Reynolds American is laying off 570 people and proving that its executives can mumbly-speak with the best of them:

“As we invest in growth to expand the business base of our operating
companies to innovative new tobacco products, we continually review our
plans to support that strategy and to strengthen performance in a
changing marketplace,” said Susan M. Ivey, RAI’s chairman, president
and chief executive officer."

and

“Continued success demands that we fully align our plans, programs and
people behind the things that matter most to our future performance,”
said Daniel M. Delen, chairman, president and chief executive officer
of R.J. Reynolds. “The steps we are taking support R.J. Reynolds’
ongoing evolution to a ‘total tobacco’ business model that includes
both cigarettes and innovative smokeless tobacco products."

I don’t know squat about what’s going on day-to-day in Reynolds, and maybe they absolutely have no choice but to cut jobs, but for once I’d like to hear an American executive say that they realize that 570 of their people, the people who helped put them in their big house and nice car, are now scrambling to find a way to pay the bills, and it is at least in some part due to the executives’ job performance that these people are being put on street.

What really disturbs me about this is that I don’t get the sense that this is a "survival" move by Reynolds, but more a "we need to keep our profits up to satisfy shareholders" move.  I mean this is a company that reported the following net income over the last four years:

• 2004 – $688 million
• 2005 – $1.04 billion
• 2006 – $1.21 billion
• 2007 – $1.31 billion

Reynolds is no different than almost every other public company out there.  The number one priority is doing whatever it takes to please the shareholders, and executives are compensated based on how well they do that.  Still, it would be nice to see at least one Fortune 500 company put its people first and take a short term financial hit in an effort to build long term health for the company and its people.  And if that’s not possible then it would be really refreshing to see an executive take a personal hit in acknowledgment of the fact that they are directly responsible for some of their people losing their livelihoods. 

When is the last time you heard of an executive of a public company taking a pay cut in order to help save jobs?  I sure hope someone can give me an example that I just haven’t heard of, but in my mind I’m thinking of the execs at Citi and Merrill Lynch who steered their companies from incredible profitability to massive losses and parachuted out with severance packages that Midas would envy.  I’m also thinking about Delphi’s executives feathering their nest while also saying that they could save the employees’ pension plan if the union members would agree to working for about a third of their old pay. I could go on, but then this post would be interminably long.

I love business and I love free markets, but I also think that just because markets are free doesn’t mean that businesses and the people who run them are relieved of a moral obligation to their people and communities.  The standard line from executives during layoffs is that their job is to look out for the best interest of the company, and by extension its stakeholders.  While layoffs might be bad news for some it is better news for everyone else because the company will prosper and take better care of the majority.  My response is that in cases where the company is about to go belly up and you have to drop 50 in order to save 100, then maybe so.  But when a company is profitable and the only gain in dumping the employees is becoming more profitable, well then that is simply immoral.  It shows a lack of leadership, a lack of ability to find a way to help employees adjust to the new strategic direction, an inclination to take the easy road.  In short it shows executives to be short-sighted, self interested yellow bellies.

I can only hope that when the executives who make these decisions sit down to dinner with their families,  they will think about those people whose sweat helped put that dinner in front of them and who now face a struggle to put their own dinner on the table.  And if they do think about that then maybe they’ll think about foregoing a raise or a performance bonus, or maybe they will redirect that money to a program that will help place those lost employees with another company.

I’m not holding my breath.