SuccessFactors CEO Lars Dalgaard continues to be a larger-than-life personality.

Dalgaard’s move late last year to dramatically downsize his HR software firm was on par with the company’s super-sized spending on sales and marketing in recent years.

And his comments about the cuts have been at turns callous toward those losing jobs and refreshingly contrite.

In a recent interview, Dalgaard told me that expanding SuccessFactors’ headcount as quickly as he did was, in retrospect, misguided.

“I blame myself,” he said last month. “I am the one who made a mistake.”

Amid the quickly deteriorating economy, SuccessFactors’ headcount fell by 173 people in the fourth quarter of 2008, from 769 to 596. The 22.5 percent reduction is much deeper than the typical corporate downsizing. Even in this dreary business climate, firms generally don’t lop off more than 10 percent of their employees.

The scale of SuccessFactors’ cut raised eyebrows about whether the action would hurt the quality of its people management software or the level of service it provides customers. Dalgaard, though, said customer service was untouched, and the engineering capacity remained as strong as ever. The layoffs, he said, focused on areas including sales and marketing and new software implementations.

It also seems on the surface that San Mateo, California-based SuccessFactors may have violated California’s WARN Act. That law, which is tougher than the federal WARN Act, applies to establishments with 75 or more employees, and requires employers to give affected employees and government officials 60 days’ notice in advance of a plant closing or mass layoff. A layoff of 50 or more employees within a 30-day period, regardless of the percentage of the workforce involved, generally triggers the rule.

California records show SuccessFactors did not give notice of a layoff.

Dalgaard said SuccessFactors avoided violating the state law. He indicated that the cuts were made in a piecemeal way over time, as the economy worsened. “We were taking out people every week of the quarter,” he said. Also, the company said, not all of the cuts were made in California, and some people left the firm voluntarily.

SuccessFactors declined to say how many people were laid off from the San Mateo headquarters in the fourth quarter of 2008. It also declined to say how many employees currently work in that location, saying it has never broken out headcount by geography.

Even if Dalgaard and crew carried out the downsizing legally, the move initially carried a whiff of the way the firm shifted blame to its workers in the course of reducing its headcount by dozens of people in early 2008. At that time, the company terminated workers in conjunction with the chopping of a type of business group, but claimed the move was not a layoff . Instead, SuccessFactors portrayed the action as axing low performers.

Dalgaard has acknowledged laying off workers at the end of 2008. But in a February 9 conference call with analysts, he suggested those cut loose were less-deserving employees.
 
He noted that SuccessFactors used its own Stack Ranker product—designed to “quickly identify low performers to let go during difficult times”—in the layoff.

“Did we cut into any of the A-players?” Dalgaard asked rhetorically in the call. “And the fact is, we did not. And so that’s kind of the key. You are left with the absolute top performers.”

Later, he added: “I think the morale is … spectacular because these are a bunch of winners that really want to go and change the way the world works for a living.”

It may not be a new practice for businesses to try to shed poor performers during a downturn. But Dalgaard’s comments effectively rubbed it in for those laid-off SuccessFactors employees. And it’s not clear the claim about “A-players” is accurate.

Terrance Seto was cut late last year as part of the trim, after about a year and a half at SuccessFactors. Seto, who worked to configure product demonstrations, said that earlier in the year he had gotten a handwritten letter from Dalgaard praising him as one of the top performers in the firm.

Seto criticizes the way SuccessFactors hired so rapidly earlier in 2008—it added about 75 people between the end of March and the end of September—only to lay off many workers at the end of the year.

“It’s kind of disrespectful to the employees,” he says.

Seto also wishes the company would admit it erred in growing so fast.

Such a confession was not to be seen in SuccessFactors’ press release about fourth-quarter results or during the related conference call with analysts. The company portrayed the headcount haircut as a wise, if difficult, move that was part of a shift from “hyper” growth mode to a more moderate growth mode.

But in my recent interview with Dalgaard and Dominic Paschel, the firm’s director of public and investor relations, the tune changed some. They conceded that good people were lost in the reduction. And Dalgaard showed a rare willingness among corporate executives to admit a mistake and take personal responsibility for it.

“I feel like a total loser for having to take the cut,” he said. “That was the worst thing I’ve had to do in my life.”

I’ve appreciated the way Dalgaard combines the ambitious capitalism of his adopted America and the socially minded humanism of his native Denmark. For better and for worse, both those qualities were on display in this downsizing. It’s the latest incident in which Dalgaard has seized the spotlight. And I suspect there are more to come.

“Old” Europe is suddenly the new new thing.

Deepening gloom about the recession and job market is opening up debate in America about whether European-style employment and social welfare programs may prove to be a vital part of a healthy economy for employees and employers alike.

The sturdy safety net of universal health care, generous unemployment benefits and relatively secure pensions often has been derided as anti-entrepreneurial and part of the reason for Europe’s relatively high unemployment.

Indeed, those benefits and strong job protections may have played a role in high jobless rates in European nations such as Germany.

