MANAGEMENT experts say that regular staff culls represent a highly punitive process that works best when implemented by companies such as Microsoft, which pay their employees high salaries.

These firms enter implicit contracts with staff who understand that they can be fired, according to Joseph Lampel of the Cass Business School.

At McKinsey, the management consultancy, or the American investment banks, workers accept the brutal bargain because of the lucrative pay and the prestige associated with working at well-known companies. This practice can also be used in sales organisations, which can measure staff performance precisely, Professor Lampel said.

However, when used at Enron, this method of management created an atmosphere of fear and distrust. Professor Lampel gave warning that it tends to encourage unethical behaviour as staff feel pressured by impending job cuts.

“This is pervasive on Wall Street, with people cheating or playing games with their stock portfolios because they are afraid of being fired,” Professor Lampel said.

It is unlikely that the technique can be readily applied across Britain, as companies would have to boost salaries enormously, Professor Lampel said.

However, British companies could opt instead to shred unprofitable business units as regularly as their American counterparts do, he said. That process would be easier as it would simply be a matter of reviewing the unit’s profit and loss accounts.

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