What is it that suddenly has conservative MBA academia struggling for credibility?

Nothing short of the unpopular view that companies should pause before swinging the cutback axe - at least not until they have tried to trim corners and improve business operations in other areas, Professor Loree says.

'A lot of companies are jumping too quickly on the downsizing bandwagon. Downsizing is often a vicious cycle. Companies do this in response to some type of problem. The result is that the remaining employees have low morale and a low level of commitment to the organisation; so much so that a year later the company is in the same, or worse shape.'

Citing recent research, he says lay-offs often backfire because they demoralise the surviving workers, with management using precious resources to try and heal bruised relationships.

In the meantime, the business media and speculative investor culture exacerbate the problem by rewarding companies that announce lay-offs with positive press and sharp rises in share prices. The effect, says Professor Loree, is that 'downsizing becomes normatively valued', resulting in waves of copycat lay-offs that are little more than band-aid solutions to complex business problems.

Professor Loree, a full-time lecturer at Ivey's Ontario campus, focuses his research on organisational structure and how companies survive in turbulent times. He was in Hong Kong recently to lecture for the Richard Ivey School of Business's part-time MBA programme at the university's campus in Wan Chai.

What does he prescribe in place of job cuts?

A good start is to encourage staff members to think more creatively, he says.

'You want people to value their jobs and feel more committed to their organisations so that they work hard because they want to, not because they have a boss leaning over their desk threatening to fire them if they don't perform well,' he says.

The desired result is a workforce that needs less supervision and is much better equipped to solve work problems on their own.

It is often lagging corporate performance that leads to systemic problems, such as poor product development or the lack of effective sales and marketing. These problems are not easily solved by trimming staff ranks.

Aside from the 'feel good' aspect to his philosophy, the professor says the results also trickle down into the bottom line.

'Many of the tools we use in organisational behaviour could be viewed as treating people humanely, but I want my students to understand there is a solid business reason for doing this. It leads to a high-performance company.'

To compete in tough recessionary times, companies should foster a creative workforce that will develop a competitive advantage, he advises.

'Competitive advantage is never about copying others. It's about finding a niche and doing it differently to the others.'

He cites the Men's Warehouse, a US retail clothing chain that specialises in affordable clothing, as a firm that made some wise moves when facing an internal crisis in the mid-1990s. Instead of trimming staff, the company pumped money into training and product development. The result was robust sales when the economy recovered.

Graphic: TIPS05gsp