But now it appears ample jobless benefits and the like are cushioning the blow of the global recession. Government-provided health care helps prevent public panic around layoffs in Europe. And unemployment benefits that can cover 70 percent of net earnings or more for years at a time fuel continued consumer spending.

With the stimulus plan passed earlier this year, the U.S. took some steps in Europe’s direction. A COBRA subsidy makes it much easier to maintain health insurance after losing a job, and states were encouraged to loosen eligibility rules for unemployment insurance. In addition, jobless benefits were bolstered by $25 a week and the extended unemployment benefits program—which provides up to 33 weeks of additional benefits—was continued through 2009.
 
Even so, U.S. workers still face the prospect of running out of jobless benefits after about a year. And despite the $25-per-week boost, U.S. unemployment insurance checks are paltry: The average weekly benefit in 2007 was $288, or just 34 percent of the average weekly wage.

What’s more, many out-of-work Americans don’t receive unemployment benefits.

Amid evidence of increased employer aggressiveness in challenging jobless-benefit claims, the rate of recipiency—which captures the percentage of unemployed people who have qualified for and are claiming benefits—was 45 percent in the third quarter of last year when considering all unemployment insurance programs.

The stimulus act’s eligibility reforms should bring that number up. But all the insecurity built into the U.S. economy has already pushed people into their shells. Americans have been spending less at a time when companies need their business.

Better benefits for those out of work in Europe may help explain why economic contraction in the European Union in the fourth quarter of 2008 was not quite as severe as the shrinking in the United States.

Also finding its way into the spotlight is a German program to preserve jobs through reduced hours and wages. Similar “work sharing” programs in the U.S., where businesses can cut employee hours and pay but government helps make up the difference, exist in just a minority of states. But those programs are getting more attention, as is the idea of a tax credit for paid time off.

European countries also have been lowering payroll tax rates, another intriguing idea for battling the recession.

Critics who claim Europe should invest in larger stimulus programs—closer to the scale of the U.S. effort—may have a point. But it seems clear we, too, have some lessons to learn from our friends across the pond. “Old” Europe could help a sluggish America put a spring back in its step.

Here’s one way companies can avert public relations problems associated with layoffs: disclose, disclose, disclose.

As it stands, employers often are not forced by law to admit when they engage in modern layoffs—of the 5 to 15 percent of headcount variety. California is a rare exception, with its notification law triggered by a layoff of just 50 employees.

But in an era of Facebooking, Twittering and other forms of electronic self-expression, stories about job cuts are going to be told.

“There’s no ability for a company to control the message like they used to,” Jennifer Benz, a San Francisco-based communications consultant, told me recently.

She points to Telonu.com, a site that welcomes stories of layoffs. At Glassdoor.com and Vault.com, ex-employees also are invited to talk about their old firms.

The New York Times recently reported on some 4,600 North American job cuts at IBM.

“The cutbacks surfaced only because of their size and timing, with word spread through blogs, employee message boards and [union group],” the Times said.

I, for one, back an idea raised in the article: requiring large corporations to annually report employment country by country.

“All our multinational companies are increasingly less American, except when they are asking for tax breaks and increased government spending in their industries,” Ross Eisenbrey, a researcher at the labor-leaning Economic Policy Institute, is quoted as saying. “Knowing where their employment really is would be useful information for policymaking.”

Whether that rule ever comes to pass, smart firms are getting in front of this issue. They’re disclosing their cuts and explaining them. Examples include online retailer Zappos.com and software giant SAP.

The public may not love hearing about more job-loss woes. But people—who include potential customers and future employees—will be much more sympathetic to the transparent company than the one whose layoffs only surface when angry ex-workers vent.

United came up short even on the in-flight video endings.

Both “Mamma Mia!” and “Battlestar Galactica” were cut off tantalizing moments before grand finales on my United Airlines flight this week from Chicago to San Francisco. And that frustration fit a broader pattern for me on United this holiday season. I found the airline—to which I’ve long been loyal—to be wildly inconsistent with its customer service, a sign of less-than-stellar management of the firm’s 52,000 employees.

Yes, the holidays are stressful for airlines and their employees. And they’re made more so when bad weather strikes, as it did in the past week or so in the Midwest. But that doesn’t excuse the way United failed to organize its bag-check lines effectively in San Francisco. Or the way one agent washed her hands of the chaos, saying she was going off duty. Message to passengers: We don’t really care.

During my journey back to San Francisco from Minneapolis on Tuesday, I got a different message: We don’t really care if we give you accurate information. The day started with a canceled 9:30 a.m. flight. If my wife and I had gotten a phone message about the cancellation and the later assigned flights, we might have spent time sledding with my nieces and nephews rather than killing time in the airport. I know United makes such calls. I got a canceled-flight alert on my cell phone on our way out to Minneapolis.

United might have called me Tuesday morning, but I don’t know for sure. No message was left. Then, when we spoke to a ticket agent, she said the cause for the cancellation was weather-related. But later, other United officials said a mechanical problem had led to the delay.

