In September 2010, approximately forty Kumon employees were laid off without any warning or explanation. Many of these people had been with the company for significant periods of time and were well-respected by fellow employees and franchisees alike. This forced many departments to scramble to complete the work that was suddenly not getting done. Even more surprising was the lack of communication from the upper management to the people who still remained with the company. The franchisees did not receive an explanation either, which continues to cause great concern among the franchisee community. Following the layoffs in September, the company has seen more staff members leave voluntarily. Good communication is a sign of a company that values its employees and treats them well. It goes hand-in-hand with retention; employees want to stay at a company that communicates well. It does not appear that such an attitude is present at Kumon.
Two disturbing points about the layoffs should be mentioned: First, the president of Kumon North America conveniently scheduled an international business trip beginning a day or two before the surprise layoffs. He was not around at all when the layoffs happened, and that is cowardice personified. Secondly, the layoffs occurred on September 29, 2010. During a layoff, most companies give their employees at least one or two months of continued insurance coverage before they have to begin COBRA. Kumon did not give anyone that courtesy, and the employees who were laid off had only one day of insurance coverage before having to decide whether or not to begin COBRA on October 1. As I mentioned before, many of the employees who were laid off had given many years’ service to Kumon (some had been there more than twenty years) and they certainly deserved more than one day to get their affairs in order.
The fallout from the layoffs has resulted in a company where fear is the motivating force behind continued employment. As there is very little internal communication, Kumon associates are constantly wondering when the next round of layoffs might happen and for what reason they might occur. At the same time, the company treats a select few high-performing franchisees to luxury vacations (perhaps the fact that there are so few high-performing franchisees is an indication of the questionable sustainability of the Kumon business model), hosts multi-million dollar conferences all over North America, and maintains a lavish headquarters in northern New Jersey, one of the most expensive areas of the country. It is concerning to consider all of the above in light of the increased focus on expansion coupled with one of the highest royalty rates in the franchise industry.
