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Fire senior staff, underperformers or young hires? Layoff lessons from European management

Posting in Government

Traditionally, European firms fire employees by how big their salary is: that is, the most expensive are given pink slips first, with cuts working their way down the compensation tree. But the reality varies greatly depending on which country you work in.

Traditionally, European firms fire employees by how big their salary is: that is, the most expensive are given pink slips first, with cuts working their way down the compensation tree.

The reason, according to a piece in the Harvard Business Review, is that cost savings are achieved at the expense of experience, rather than productivity, since salary is correlates highly to seniority. And it's always easier to dismiss one high-salaried senior manager and save the jobs of two younger junior managers (not to mention that it helps the long-term prospects of the company).

According to authors Michael Segall and Gabriele Jacobs, the reality is much different: whether you'll survive or not depends largely on which country you work in.

According to the authors' research:

  • Germanic cultures tend to fire the young.
  • Anglo-Saxon cultures tend to fire the weak.
  • Latin cultures tend to fire the old.

Here's how different cultures approach layoffs when times get tough:

In Germanic (Germany, Austria, etc.) and Anglo-Saxon cultures (UK, Ireland, etc.), performance is the top priority. Still, good performance is often the principle reason to target a manager for a layoff in this culture. "The thinking here is that choosing a good performer decreases social discord since he will find employment easier," the authors write.

In Latin cultures (Spain, Italy, France, etc.), eligibility for pre-retirement makes you a prime target. "Many European governments encouraged older employees to leave the labor market to create more employment for younger workers," the authors write. The mentality: why work when you can stay home and receive the lion's share of your old salary from the government?

(There are more detailed takeaways from their research, which I encourage you to read.)

So what if you're an American? The authors say the U.S. is considered to be an "extreme form" of Anglo-Saxon values, so office survival is all about merit.

What is your layoff strategy?

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure