During the latter part of ‘91 this country was experiencing a major recession while, at the same time, the communist threat was dissolving. For the first time in modern history, we were being paid to free one nation from an interloper, while we defended a few others. Somewhere along the way, someone decided that we were now a part of a global economy. We were being told that we were suddenly going to have to compete globally. Ask one of the big three automakers just how new this was.

Since the “communist threat” all but ceased to exist, our leaders decided to reduce the defense budget. Of course, the defense contractors were now scurrying for business, as were the sub-contractors. And so on, and so on... The surprising part of this was that it wasn’t only the blue collar workers that were hitting the streets, their white collar supervisors and mid-level managers were also being shown the front door.

The remaining “wizards” noticed something. Shazam! The profits for the next quarter were huge. It is as though they had discovered something new. If you cut payroll, the bottom line will swell in direct proportion to the salaries eliminated. In the past, when an organization had to let some people go, they were viewed in a poor light by the general public and Wall Street. This time the “wizards” had other things to blame it on. The recession, defense cuts and, of course, the new global economy. Let’s look at the value of each of these.

The recession was brought on primarily by a major readjustment in the price of domestic real estate. This, of course, brought to light the massive mismanagement of the country’s savings and loan business. Since banks had gotten into the real estate business pretty heavily, they too were swept into the whirlpool. Thanks to billions of taxpayer dollars, we have managed to clean up that mess.

Defense budgets were reported to have been cut to the bone. We all will agree that the country over-reacted to the fall of communist Russia. Instead of being threatened by one really big bully, our national security is now threatened by a multitude of pseudo juvenile delinquent countries and groups that formerly hid behind their now deposed leader.

The biggest joke of them all is the sudden discovery that we are a part of a global economy. For crying out loud, we have been importing and exporting goods and services since before this country ever existed. We have been sending raw materials to low labor rate countries for decades. The Havana cigar started out with New England seeds that were sent to Cuba to take advantage of their cheap labor. French wine, Italian cars, British machinery and Swiss watches. California wine, Detroit cars, Westinghouse machinery, Timex watches, Microsoft and Boeing. Let's not forget about their tea and our cotton and tobacco. So much for the newness of our presence in the global economy.

Now where does that leave the “wizards”? What are their excuses for massive downsizing? Could it be the fast buck? Heavens no, you say! To be so short sighted as to look only at quarterly results would be sophomoric, uneducated and inexperienced. If you let the wrong people go, you may be creating your own competition. Does anyone remember that IBM begat DEC which begat Data General. Does anyone remember that HP begat Apple. Those are the big boys and the big stories. What we are talking about here is your former manager setting up shop with your former employees and calling on your, about to be, former customers.

Pay attention to the details. Know about who is being let go. More importantly, examine carefully who is making the recommendations and who will be left. What, if any, are their motives? What, if anything, will they gain? Where will you be in both the short and long term? Remember what your mother said when you wanted to do what everyone else was doing, “If they are all jumping off a cliff, would you jump too?”

In the following pages we have endeavored to pass along what we think to be some very basic knowledge that a lot of us forget about from time to time. We understand business, we understand people in business and we understand that it is very easy to forget about some of the basic principles and subtle nuances associated with your position in business.