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When a layoff is the reward for experience

Circuit City's move to replace veteran employees with cheaper workers results in anguish and lawsuits.

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As for finding applicants to fill the new vacancies, Ms. Matuson asks, "Are people going to apply to a company that doesn't value experience?"

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She explains that a few years ago, during the dotcom boom, companies were hiring inexperienced people and putting them in high-level positions. "They would hire someone who had been out of school for a year or two and call them vice president of sales and marketing. More and more we saw these companies implode. They didn't have the bench strength."

Today, she finds that savvy managers are saying, "I do need somebody with depth. I do need someone who has worked in different cycles of the economy. If we hit a recession in a few years, I want somebody who can weather the storm."

Even so, experience is not always a high priority. "Many senior executives today don't have a clue about the value of the knowledge that is walking – or being pushed – out the door of their organizations," says David DeLong, author of "Lost Knowledge: Confronting the Threat of an Aging Workforce." "Too many managers have become so addicted to the mantra of 'cost cutting' that they have lost sight of the trade-offs involved in letting veteran workers go."

Some also ignore the "exorbitantly high" price of training new workers, says Drew Stevens, president of a management consulting firm in St. Louis. He cites research suggesting that it costs more money to restaff and train than to maintain current employees – by as much as 45 percent.

Then there is the cost of losing experience. "There is no monetary replacement for the knowledge lost through attrition," Mr. Stevens says. "America currently is suffering from huge losses in workforce knowledge. Where does all that knowledge go? It's certainly not being given to all the new employees that are coming in. When organizations start laying off, what happens to knowledge, relationships, support of the consumer?"

At its most basic level, knowledge must translate into value for employers. "The key with experience is it has to result in increased productivity," says Craig Rowley, vice president of the retail services sector for the Hay Group in Dallas. When stores depend more on self-service, experience doesn't lead to more sales.

As veteran employees seek to stay in the workforce, issues of salaries and experience could loom larger. Professor Payette hears of job applicants who downgrade their résumés so potential employers will not reject them on the assumption that their salary requirements would be too high.

Sometimes salary levels do pose challenges.

"The problem is that pay increases are given partly for merit and partly in response to pressures to satisfy employees who want to feel they are moving forward in their careers over time," says Rob Bennett, publisher of a personal-finance website, Passion.Saving.com. "Employees who are just staying in place are given financial awards for doing so and then are found to be too costly to keep on when the company is faced with competitive pressures."

When times are good, Mr. Bennett adds, companies tolerate paying more for skills that are not increasing. But that changes as soon as competitive pressures come in.

He suggests that employees ask themselves, "Am I really worth more money this year than last year?" Start honing new skills. If you suspect a layoff might be coming, develop personal strategies. "You don't want to wait until it hits and everyone is let go at the same time. Ask, 'What skills do I have?' There's much more flexibility today to take those skills somewhere."

Ms. Kenny's advice. "The message to all of us who work is to ... be aware of the competitive nature of our particular industry or function," she says. "Make it your job to understand if you are well paid, overpaid, underpaid, because the goal here is not to be surprised."

As employers and employees adjust to a changing workplace, Stevens offers this reassurance. "Knowledge is so powerful," he says. "It's that knowledge that drives business. There will always be a place for experience."

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