Professor Sandra Sucher, left, and Fabienne Goyeneche of Michelin (Photo by Stephan Gladieu)

Professor Sandra Sucher, left, and Fabienne Goyeneche of Michelin (Photo by Stephan Gladieu)

As executives of an international company are considering workforce reductions in Europe and South America, they are providing layoff support to employees and working with communities to create incentives for new businesses to replace lost jobs. Other companies in Hong Kong and China have “no-layoff” policies. In her research into how businesses are reinventing layoffs, Professor Sandra J. Sucher (MBA 1976) is examining the impact of layoffs and comparative approaches to workforce management around the world.

“In the United States, layoffs seem normative, but in fact they are contingent on particular circumstances,” says Sucher, MBA Class of 1966 Professor of Management Practice and Joseph L. Rice, III Faculty Fellow. “Both why and how they are done matter—to employees and to the company’s future performance.”

Sucher is exploring how some companies are using humane and effective practices that enable them to respond to shifting economic and competitive forces while still making good on responsibilities to their workers and the communities in which they do business. By studying multinationals, she hopes to learn not just about their activities in their home regions, but also how they implement their approaches in all the countries in which they operate. The research was sparked by a discussion of layoffs in the required MBA course Leadership and Corporate Accountability.

Sucher was initially surprised to discover no clear academic consensus that downsizing improves a firm’s long-term financial health. This finding, combined with the great human toll involved, indicated to her that layoffs must be undertaken only as part of a broad strategy, not simply to cut costs.

The “how” is also key: Sucher’s recent case about Nokia shows how well-planned layoff support resulted in a defined next step, such as a new job or training, for 60 percent of the company’s employees worldwide by their last day on the job. She is currently studying Michelin’s actions, which include providing layoff and community support when closing plants in France and Hungary and its rubber operations in Brazil.

Furloughs as an alternative to layoffs are used less frequently in the United States than in the rest of the world. Sucher’s case on Honeywell reveals how the firm—the only one of its US peers to use furloughs during the Great Recession—maintained its financial health through the downturn and recovery. She hopes that American companies will become more open to this approach.

Sucher’s goal is to change the way practitioners—and MBA students—think about workforce management by synthesizing existing cross-disciplinary research and applying it to publications such as the Nokia and Honeywell cases, as well as to a book now under development with Research Associate Susan J. Winterberg. “Each strategy requires very firm resolve and commitment on the part of senior management,” says Sucher, “because there’s always something that looks easier.”

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