Newspaper article THE JOURNAL RECORD

Study Shows Hike in Cuts by Companies in Middle Management

Newspaper article THE JOURNAL RECORD

Study Shows Hike in Cuts by Companies in Middle Management

Article excerpt

By Barbara Presley Noble

N.Y. Times News Service

Middlend lesseranddle managers may be forgiven if the current terms of art in human resources _ including downsizing and streamlining _ seem more like euphemisms for bloodletting.

According to Workplace Trends, a newsletter that keeps track of corporate staff cuts at all levels nationwide, 550,000 lost their jobs last year, up from 110,000 in 1989, when Workplace began collecting the data.

Because much of the cutting is coming from their ranks, middle managers may also be forgiven for feeling that they have been forced into a nasty game of duckdver by senior executives hunkered down and pushing buttons far from any set of coordinates that might put them at risk.

That feeling, however excessive it sounds, is not an illusion, according to research by three business school professors, who tracked the efforts of several large companies to reverse their reverses in fortune _ defined in the research as a year of negative earnings.

Kose John and Larry Lang, finance professors at New York University, and Jeffry Netter, an assistant professor of finance at the University of Georgia, report in the current issue of the Journal of Finance that companies have many firstrike responses to intimations of disaster.

"They retrench quickly," Lang said. "They become more focused, sell assets and divisions."

Using information from Standard Poor's Compustat data base and company documents, and news accounts, the three researchers found, among other things, that the corporations under study typically cut some 2,000 employees, or about 5 percent of their workforce, in the first year after the negative earnings.

What the companies don't do is introspect much about the reasons for their plight. Most companies first blame what the authors call "exogenous variables" _ external conditions _ for their problems, including the state of the economy, mentioned by 92 percent of the companies, and competition, foreign and otherwise, mentioned by roughly half. …

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