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Thursday, 26 November 2020

What is the value of employees?

Thursday, 25 October 2012 | Posted by: Damir Gagro, European Coatings Journal

When companies announce successful results, they quickly point at the performance of their employees. Their commitment, expertise and competence are highly praised by Managing Directors, CEOs and Presidents.

One might think every single one is of inestimable value for companies. So to speak, they are acting as pillars of an enterprise. But as soon as times get difficult, one of the first measures is to cut jobs. Then, what is the value of employees?

The recent quarterly reports of three chemical giants – BASF, Dow and DuPont – show profit declines. In the course of an economic slowdown Dow and DuPont react with job cuts, 2,400 and 1,500, respectively, employees worldwide are losing their work. Do listed companies only react with these kinds of measures to please their shareholders?  Of course, in most cases shares go up. But with layoffs, companies also have to face a loss of human capital. For short-termed goals and for a measurable value this seems to be of less interest. But maybe more capital is destroyed than costs are saved if the pillars are being torn down. In this context the discussion on a substantial shortage of skilled workers has a slightly bitter taste.   

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Damir Gagro
European Coatings Journal
Damir Gagro
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