'Extreme Downsizing' May Hurt Companies Later : NPR

'Extreme Downsizing' May Hurt Companies Later : NPR

Northrop Grumman has a clear picture of its revenue flow for several years into the future because of its contract work - it knows how much will be coming in for each year.

Because of this, Northrop Grumman attempts to downsize its work force so as to not have a "loss" resulting from paying more in salaries than t is taking in on contracts.

In the past, Northrop Grumman went through lay-offs and warned its employees of potential lay-offs. This resulted in a lot of people leaving, both through lay-offs and on their own.

Northrop Grumman was able to minimize losses, but then had a SERIOUS SHORTAGE of knowledge workers, as TOO MANY people went away - so many that Northrop Grumman had to offer financial incentives to its employees for referrals of new employees in order to bring in new employees to replace the employees that left on their own or who were laid off.

First, Northrop Grumman makes a bunch of employees leave the company, either voluntarily or involuntarily.

Second, after determining the shortfall in knowledge and skills, Northrop Grumman goes into an hiring phase to make up for the lost knowledge and experience that went away.

Northrop Grumman is not always successful in replacing the lost knowledge and experience.

What a way to run a business - this is the Northrop Grumman way!