Managing in Troubled Times Case Study

Managing Downturn without Downsizing (A): US Financial Crisis and Layoffs

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Abstract:
This case study is first in the series of Managing Downturn without Downsizing. It was primarily written to analyse the consequences of the 2008 US Financial Crisis and the resultant layoffs. Is crisis the right time for companies to adopt the job-cutting approach? Are companies worsening the economic condition through layoffs? Are layoffs the only cost-cutting tool available to companies during times of crisis? With the emergence of globalisation, every economy and industry is intertwined in such a manner that any change – positive or negative – had a major impact across the world. Similar was the impact of the 2008 US Financial Crisis on every industry and company irrespective of size and scale. The immediate impact of the crisis was increase in the unemployment rate with countless people being laid off. To prevent the consequences of the crisis and to stabilise the economy, the US government provided financial assistance to several companies, but that could not stop companies from cutting jobs. Several companies in fact were speculated to have misused the bailout money to further their businesses. Further, the case study highlights as to why the companies are laying off such a big number of employees.

Pedagogical Objectives:

• To examine the impact of the US Financial Crisis on industries – that were impacted directly and/or indirectly
• To understand the nature, extent and intensity of job losses resulting out of US Financial Crisis
• To analyse and debate on the role of downsizing as a cost-cutting tool.

Keywords : Downsizing, Layoffs, Unemployment rate, Recession, US Financial Crisis, Subprime mortgage market, Great Depression, Bailouts, Federal Reserve, Globalisation, Retrenchment, Denominator Management

Contents:

• US Financial Crisis: Beginning of the End for Globalisation
• US Financial Crisis: Bailouts and Fallouts
• The Catastrophic Crisis and Job Cuts