point, staff positions may become redundant.
Let’s remember that companies are in business to turn a profit, not act as employment centers. But one must also keep I mind that a company’s greatest asset is its employees. The trick is to mind the happy medium.
Let’s get the facts out there. Most retailers think the front line is disposable. They talk about the importance of customer service, the need for great team members and how they value their employees. But actions speak louder than words.
The issue of front-line employees to most large retailers is just another commodity to be dealt with. It is the easiest variable to cut. No contract, no lease. Almost every other cost except inventory is fixed. So if you are going to cut costs, just cut labor hours.
Even in today’s world, there are companies that spend technology dollars on areas that will reduce labor costs, be it in the warehouse, the call center, or the selling floor…when there is a shortage of workers at the store level. It is an HR and Home office problem but only the store manager feels the real pain.
I applaud Publix and those few other retailers who do really walk the talk and realize that when it’s all said and done, people like to do business with people.
Unlike Publix, many companies are letting fear cloud their thinking. Sure, some retailers are in such dire straits that they must resort to mass layoffs and other drastic measures. However, others are just running scared. I love this Jon Stewart quote, I paraphrase, “If you don’t stick to your values during tough times, they are just hobbies.”
I think layoffs in the food retail sector need to be very tightly tied to store closings if they are to make any sense.
I can see where some retailers may choose to eliminate or minimize labor costs associated with overtime or other premium time pay rates, but to cut labor during a time when consumers are planning to eat more at home and are looking for good service in addition to low prices does not make sense to me.
We might see some retailers resorting to no pay increases or even pay reductions to survive (ala the airlines) but these might be a temporary way to survive while maintaining adequate labor at store level.
Publix, for any number of reasons (most of which they control) is surviving well in these tough economic times. They remain focused on how they do what they do. Retaining customers during these times, as was pointed out by you a week or so ago, is critical.
Having fewer faces against customers is not wise, considering their service reputation. Publix, by showing loyalty to their associates, almost by default forces associates through their attitudes and behaviors, to work hard at retaining Publix’s existing customers.
At the very center of what happened to most of the retail casualties of the economic downturn last year, were many retailers who maintained loose or no relationships with those they served and customers fled like a frightened flock of birds. To prevent that happening as the economy worsens, retaining customers has to become a top priority. While being loyal to their associates, Publix understands retaining customers in these difficult times is critical. People serving people accomplishes that.
I do get the sense, and I’ve read commentaries to this point, that a lot of companies are laying off preemptively. Because they are looking at declining revenue streams and don’t know where the bottom is, they are looking at absolutely worst-case scenarios and laying off to those levels. They only want to go through the pain once, and they know they can’t stand pat while conditions continue to deteriorate, so they are taking more rather than fewer people.
Obviously, for each company the worst-case scenario is going to be very different. For those companies whose revenues have held up reasonably well, and most importantly, appear to be predictable and stable, they can hold off longer before having to make layoff decisions, if at all.
I agree with David. I used to work with Publix and they have a passionate standard for every single thing that they do that comes straight from George Jenkins. He was an amazing man and set an example that has continued to keep them successful. If you ever shop Publix, you know that it’s hard to put into words why it’s so different–it just is. And people stand by them when the going gets rough because of it.
My friend John Greening at Northwestern shared another point this past week: “flat is the new up.” Very true. If retailers can do what they can to just get through this tough period and re-focus on things that are going to help sustain business, they’ll make it. But, if they were already struggling, this is a death blow.
Again, front line staff are viewed as an expense–when companies talk about customer service they mean till fodder. This can then be let go when the times change without having to cut other costs. Jobs, when created, should be viewed as a long-term solution to the company with a major emphasis on sustainability.
As a company you are investing in service and training. How do you retain that employee? Do you devalue retail jobs, with a “hire them and fire them” approach or do you look for productive people to man your stores and encourage them to see the role as a career? If you do, then you have to match their commitment in the good times with a job in the bad times. How does your business plan achieve that?
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According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
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Being more purposeful, careful and responsible when hiring should be the first order of business. It reveals the personal and thus corporate values when a company hires with the thought in the back of their mind that they can just downsize if they over-expand, grow outside of their core competency, or what the heck ever else they want to do.
This commitment buys Publix a lot of respect, sentiment and support from the very people who shop there. One of the precepts of management should be making truly more responsible and accurate decisions about growth and growing only to the degree they can sustain their commitment to their associates and suppliers over the long haul. It may be that the economy would worsen or the market dynamics would change to the point that a company could not avoid restructuring and mass layoffs, but it is also true that they could do a lot better by trying harder in many cases.
The current economic downturn has public companies in a no-win situation. If they don’t trim overhead, profits sink and stocks tank. If they cut overhead too early or too far they run the risk of diminishing customer service to the point of business going to the competitors.
What to do? One solution may be pay reductions commensurate with the loss of business which could retain the majority of employees. While not perfect, this solution can aid the reduction in the volume/profit equation while holding customer service levels. All of this is dependent on pay cuts across the entire organization (including executive pay and bonuses) and a good job of communicating to all employees in a transparent fashion the need for the cuts, the benefits of keeping customers satisfied and the promise of reinstatement of pay and benefits when business improves.
Is this too Pollyanna in nature? Maybe, but these times require creative solutions, excellent communications and teamwork.
As for Publix, I don’t see them facing any harsh realities. This is a time of feast for them as they watch their greedy competitors close up shop. Because the average Publix employee is superior and more productive compared to its competitors, Publix is not overloaded with redundant workers.
