Thursday, July 28, 2005

Down-size syndrome

I have been around long enough that, unfortunately, I have been on both the giving and receiving end of pink slips. I am not sure which is worse, but I think giving them is.

When you lose your job because management can’t find a more clever way to make its numbers, you are rightfully angry and afraid. Painful as it is to pack your career in a box and head off to an uncertain future, at least you know it wasn’t your fault.

But the managers who did the deed have to come in the next day, and the next and the next, to face the empty desks that symbolize the lives they screwed up. If you are any kind of a human being, and most managers actually are, you blame yourself for not finding a better way to run the business than ruining the lives of innocent, hard-working people with mouths to feed and mortgages to pay.

Sometimes, of course, it is the manager’s fault. In those cases, the managers, not their victims, ought to be the ones packing the boxes. More often, however, uncontrollable economic forces require a company to trim a division, scrap a product line or reduce headcount to negotiate a rough patch in hopes of navigating to better times in the future.

Which brings us to the newsrooms of the New York Times Co., where some 190 jobs will be eliminated; the San Francisco Chronicle, where some 120 positions will be trimmed, and the Los Angeles Times, where an indeterminate number of pending budget cuts seem to have figured in the departure of editor John Carroll. Though the numbers may be smaller, the story is the same these days at many other newsrooms across the country.

Although it is a tragedy when anyone loses her or his job, the cuts seem especially harsh when they happen in newsrooms, where journalists who are supposed to be minding the public’s business are, instead, worried sick about their personal circumstances. Having lived through such moments, including the folding of our beloved Chicago Daily News in 1978, it is hell, pure and simple.

But the economics of the newspaper business these days leaves managers with little choice. With advertising weak, readership declining and costs climbing for everything from newsprint to gasoline to paperclips, the newsroom is one of the few places you can squeeze expenses to meet the profit targets of the (mostly public) corporations that publish our papers.

Although it is no consolation to people losing their jobs, newsroom employment at the start of this year actually was slightly above the 25-year average of approximately 53,500 professionals, according to statistics complied by the superb State of the Media project.

As you can see from the graph below, newsroom headcount historically has followed the ups and downs of the economy. Employment expanded briskly in the mid-1980s, peaking at nearly 57,000 in 1990. Staffing took a nosedive, along with just about everything else, when the Internet Bubble ran out of hot air.

This year, however, headcount almost certainly will fall below the average for the first time since 1985. Why is this happening, with the economy doing reasonably well for a nation coping simultaneously with a war, a mega-deficit and record-high oil prices?

Because newspapers (and the legacy broadcast media) are unable to maintain their historic share of advertising revenues, owing to increased competition from the new interactive media that enable marketers to achieve unprecedented efficiency and effectiveness in their campaigns.

In but one example reported by Fortune magazine, Chrysler has put 18% of its $2 billion ad budget this year into online media vs. 10% in 2004. That’s $160 million fewer dollars for legacy media this year than last, or the equivalent of 7,200 reporters making $50,000 a year.

Slow on the initial uptake, the traditional media companies finally are getting serious about earning their fair share of online revenues. But even briskly growing online sales can’t offset in most cases the secular market-share erosion affecting traditional print and broadcast advertising.

With lower profits not an option for publicly traded companies, the legacy media have no choice but to nip expenses wherever they can. And newsrooms, unfortunately, are a good place to look, because columns and airtime can be filled with respectable material from the wires and other syndicates.

The irony, of course, is that smaller, more overworked staffs are unlikely to produce the compelling local products required by the traditional media companies endeavoring to evolve into more plausible competitors in the new media mix.

If the belt-tightening actually leads to a better day for the media companies, then the pain will have been worth it, except for those who lost their jobs along the way. Cutting jobs and other expenses without a realistic, long-term strategic plan to reposition these valuable businesses will lead over time to death by attrition.

Businesses grow strong only by growing. No company can right-size its way to success.


Anonymous Anonymous said...

So what do we do about it?

I'm a low-level manager in a tiny daily newspaper -- seven of us in the newsroom, counting the sports editor. I'm looking out my office door at the empty desk of a man who left last Friday and at the desk of a woman who'll leave in two weeks, and I'm silently praying the bean counters won't find out about the vacancies before we can fill them.

Voluntary vacancies like I've got are bad enough -- we can reasonably expect to put a warm body in those slots pretty soon and my week can go back to being only five 12-hour days. The stuff you're talking about tends to become permanent.

I'd really appreciate some good news.

9:22 PM  

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