Sunday, July 13, 2008

LAYOFF VS. FIRINGS

About two weeks ago it was reported that ePrize, a Michigan based sales promotion services firm, fired 20 employees.

Why would a firm need to do such a thing and why would it make it public? The people fired are damaged goods since ePrize publicized that they were terminated for poor performance.

From Crain's Detroit Business:

"
Pleasant Ridge-based ePrize Inc. fired nearly 20 “underperforming” staffers on Tuesday, the company’s founder said.

A couple positions were eliminated in a streamlining effort, but ePrize President and CEO Josh Linkner said the remainder of the terminations were not layoffs but terminations based on job performance."

What are the possible problems?

Below are four possibilities.
  • Improperly Hired
  • Poorly Trained
  • Poorly Managed
  • Business Pullback [Result: Layoffs]
Lets take them one at a time.

Improperly Hired
EPrize is a relatively young firm. It was founded in 1999. It is possible that their training systems have not developed as the firm has grown in the nine or so years since ePrize was established. HR and hiring managers may have made imprudent choices during the years of rapid growth and quick hiring.

Poorly Trained
It is possible that the managers have a heavy load since ePrize may be operating much like a start up firm. In the rush to "make the numbers" it is likely that something had to give. As the saying goes, "what gets measured is what gets done" and that training had weak measurement metrics. Certainly sales growth and profit numbers were much more closely monitored. Since this was likely, managers focused intensely on revenue and profit metrics. Training and mentoring fell by the wayside. Growing firms need strong bench talent and the best way to get it to hire quality individuals and to have strong mentor/training relationships throughout the firm.

Poorly Managed
Some of the same problems that were pointed out above also apply here. Managers zero in on the areas where executives indicate focus needs to be [revenue, profits, growth targets]. Less time and energy was spent on managing and developing people to grow into their current positions and to prepare them for future opportunities [Bench Talent Development].

Business Pullback

It is not a secret that the US economy has been facing challenging circumstances for the first half of the year. Recession or not, there are a lot of headwinds. High fuel and food prices are sapping the spending power of consumers. When people have less money to spend and a sense of pessimism the velocity of money slows. Inflation affects consumers, manufacturers and the retailers that are in the middle. Home prices have also fallen precipitously and Consumer sentiment is very low at 56.6.

Economic Challenges
As consumers become resistant to discretionary spending, many products and services see sales decline or stagnate after continued year over year
growth. Firms begin to see margins tighten and profits to decline. Stock prices fall as future earnings expectations fall. At some point shareholders will implicitly demand that management make changes to "get results." Management will make changes on costs and expenses that they can control. Firms will cut back on marketing and advertising budgets as business slows. Competing firms will likely do the same. Firms like ePrize will see less business as their clients devote fewer resources to the kinds of promotions they specialize in. All of this will lead to ePrize reducing staff as business falls.


What happened with ePrize?
When a firm fires people they seek to replace them with more talented and capable people. Did ePrize fire or lay people off? The jury is still out, as of right now there are no new job postings coming through on job search engine Indeed.com for ePrize [See data below]. According to the ePrize Twitter page jobs have been posted here.


Of the jobs below, two of the jobs are at ePrize, the other two are not. As of right now there are no clear indications that the folks who are no longer at ePrize are being replaced. If new posting are clearly posted [with dates and specifics] that may indict people were indeed terminated.
As of right now it appears that there may be a slowdown and that these folks were laid off and not fired.


What are your thoughts?

Technology Help Desk Intern - new

ePrize - New York, NY
Maintaining laptops, software, printers and other technology. Must have network knowledge to be our hands on person for network connectivity in the office. To...
From NewYorkJobs.com - 25 days ago - save job - block - email - more...

Graphic Designer - ePrize ~ Interactive Web Designer for 74 ... - new

ePrize - Pleasant Ridge, MI
the continued growth of ePrize, the growth of our... Subway. ePrize has earned numerous awards, including the number-six ranking among the PROMO 100. ePrize's...
From Advertising Age - 21 days ago - save job - block - email - more...

Senior Human Resources Generalist - new

Accolo Inc. - Pleasant Ridge, MI
Resources Generalist for ePrize in Pleasant Ridge, MI... Subway. ePrize has earned numerous awards, including the number-six ranking among the PROMO 100. ePrize's...
From HotJobs - 25 days ago - save job - block - email - more...

Senior Human Resources Generalist - new

Accolo - Detroit, MI Resources Generalist for ePrize in Pleasant Ridge, MI... Subway. ePrize has earned numerous awards, including the number-six ranking among the PROMO 100. ePrize's...
From Monster - 26 days ago - save job - block - email - more...

9 comments:

Anonymous said...

There are 8 jobs listed that I can see. Looks like you did not post 4 of them.

Anonymous said...

Excellent posting and rationale. I totally agree, this adds credibility to others http://eprizenolimits.blogspot.com/2008/07/independence-day-for-who.html who are suggesting its layoffs.

David Damore said...

Thanks for your comments.

All four results for Indeed.com were in the post.

Ran the search again. Four results again.

Link: http://www.indeed.com/jobs?q=Eprize&filter=0

The Eprize site may list more jobs, but they are not coming up in search.

Are they seriously looking to hire people?

Not being aggressive at all IMHO.

Thanks.

Words For Hire said...

Excellent post and thoughtful analysis. IMHO, if the 20 were fired it is an indictment of the company not necessarily the employees. Mass firings would indicate a serious lack of leadership. While most companies do not fire often enough, carrying along poor performers until economics force layoffs, this appears to be just poor leadership, plain and simple. Will be interesting to watch how it unfolds.

Anonymous said...

As an insider I can tell you, absolutely, that the 17 people let go in July were let go for monetary reasons and not performance reasons. At that time, the company was being aggressively and unsuccessfully shopped around and those people were removed at the same time as some other high-level management changes designed to make the financials look better. A new round of layoffs just occurred a few days ago, putting another 18 people out of work. ePrize is very protective of its image, as it must be in this economic climate, but lying publicly about the reasons for terminating good employees is unconscionable.

David Damore said...

Thanks for the updated comments.

Firms are facing very challenging business conditions. It really is not a surprise that business for interactive promotions has slowed. Firms are reducing head count and marketing (and other) budgets to survive this downturn.

If the business is not there. The firm risks a critical failure for lack of expense control.

There is no perfect management in the world. Conditions have changed more rapidly than at any time in recent memory.

Hopefully ePrize will be able to weather the storm and resume leading the interactive promotions space, and soon.

Anonymous said...

So much of ePrize's success has been due to the lack of real competition. As real competition evolves, my guess is that ePrize will fall into far harder times. The management there has a very narrow view that has failed to evolved with the growth of the company.

Louis Friend said...

More Firings Announced:

http://eprizenolimits.blogspot.com

Anonymous said...

"Hopefully ePrize will be able to weather the storm and resume leading the interactive promotions space, and soon"

I have to agree with some of the other posters, unless you're an investor/owner, why do you wish to see eprize "leading" the ePromo space? I would rather see a handful of competitors come in, to see the market balanced by multiple sources of creative, execution and pricing. That's the free market that gives us all the best results and the best pricing.

I don't wish ePrize any animosity, but I also don't offer them a blessing to be the industry crushing leader - either they earn it, or they dont.