If Music Be the Food of Love …
It’s also the fount of profits for the C.F. Martin Guitar company, a $93 million manufacturer of guitars that typically range in price from about $2,000 to more than $100,000. According to an article in The Wall Street Journal, the company and its 575 employees, based in Bethlehem, Pa., have avoided layoffs by working together on a barebones guitar that has no inlay, uses plain wood rather than exotic Brazilian rosewood, and comes with a price tag of less than $1,000 – perfect for cash-strapped music lovers. As the Journal article notes, the company, whose sales have dropped by 20% since last fall, already sold out its first batch of 8,000 guitars.
By coming up with a stripped-down version of its product, the company kept employees busy and “avoided sacrificing quality or muddying its image,” The Journal notes.
In a recent Knowledge at Wharton article, titled As Layoffs Spread, Alternatives Soften the Blow, Wharton faculty offer their own take on how to avoid layoffs, including thinking about what kind of problem a company is trying to solve. “If there is a concern about what happens when business activity picks back up, for example, companies that hold on to their workers would be in much better shape than companies that have undergone large-scale layoffs,” the article states.
One company cited is Cisco Systems, which — after the tech bubble burst in 2001 — allowed employees to take sabbaticals while they were paid one-third their salary. "The reason was that at one-third pay, [an employee] couldn't survive forever, but it was enough money that [he or she] wouldn't necessarily be looking for another job in the meantime,” the article points out. “Cisco saved both money and talent.”
For additional articles on layoffs, see:
Half-a-Million Job Cuts: Is There a Strategy Behind the Layoffs?