Company refuses to cut staff, gains marketshare

Great little story of a private company - Marvin Windows - that has refused to lay off any of its 4,300 employees.

This doens't surprise me. From what I've seen of private-based companies, owners will sacrifice greatly to protect their employees (it's a myth that the 'rich' don't care about people, at least from what I've seen). It also goes to show, which I've spoken about before, that it's our stock market model that is at the root of the cuts we've seen (maximizing profits in the short-term to appease shareholders, even if it be at the cost of long-term growth).

The president of Marvin Windows puts it perfectly...

While Marvin’s story might seem quaint, even naïve, Ms. Marvin says the no-layoff policy is as much a business wager as an act of benevolence. She says she is confident that it will ultimately pay off. Already, she says, Marvin is gaining market share from weakened rivals. 

Ms. Marvin acknowledges that her family’s private company may have more leeway than public counterparts. It has forgone profits for two years to keep everyone employed, for instance. Nonetheless, Ms. Marvin suggests that corporate America could learn a thing or two from Marvin’s approach and long-term outlook.

“You can’t cut your way to prosperity. You can’t grow if you are cutting your lifeblood — and that’s the skills and experience your work force delivers,” she says, adding later: “Today, I think, to a great a degree, I think things have gotten out of balance. We see Wall Street almost punish companies that take the long view.”

While Marvin Windows may suffer in the short term (but they are going to suffer no matter what, it's just a question of what form that suffering takes), there's a great PR advantage here over the long-term. Standing by your employees is a positive in consumers' eyes. And when consumers feel loyalty to your company they are willing to pay more for your services and products because they WANT to buy from you over the competition.

Private companies can afford to implement this strategy because they don't answer to shareholders. Essentially, it's the private owners who take the hit in the form of less profits. But it will be a short-term hit that will pay huge dividends down the road as they not only protect their brand, but strengthen it in the minds of customers.