Where the layoff culture began

I remember when companies laid people off reluctantly, for fear the company would be branded a Bad Place to Work. The last time I remember being aware of this was in the early 1990s, when I was working as a business reporter for the L.A. Times. So, I was in the milieu. When did the culture change, so that Wall Street now frequently views layoffs as a reason to invest? Most discussions I read start with Jack Welch and his 20-year reign at General Electric (1981-2001). Tom O'Boyle accused Welch in the 1998 diatribe , "At Any Cost: Jack Welch, General Electric and the Pursuit of Profit." And so does Robert Reich, the former secretary of labor for Bill Clinton, in his latest (2007), "Supercapitalism: The Transformation of Business, Democracy, and Everyday Life."

Welch was one of the original super-downsizers. "Before Welch arrived," Reich writes, "most GE employees spent their entire careers with the company and knew they'd be looked after when they retired. Welch put an end to that." (Full disclosure: my Uncle Jack retired from GE and is somewhat in awe of Welch.)

Between 1981, when he became CEO, and 1985, Welch laid off one in four employees, or more than 100,000 in all. This earned him the nickname "Neutron Jack." Even when times were good, Reich says, Welch encouraged managers to lay off their bottom 10 percent of subordinates each year "to keep GE competitive."

Sounds more like he wanted to scare the pants off anyone working there. I'm sure they were working long hours to meet these demands -- not exactly a family friendly environment. Funny how this macho stuff all dovetails together -- be the best, work the hardest, abandon your family for all practical purposes. Did these GE employees have working spouses?? The nannies of the world really should form a union. They have two-income couples at their whim more than they know.

But back to Jack. Reich says he was simply responding to Wal-Mart-style pressures from investors. Just as Wal-Mart was able to bargain for lower prices from suppliers by attracting legions of shoppers, so have the managers of mutual funds and pension funds squeezed companies for higher profits.