Every retailer has developed their own individual labor models. Some retailers seem to hire a lot of warm, unproductive bodies. Mass layoffs are just a form of thinning the heard of unnecessary workers and moving towards having a more efficient labor force. Other times it’s simply a need to conserve cash to stave off bankruptcy. So each case is different.
In some cases yes. Publix is a great example of how companyies should follow the basics regardless of the market. Publix was built during the depression. During those tough times, they learned the importance of hard work, sacrifice, customer service, loyalty, and conservative decision making.
When the market heated up, they did not lose themselves. They were never afraid to turn down risky opportunities when the market was hot.
Now, with the market being down, they are in much better position than their competitors. Before other retailers start layoffs, they should consider every opportunity and make sure they are headed in the right direction.
Whether mass layoffs are required is dependent on a company’s overall health. Those with the resources to weather the storm are in an excellent position to increase the gap between them and their competition. Investing in the business when the competition doesn’t is a great way to get ahead but only works if the business can sustain the short-term downturn. However, many companies are not large enough to sustain a prolonged downturn, so they must be proactive and reduce costs just to survive.
I think the snapshot of the result of the ongoing poll is interesting. Certainly, prevailing market conditions have a role to play in companies rolling back their store footprint, cutting headcount, etc. But management teams at public companies that are blaming poor performance on a trough in the market that is beyond their control, have also been quick in taking credit for riding a wave that is not of their making.
As I think I’ve said earlier–success has many fathers, but failure is the neighbor’s baby.
Mass layoffs in retail is a short sighted solution that gives a false sense of security. The fact is that sales associates are crucial for increasing amounts per transaction through up selling while improving the shopping experience.
Does that mean Publix is on the right track? While the goal may be noble, the fact is that overhead costs may be a factor if revenue falls below a certain point. At some point, staff positions may become redundant.
Let’s remember that companies are in business to turn a profit, not act as employment centers. But one must also keep I mind that a company’s greatest asset is its employees. The trick is to mind the happy medium.
Let’s get the facts out there. Most retailers think the front line is disposable. They talk about the importance of customer service, the need for great team members and how they value their employees. But actions speak louder than words.
The issue of front-line employees to most large retailers is just another commodity to be dealt with. It is the easiest variable to cut. No contract, no lease. Almost every other cost except inventory is fixed. So if you are going to cut costs, just cut labor hours.
Even in today’s world, there are companies that spend technology dollars on areas that will reduce labor costs, be it in the warehouse, the call center, or the selling floor…when there is a shortage of workers at the store level. It is an HR and Home office problem but only the store manager feels the real pain.
I applaud Publix and those few other retailers who do really walk the talk and realize that when it’s all said and done, people like to do business with people.
Unlike Publix, many companies are letting fear cloud their thinking. Sure, some retailers are in such dire straits that they must resort to mass layoffs and other drastic measures. However, others are just running scared. I love this Jon Stewart quote, I paraphrase, “If you don’t stick to your values during tough times, they are just hobbies.”
I think layoffs in the food retail sector need to be very tightly tied to store closings if they are to make any sense.
I can see where some retailers may choose to eliminate or minimize labor costs associated with overtime or other premium time pay rates, but to cut labor during a time when consumers are planning to eat more at home and are looking for good service in addition to low prices does not make sense to me.
We might see some retailers resorting to no pay increases or even pay reductions to survive (ala the airlines) but these might be a temporary way to survive while maintaining adequate labor at store level.
Publix, for any number of reasons (most of which they control) is surviving well in these tough economic times. They remain focused on how they do what they do. Retaining customers during these times, as was pointed out by you a week or so ago, is critical.
Having fewer faces against customers is not wise, considering their service reputation. Publix, by showing loyalty to their associates, almost by default forces associates through their attitudes and behaviors, to work hard at retaining Publix’s existing customers.
At the very center of what happened to most of the retail casualties of the economic downturn last year, were many retailers who maintained loose or no relationships with those they served and customers fled like a frightened flock of birds. To prevent that happening as the economy worsens, retaining customers has to become a top priority. While being loyal to their associates, Publix understands retaining customers in these difficult times is critical. People serving people accomplishes that.
I do get the sense, and I’ve read commentaries to this point, that a lot of companies are laying off preemptively. Because they are looking at declining revenue streams and don’t know where the bottom is, they are looking at absolutely worst-case scenarios and laying off to those levels. They only want to go through the pain once, and they know they can’t stand pat while conditions continue to deteriorate, so they are taking more rather than fewer people.
Obviously, for each company the worst-case scenario is going to be very different. For those companies whose revenues have held up reasonably well, and most importantly, appear to be predictable and stable, they can hold off longer before having to make layoff decisions, if at all.
I agree with David. I used to work with Publix and they have a passionate standard for every single thing that they do that comes straight from George Jenkins. He was an amazing man and set an example that has continued to keep them successful. If you ever shop Publix, you know that it’s hard to put into words why it’s so different–it just is. And people stand by them when the going gets rough because of it.
My friend John Greening at Northwestern shared another point this past week: “flat is the new up.” Very true. If retailers can do what they can to just get through this tough period and re-focus on things that are going to help sustain business, they’ll make it. But, if they were already struggling, this is a death blow.
Again, front line staff are viewed as an expense–when companies talk about customer service they mean till fodder. This can then be let go when the times change without having to cut other costs. Jobs, when created, should be viewed as a long-term solution to the company with a major emphasis on sustainability.
As a company you are investing in service and training. How do you retain that employee? Do you devalue retail jobs, with a “hire them and fire them” approach or do you look for productive people to man your stores and encourage them to see the role as a career? If you do, then you have to match their commitment in the good times with a job in the bad times. How does your business plan achieve that?