Case ID: R0903X     Solution ID: 34518

The Layoff HBR Case Study Case Solution


The case prepared out of the HBR case study is designed for the teaching purpose. It is to be noted that the commentary-only version is the Reprint R0903Z and the complete commentary case study is the Reprint R0903A. Astrigo is going through very troubled times as the home improvement chain witnesses a significant drop in its sales and earnings. The only feasible solution that could be derived so far is to bring about a 10% reduction in the staff. However Layoffs had never been popular historically and doing so would mean hurting the sentiments of the employees and crashing the customer service. Using up the reserved cash as a survival technique would fail too. Four experts’ voice their opinion over this fictional case study by having said that, all that the company needs is to borrow a page from McDonald’s and announce Astrigo’s intention to fully protect their commitments with the long-term shareholders. This initiative will ensure a more sound management support that will eventually result in a defined clarity and flexibility in the system. If the company is not in the position to avoid layoffs, a last-in, first-out approach would be relatively cheap. The former CEO, Jorgen Dormann had a completely different way of handling this dilemma. Instead of counting on the layoffs he personally reached out to his 180,000 employees and with this direct communication they were able to generate ideas that resulted in a massive saving of $1.6 billion. Management professor Robert I. Sutton thinks that executives might overlook the excessive costs attached to layoffs and end up not only hurting the employee’s morale and productivity but losing the training invested in the human resource. There can be many other alternatives like implementing pay cuts, unpaid time off, reduced benefits. If a holistic perspective is been taken layoffs might be the worst possible solution on hand.

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