Why Nintendo’s Satoru Iwata refuses to lay off staff

Many game companies cut their staff numbers to save costs, or reassure investors, but Nintendo chief Satoru Iwata says that’s a strategy he won’t be using.

Participating in an investor Q&A, Iwata was asked why, given Nintendo’s lackluster financial performance recently, he had not cut staff numbers. He replied that such moves might resolve short-term difficulties, but always proved counter-productive in the long-term.

“If we reduce the number of employees for better short-term financial results, employee morale will decrease,” he said. “I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.”

Iwata pointed towards the value of the yen against the dollar as a significant factor in the company’s decreased profits. He also said that today’s games require more manpower to produce than those in the past.

“I know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run.”

In 2011, when Nintendo addressed the sluggish performance of its recently launched 3DS by slashing the machine’s price, Iwata imposed a 50 percent pay-cut on himself, while other board members also took smaller pay decreases.