The sense of being lied to grew stronger during the day. First, the Minneapolis ticketing agent indicated that my family of four would be getting first-class seats to Chicago and business-class seats to San Francisco. As it turned out, she may have been fudging or woefully inexact: A United reservations official informed me later that just I had the fancier seats, not my wife and two kids.

In any event, United ignored any and all upgrade promises. No first-class seats for any of us to Chicago. And we barely got seats together in the back of the economy section on the flight to San Francisco. To add insult to injury, a gate agent in Chicago seemed to chide me for expressing frustration over losing any upgraded status.

There were moments of great service scattered throughout my holiday journeys on United: safe, competent piloting, for starters. Plus savvy, empathetic flight attendants.

But United does not get full marks on the subject of cabin-crew staffing. On the Chicago-San Francisco leg, our 747 jet was delayed for probably 30 minutes or more because the airline had to scramble to assemble just a skeleton crew of attendants. And the notion that the company was pinching pennies on labor was reinforced when we landed in San Francisco. Even though the plane was late and some passengers had tight connections, the jetway operation crew was missing in action, leading to another delay.

(I’m not sure if United hires jetway operators. But even if it doesn’t, it reflects poorly on United managers that they didn’t marshal one in time to meet our plane.)

I’ve flown United for years as my primary airline. I’ve stuck with them partly because I am sympathetic to the employee-ownership model they’ve tried. And United just announced a smart-sounding program that lets employees earn up to an additional $1,200 yearly for on-time performance.

But United clearly has something wrong in its culture. A recent federal report found it to rank 17th out of 19 airlines in terms of complaints per 100,000 enplanements during October. And this holiday season made me question if I should continue giving United the gift of my business, and wonder why the airline doesn’t seem to engender the same level of employee enthusiasm and service as other organizations inside and outside the airline industry.

The bungling was summed up for me by the way United botched the in-flight entertainment on our flight home. Just as a struggle between Cylons and humans was about to come to a head in “Battlestar Galactica,” the airline switched over to “Mamma Mia!”

A fine movie, but the crew didn’t time it right, either. Right before Meryl Streep, Pierce Brosnan and others were about to sing another ABBA song during the film’s credits, the entertainment stopped. We were descending into San Francisco.

Maybe there a silver lining there. United chopped off the tune “Waterloo.” When it comes to people management and service, maybe the company isn’t quite ready to surrender.

Last year, members of Congress proposed a bill  called America’s Climate Security Act.

The comprehensive nature of the bill—which aims to head off environmental disaster through measures including a cap-and-trade scheme for greenhouse-gas emissions, mass-transit funding and a sustainable energy program—and its stability-focused title may be a guide for solving the economic crisis at hand.

Could we benefit from an “Economic Climate Security Act” that makes life less stormy for both Wall Street and workers?

The toppling of banks and freezing of credit in the past week has made it clearer than ever that today’s global finance system has become too precarious for its own good. But to get out of trouble, we may want to think about steadying not just the financial and credit markets, but the fortunes of workers as well.

A few years ago, any talk of reining in innovation or market freedoms might have been met with uniform ridicule as commerce-killing and communistic. But the financial meltdown of the past year or so has turned even the free-marketeers in the Bush administration into government activists. And months before Lehman Brothers, Merrill Lynch and Washington Mutual fell from grace, government finance officials from around the globe were calling for financial-market reform that “enhances stability, whilst retaining efficiency.”

A new era of tighter regulations on financial institutions seems to be on the horizon, with measures that likely will seek to curtail excessive risk-taking while preserving the vital activities of lending, borrowing and investing.

But why shouldn’t the reforms extend to American workers as well? They also face growing risk in the form of shaky retirement funds, increased health care costs, layoffs and an unstable standard of living.

Greater economic security for Americans in a global economy is not an easy achievement. There needs to be a vibrant business scene, along with long-term improvements in research and development. It also requires a stronger safety net made up of decent unemployment benefits, smart training programs, health insurance and sound retirement income.

These are tough, potentially expensive problems to tackle. But failing to solve both the labor and the capital sides of the puzzle not only will make life harder for workers, but likely undermine U.S. businesses in the long run.

Evidence is piling up that anxious workers make for less-productive employees. Half of the Americans polled in a recent survey said they are experiencing stress because of financial concerns, and 48 percent said that stress makes it hard for them to perform well on the job.

What’s more, workers double as consumers, who play a key role in generating economic growth. In a bad sign, consumer confidence remains near a 16-year low.

The business community has started taking Americans’ economic insecurity more seriously. And the so-far unsuccessful $700 billion bailout package includes some assistance to homeowners facing foreclosure. But the financial predicament of recent days is a perfect opportunity to consider a more comprehensive measure, one that at the very least would shore up America’s skimpy safety net.

We certainly shouldn’t eliminate individual accountability, risk or market freedoms. But to create an economy of shared, sustainable prosperity, it seems clear that both Wall Street and the workers who live off Main Street need more stability.

Isn’t it time for economic climate security?