Wednesday, April 01, 2009


Mark Cuban asks: "Why are profitable companies laying off people?"

The real answer is it's because they have no idea how their company makes money in the first place.

Cutting productive people almost always decreases costs less than revenues over the medium to long term due to direct and indirect loss of productivity, knowledge and morale. The only time this is not the case (that I can think of) is if the business is being fundamentally transformed (e.g., you were a construction company, and now you're going to be a university).

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