History shows firing workers during an economic crisis is a mistake - Business Insider

During the Great Depression of the 1930s, IBM's CEO, Thomas Watson, proved a point that today's executives should consider. In the worst of times, bravely bucking pressure to lay off workers and instead investing in the business can tee up explosive growth later.in April saying that 32% of companies expect to lay off workers in the next month. The White House said unemployment could hit 20% by June.

Watson's actions backed up his words. He made two pledges: he would keep the factories running and lay off no one; and he would increase spending on research and development. "Conditions in this country are going to be better, our sales force is going to get stronger, and later on we are going to be able to do more business. I will take my chances on selling enough machines later to absorb those parts."

No one foresaw the coming impact of Franklin D. Roosevelt's New Deal economic stimulus plan. FDR was elected president in 1932. As part of the New Deal, on August 14, 1935, Roosevelt signed the Social Security Act. Only one company could meet the demand. IBM had warehouses full of machines and parts and accessories, and it could immediately make more because its factories were up and running. Because IBM had been funding research and introducing new products, it had better, faster, more reliable machines than any other company. IBM won the contract to do all of the New Deal's accounting.

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