Firings and Hirings Shaping Up as the Competing Trends of 1997

Early last year, AT&T; Corp.’s Robert E. Allen was the poster boy for corporate downsizing, announcing with great fanfare the telecommunications giant’s plan to ax 40,000 jobs. First came the Wall Street kudos. Then followed the charges that Allen was a “corporate killer,” slashing positions even as the company was building profitable new businesses.

The public lashings did not prompt a change of heart in the CEO suite, but something mighty interesting happened. AT&T; ended 1996 with a net gain of 2,000 workers, after ramping up its fast-growing wireless, Internet and local-phone operations. Hiring continues even as the company offers voluntary buyouts to 4,000 managers in its latest effort to slash 17,000 more jobs over three years.

Similarly, Eastman Kodak Co. early this year disclosed that it would eliminate 3,900 positions but noted that its overall payroll would not diminish because a like number of new jobs would be generated. As a Kodak executive put it: “This is the ebb and flow of a dynamic company.”

Throughout corporate America, downsizing--a chilling buzzword if ever there was one--is evolving.

Workplace watchers say 1997 is shaping up as a year of competing trends of hiring and firing. Layoffs will continue, if at a slower pace than in years past. Yet many companies, realizing they are inadequately staffed to take advantage of economic growth, are desperately devising strategies to cope with stepped-up workloads and opportunities. In some cases, that means hiring--albeit a different sort of hiring from in the past.

“Trends are running both ways,” said John A. Challenger, executive vice president of Challenger, Gray & Christmas Inc., an international outplacement firm based in Chicago.

Many companies, Challenger said, are feeling the aftereffects of the last decade’s mass layoffs. Poor morale, declining productivity, high turnover and a loss of corporate memory are all byproducts of the cost-cutting frenzy.

In a recent survey of 640 human-resources professionals, 45% said their companies are understaffed, and 52% projected understaffing in 1997, according to the William Olsten Center for Workforce Strategies, a nonprofit organization in Melville, N.Y., that studies trends in work force management. The center is affiliated with Olsten Corp., a staffing service company.

The understaffing is hurting business, the H.R. executives readily admit. Anxious, stressed-out workers are quicker to quit. High turnover is causing customer service to slip and deadlines to be missed, a serious lapse in today’s competitive marketplace.

But budget restraints continue to keep the lid on hiring. And most companies surveyed said they can’t find people with the right skills, even if they could hire them permanently. So what’s a beleaguered personnel director to do?

Increasingly, companies are signing on “just-in-time labor”--part-timers, contingent workers, contractors (many of them discharged from full-time jobs)--as staffing needs crop up. The use of outsourcing services to handle payroll, security and office maintenance also is growing apace.

“Rather than just cutting-edge companies doing this, it’s becoming an accepted idea and is picking up momentum,” said Gordon Bingham, senior vice president of marketing for Olsten Staffing Services, which operates 700 offices in North and South America and Europe. “The H.R. community is looking for new and different solutions.”

All this means is that workers can’t relax. In today’s leaner companies, Challenger said, employees will have to steer their careers more carefully than in the past, staying technologically up-to-date and tackling tough projects to get noticed.

Companies will use downsizing as a tool to perpetuate job insecurity and internal competition, thus controlling any pressure for a boost in wages.

The news is not all grim, however. Eric Rolfe Greenberg, director of management studies at the American Management Assn. in New York, contends that the employment situation is positive because of companies’ increased emphasis on growth.

Companies “typically will create as many jobs as they cut, if not more,” he said.

Consider Levi Strauss & Co., which recently revealed plans to chop as many as 1,000 salaried positions over the next year. The big San Francisco-based jeans maker nonetheless is participating this month in three job fairs geared to prospective Asian, Latino and African American candidates.

Even when one part of the business is paring down, it’s important to stay aware of who’s available and build a fresh reservoir of resumes, Levi spokesman Dave Samson said.

“At some point,” he added, “you will be coming out of the difficult period.”

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Does your company avoid layoffs by retraining or redeploying workers? Tell us how. Write to Martha Groves, Corporate Currents, Los Angeles Times, Business News, Times Mirror Square, Los Angeles, CA 90053, or e-mail martha.groves@latimes.com