Recession, S-Curves and Digital Equipment Corporation - History of Computing: Learning from the Past - page 181

until the late 1980's when economic circumstances and pressure from Wall Street
forced it to resort to large scale layoffs. In the 1970, 1973 recessions, DEC reduced its
hiring, stabilised its workforce and rode out the recession as can be seen in figure 1.
The result of the recessions on profit during this period is shown in figure 2 and
clearly demonstrates the impact of the recessions on the profit of the company and
how it impacted growth.
In the recession of the early 1980s it appears that DEC did not apply the same rules
on hiring as can be seen in figure 3. This impacted the company in 1983. Ken Olsen
said in a speech to the Newmans Society in 1982 that he had said publically “' DEC
didn't need recessions to straighten us out ,' but that it wasn't true, recessions made
DEC strong”.

DEC employees 1976 to 1991

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

yea r

Fig. 3. DEC employees 1976-1991

DEC profit 1976 to 1991

DEC income 1976 to 1991

1,500,000,000

16,000,000,000

14,000,000,000

1,000,000,000

12,000,000,000

10,000,000,000

500,000,000

$

8,000,000,000

$

6,000,000,000

0 4,000,000,000

2,000,000,000

0

-500,000,000

-1,000,000,000

year

year

Fig. 4. DEC profit 1976-1991 Fig. 5. DEC income 1976-1991

Again, this statement was true up until 1982 when there was no hiring freeze im-
posed and so expense grew and profits suffered for a number of years as can be seen
in figures 4 and 5. In the mid 1980's DEC was forced into staff reductions. The
method they used is described in Allen and Scott Morton [2] who did a study of
employment security at DEC. It showed how a firm could manage its workforce
without enforced redundancies thus maintaining its reputation for employment secu-
rity. The major proportion of the reduction was in the manufacturing areas, primarily