Layoffs never boost morale, right?

Well, maybe. Layoffs can work wonders if they’re perceived as fair by the rank-and-file.

Most layoffs hit worker bees disproportionately. A few higher-level executives might be reassigned or demoted, but the majority of people who lose their jobs tend to be folks on the lower end of the food chain.

That’s often a recipe for disaster. Surviving employees think, “Those do–nothing execs with their plush offices go unscathed while the skilled people who do real work get canned.”

Occasionally, a company understands the lasting scars that such actions leave. Consider how Chrysler is fighting its way back from the brink. In an interview with The Wall Street Journal (July 3-4 issue, p. A9), Sergio Marchionne says that soon after he arrived at Chrysler a year ago as its CEO, he refused to follow the usual blueprint of shutting factories and firing assembly-line workers.

Instead, he terminated 18 of his 22 direct reports.

While it’s too early to say whether Chrysler will survive long-term, you can bet that its employees are breathing a sigh of relief that their new CEO “gets it.”

When you’re willing to go against the grain and make hard choices (like getting rid of the execs who report to you rather than canning nameless, faceless folks five layers down), you earn credibility. And that’s a leader’s secret weapon.

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Tags: leadership