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July 01, 2002
Swift Cuts Seen as Aid to Productivity
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unexpected surge in productivity may have its roots in a corporate strategy of targeting and eliminating under-performing employees with unprecedented swiftness, according to the outplacement firm Challenger, Gray & Christmas Inc.

Because of this new strategy, the average tenure of discharged managers and executives has fallen to under five years and nearly one in every three discharged managers and executives does not even make it to his or her two-year anniversary, according to a new Job Market Index survey released Thursday by Challenger.

Over the last five quarters, discharged managers and executives spent an average of just 4.8 years with their former employers. That is down 38 percent from 2000, when the average tenure was 7.7 years. Between 1996 and 1999, the tenure among discharged managers and executives averaged nine years, peaking in 1999 at 10 years.

Perhaps more telling of companies' increasing tendency to dismiss employees sooner rather than later is the fact that a higher percentage of managers and executives are being discharged within 24 months of being hired.

Since the first quarter of 2001, an average of 26 percent of discharged managers and executives spent less than two years with their former employer, according to the press release from Challenger. In the last two quarters, that figure has reached even higher, averaging 29 percent.

By comparison, only 17 percent of discharged managers and executives had tenures less than two years in 2000 and in 1999 the figure was just 13 percent.

The Challenger Job Market Index is based on a quarterly survey of 3,000 discharged managers and executives from a variety of industries throughout the United States.

We are witnessing a profound change that will permanently do away with the 10-year pin and other commemorative gifts for longer service. It is getting to the point where a person's career at a specific company will be measured in months, not years, observed John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Challenger noted that average performers could survive at a company for years, if not decades, by maintaining a low profile and meeting minimum expectations. That is no longer the case, not in such a competitive global marketplace.

Challenger also pointed out that as more and more companies go public, thus falling under the scrutiny of Wall Street, and as more small businesses join the global market battle, employers can no longer afford to retain mediocre workers.

The constant evaluation and reevaluation of workers has resulted in an increasing trend of frequent job cutting - companies announcing multiple job cuts over a short period, sometimes within months of each other.

It used to be that job cuts were a rarity at most companies, occurring once every few years, if at all. Companies would make one big job-cut announcement and the remaining employees could rest assured that their jobs were relatively secure for the next several years, said Challenger, whose firm tracks job-cut announcements daily.

Now, it is rare when a sizable company goes 12 months without announcing workforce reductions. Where a major announcement used to occur, affecting thousands of workers, it is now more common to see a company make several announcements over the span of a year, cutting 250 here and another 500 there, Challenger observed.

According to Challenger, those most likely to survive these frequent job cuts are those who practice the art of reselling themselves throughout their tenure.

The decision on who stays and who goes in a downsizing often comes down to the likability factor - basically, how well you are liked by your supervisor. The likability factor, however, is not predicated solely on personality. It is also highly dependent on how well a supervisor is informed about your accomplishments.
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