Corporate America Working Toward “Headcount Zero”

Not content with simply not hiring anyone, large corporations are now in a race toward Headcount Zero* – whichever company figures out how to run without a single human employee first, wins.

Ain’t productivity grand?

In just the last two weeks we’ve heard about tens of thousands of jobs being cut:

•Merck (MRK) is firing 13,000
•The bankrupt Borders has 10,700 retail bookstore employees to lay off
•Barclays (BCS) announced 3000 job cuts, but they did it in a British accent so employees were probably charmed into thinking they were getting a raise or something
•Credit Suisse (CS), Goldman Sachs (GS) and Morgan Stanley (GS) are firing anyone who isn’t the boss’s daughter or dating the boss’s daughter (see Dealbreaker for the litany of Wall Street layoffs, its a tsunami)
•There’s a massacre underway at Cisco (CSCO) – 9% of the workforce or 6500 jobs are now being eliminated, 15% of which are at the vice president level or above
•HSBC (HBN) came out on Monday and announced they were adding a few more layoffs to the already announced 5000 they were planning. How many more layoffs? Oh, just another 25,000
This morning, the Challenger survey came out and put a number on all this downsizing (via Business Insider):


A sudden and unexpected burst in private-sector downsizing pushed the number of announced job cuts to a 16-month high of 66,414 in July…The 66,414 job cuts last month were up 60 percent from the previous month, when employers announced plans to shed 41,432 workers. The July figure was 59 percent higher than the 41,676 layoffs recorded in July 2010. It was the largest monthly total since March 2010, when 67,611 job cuts were announced by the nation’s employers.

And lest you think this trend is all about slack demand, I point you to the case of China’s Foxconn, the slave-driving suicide machine that manufactures a huge percentage of Apple’s (AAPL) iPhones and iPods. No slack demand there, the factory is cranking away so relentlessly that the Lorax has taken up residence in the parking lot.

Anyway, Foxconn, which has consistently had trouble with “employee morale” has just informed their employees that they plan to replace them with “a million robots”. It’s like The Jetsons but with less flying cars and way more miserable people.

And I can promise you that whatever cost savings these big companies are after, small business owners are after the same ones. No amount of monetary stimulus is going to help this situation, it simply has to run its course. We can save ourselves the QE3 jacking up of commodity prices, it won’t lead to more jobs.

The irony is that as technology makes it easier and easier for large corporations to do with less and less people, the high tech firms themselves are adding headcount at a furious pace. I suppose this is the silver lining. Google (GOOG) and Facebook (DORK) are in an arms race for talent as both companies break internal records for hiring in 2011. Then you think about all the startups and vendors benefiting from that ecosystem and you say to yourself that maybe there’s some hope after all.

Or not. Maybe you’ll get to work one day and see an iPod sitting in your chair, plugged into your PC and banging through your tasks. Guess we’ll see.

* Yes, I invented the term “Headcount Zero”. Just now. It’s pretty clever, I know.