Nike, the global brand of sport wear is under the process of transition. They have decided to release a large number of their best performing employees. For instance, the organisations are sacking their 40% of the senior employees, such as vice presidents and other higher ranks. This comes after a similar round of layoffs last month that affected their European headquarters.
Nike has been discharging workers in an effort to reduce their expenses and enhance their performance. A lot of other firms are doing the same thing this year. It is an indication that they are attempting to cut costs by hiring fewer employees. However, this is a shift that is seeing many hard working people losing their jobs.
Last month, the layoffs affected employees working at Nike in the Netherlands specifically. Now, the latest round of cuts is affecting people more at the managerial level in the company’s headquarters in Oregon. These are the vice presidents, senior directors, and directors. Just for scale, in this latest round, Nike fired 732 of its senior employees alone. Of them, there were 174 directors, 32 vice presidents, 112 senior directors.
Some of the reasons for these sackings include the fact that Nike has been operating under financial problems. In terms of stock, they have not done well and the share price has reduced from USD 2. 38 to USD 73. 05. This is a decline from the position it occupied in November when it stood at USD 177. Due to these financial constraints Nike has seen its shareholders’ value erode by a massive $ 28 billion within a mere ten days.
These separations were planned since February when the company indicated they would let go of approximately 2% of its workforce. This 2% amounts to 1,600 employments. It is aimed at rationalizing their processes and attempt to stabilize or improve the companies’ financial position.
It is also a valid point that even though layoffs are never a pleasant thing, they could sometime be inevitable in order to cope with the needs for the company to sustain its operation. Nike is attempting to address a difficult issue of challenging economic climates where there is the attempt to reduce expenses but also retain performance. They have also been experiencing the trickle-down effect of COVID-19 the whole world have not been spared from the pandemic.
Nike’s latest Corporate Responsibility Report for the fiscal year ending May 31, 2023 reported that during the course of the fiscal year, Nike hired 423 people to vice-presidential or otherwise higher positions functional within the organization. This is evidence that the company had in fact been building up its senior force but now what’s happening is they are going in there and they are slashing that entire force.
In addition to the dismissals, the report detailed the prediction of even lower sales for Nike in the subsequent fiscal year. This outlook has informed the subject decision on the manner to approach the issue of staffing reduction. A company can maintain some level of decoupling by attempting to make these hard choices ahead of time to brace itself for a potentially challenging year.
In conclusion, we were able to determine that Nike is in a period of trials and tribulations. They are to discharge more than one half of their key staff – their vice presidents and other top-players, in essence. This is a part of their plans to reduce some of the expenses as well as to enhance their strengths on the financial side. It is a very unfortunate scenario in as much as it is challenging for those who are going to lose their jobs; it is a move Nike considered important so as to respond to their current financial concerns.
