November layoffs?

October 6, 2005 5:27 PM

My employer of 6 years has had mass layoffs each November that I've worked there. Why would they do this?

First, why would they be so predictable? Everyone expects the layoffs; no one quits in October - they wait & see if they'll get severance first. And don't employers usually worry that if someone expects to be let go, they might steal company secrets, etc.? There are usually a lot of organizational changes in the days beforehand, so everyone KNOWS it's coming.

Plus, doesn't it seem very cruel? It's usually late November, which means it's just weeks before Christmas. Seems like a terrible time to have to look for a new job, and one of the worst times of the year to lose an income.

I'm thinking there must be a reason; is this common in large corporations?

posted by peep to Work & Money (15 answers total)

When does your company's fiscal year start and end? When does it purchase health benefits? What large employee-related expenditures are made by your company before the end of October?
posted by Rothko at 5:29 PM on October 6, 2005

No ideas about why it would be in November, but the longer employees are around, the more they cost. One of the reasons the new discount airlines in Europe like Ryanair and Easyjet are so cheap, I'm told, is because they lack "legacy costs" - pensions and the like for aging employees. Could this kind of thing be a reason?
posted by paul! at 5:35 PM on October 6, 2005

My sister used to work for MCI. They had a saying:
We RIF you a Merry Christmas.
RIF = Reduction in Force.
posted by darkmatter at 5:46 PM on October 6, 2005

I would have to second Rothko in that it sounds like it's based on your companys fiscal year end, probably September. It seems an archaic business practice though. I would think that most companies track earnings and losses throughout the year and budget accordingly.

And yes, it would seem that larger more established (old) organizations would operate this way.
posted by snsranch at 5:51 PM on October 6, 2005

Does the company experience cyclicality with the first calendar quarter of the year being the low point? If so, firing people before the holiday season is probably a good way to reduce costs for the down quarter. And maybe it's harder to sue during the holidays as lawyers will be trying to make time for their families. How quickly does the company bring staffing back up (or does it)?

However, if this is a public company, I doubt that they're simplying dumping costs to meet estimates for the fiscal year. Analysts will follow the quarterly trends and notice the manipulation. I guess it's possible that, based on the 6 year trend, the market knows this is coming and builds it in to estimates. However, I'd think that the wage savings from 1/3 of a quarter would be offset by severance costs.
posted by mullacc at 5:55 PM on October 6, 2005

Are these employees who are laid off and then hired back in the new year? or are they gone forever?

How much seniority do they have? It is a known and despicable practice to get rid of employees shortly before their employer-provided retirement benefits would vest, so that they don't.
posted by megatherium at 7:00 PM on October 6, 2005

Many companies end their fiscal years in April and do a lot of chopping around the fiscal half-year, for some reason, which would be around November.
posted by wakko at 7:06 PM on October 6, 2005

Response by poster: Some follow-up: it's a public company, although they went public during my employment there (between 1999-2005). Fiscal year end is December. First quarter is the slowest time of the year for us. Employees are NOT hired back, and staffing levels do not return to pre-layoff levels. Those laid off are usually IT, admin/clerical, and customer service-type jobs, so these are actually more of the lower-payed, less-vested employees. Every year, more jobs are consolidated, trimmed, outsourced, centralized, etc. Normal "fat-trimming" stuff; I'm just so curious about the timing.
posted by peep at 7:32 PM on October 6, 2005

Response by poster: lower-PAID. I can spell.
posted by peep at 7:32 PM on October 6, 2005

Sometimes the timing is industry-specific. For instance, in the design/advertising/web industries, nothing much happens over Christmas. From Nov till well into Feb there are no new initiatives from clients, and very few new clients. November is thus a good time for layoffs. And in my experience, companies seldom, if ever, feel the need to be kind about it. It's just business.
posted by BorgLove at 8:19 PM on October 6, 2005

I have noticed a cycle in the States that begins in September. After the summer, people are back together so plans can be made. In November, the layoffs could be the fruition of those plans. This sort of cycle happens again after the holidays, but to a lesser degree.
posted by Goofyy at 9:18 PM on October 6, 2005

b1tr0t writes "A corporation's first duty is to its shareholders. "

Actually, a corporation's first duty is to its STAKEholders: this includes not only shareholders, but also employees, vendors, customers, and the community. Only a corporation that wants to fail in the long run would only focus on the shareholders and ignore the remaining interested parties.
posted by tuxster at 2:38 AM on October 7, 2005

FYI, my Fortune 100 employer looks at its obligations through tuxster's eyes. In that shareholders are important, but just as important are the customers and employees. Vendors and community are also important, but are slightly below the golden triad of People (employees), Service (customers), Value (shareholders).
Anyway, the picture peep paints is pretty bleak in my mind. The layoffs make rational sense if the company is failing to grow, and instead must focus on reducing expenses (layoffs) and hope that there's enough workforce left to generate growth.
In other words, unless there is some other explanation, the behaviour is symptomatic of a company that is far from well.
posted by forforf at 7:44 AM on October 7, 2005

oops, that was supposed to be FWIW not FYI ...
posted by forforf at 10:36 AM on October 7, 2005

My guess is that this is psychlogical- they don't want to announce major layoffs during the Holiday Season.
posted by mkultra at 10:58 AM on October 7, 2005