Right way to downsize

Hey there, time traveller!
This article was published 07/11/2015 (3805 days ago), so information in it may no longer be current.

Downsizings, rightsizing, re-sizing, reorganizing, re-engineering, restructuring — what a grand vocabulary we’ve developed for when we struggle to meet current organizational and market challenges.

Change results not only in layoffs, but also often involves restructured or cancelled services, facilities and programs, consolidated departments, closed regional offices and outsourcing, selling non-core businesses and/or merging with another company, resulting in the disappearance of a well-known name.

Sometimes, entire industries are changing at the same time because of local and market trends. In fact, it is interesting, yet disconcerting, to see the trend toward change sweep the country, sometimes like a tsunami wave. Change in Canada’s oilpatch is a good example as we see more and more former Manitobans arriving home after getting laid off. Yet, at the same time, job loss hits all types of professions, not just blue-collar jobs.

Sometimes, however, restructuring will occur when organizations are doing well. It is considered a means to maximize efficiency and cut corporate bureaucracy and hierarchy in order to reduce costs.

It’s amazing that over time there can be so much “job creep” within an organization that employees are not doing what they were originally hired to do and/or continue to do something that is no longer necessary or beneficial to the organization. Some have instituted technology solutions, but this has been accompanied by poor training, and so the old ways linger and efficiency has become a fantasy.

Downsizing of course, has a downside. In particular, if not planned and carried out wisely and effectively, an organization can lose the highly skilled technical knowledge it desperately needs to survive. In that case, you will often find former employees hired back on contract.

On the other hand, when jobs are not restructured properly and tasks eliminated, the result is that one employee will end up doing the tasks of three employees. Anger, burnout and turnover often result. Another strategy is to reduce bureaucracy by increasing the span of control for management sometimes causing them to oversee hundreds of people, hundreds of kilometres apart. Frankly, this doesn’t work for long, either.

The challenge with downsizing is that it is often enacted as a quick fix and/or a last-minute strategy when crisis has hit and change is imminent. Thus, instead of an increase in profitability and reduced costs, the downsizing brings about low employee morale, loss of productivity, reduced customer service and a rise in both employee and customer complaints.

The other challenge of downsizing is the importance of letting employees go in a dignified manner. This means treating departing employees fairly and with consideration for their tenure, their ability to get another job and their emotional response. It has become common practice to offer and pay for employee career counselling services to help laid-off employees regain employment. The benefit of this type of service is that it mitigates individual anger and helps employees overcome their emotions and get on with life. While it can be costly, the overall benefit outweighs any negatives, especially where public relations is concerned.

However, let’s go back to decision making, that all-important process of selecting those employees to be laid off and/or which departments, services, offices and facilities need to close. These decisions and processes need to be just as rigorous as any hiring techniques, because all in all, the manager’s job is to ensure there are sufficient skills, competencies, systems and processes to get the job done. The following guidelines will assist you in this task:

Recognize the stresses — By the time an organization determines there is a need for restructuring of some sort, there is usually a good deal of accompanying stress. Identify and recognize both the organizational as well as personal stress and be cognizant of the impact it might be having on the urgency of your decision making. Identify the time pressure and its reality. Determine a specific time frame and continually review your status with this in mind.

Align strategy to purpose — No matter what, downsizing impacts people and work processes and so must be carefully evaluated and planned. If you are looking simply at workforce-reduction strategies, you can consider voluntary early retirement, buyouts, transfers or layoffs. If you need to eliminate work, then implement work redesign that might result in merged departments, redesigned jobs and the elimination of layers of hierarchy. If, on the other hand, you need to completely change the culture of an organization, you need to implement an employee-engagement strategy that can result in innovative, bottom-up changes. No matter which strategy you choose, it is important to engage in a thorough analysis of the organization and a systematic analysis of the pros/cons of each.

Project timing — There is considerable controversy regarding the “how to” of eliminating employees once a decision is made. Some favour a more gradual approach, while others prefer a quick incisive hit so employees aren’t waiting and worrying about their jobs status. Keep in mind that low morale can pull productivity down very quickly. My experience suggests that gradual layoff is not only more difficult, but also leads to productivity and morale issues.

Communicate, communicate, communicate — Good communication is extremely important, both in the planning and implementation of employee layoffs. Prepare managers by giving them a question-and-answer sheet that ensures all communication is consistent. Address all questions raised by staff and communicate the answers to everyone. Hold face-to-face meetings, one-on-one or small group meetings, use your intranet and company newsletter. Send company emails and allow for the submission of questions; broadcast the answers to everyone. Prepare a press release as required.

Look after departing employees — Part of the next task is to develop a plan for those who are leaving the organization. Career transition services are typically offered to displaced employees in order to help them find new work. This can be contracted by an external vendor and delivered in either group or individual packages. Recent studies have shown that individuals who receive this service acquire a new job faster than others.

Focus on retention — When downsizing and/or instability occur, everyone goes into career-survival mode, which in turn causes some individuals to start exploring the market and preparing to leave. Special attention must be given to these employees so their key skills are retained and put to use in your company. Meet as many people as you can to give them reassurances and opportunities going forward, as they are important to future stability.

Downsizings, rightsizing, re-sizing, reorganizing, re-engineering, and/or restructuring — it doesn’t matter what you call it — the phenomenon is here to stay. However, the key to success is careful analysis, planning and execution.

 

Barbara J. Bowes, FCHRP, CMC, CCP, M.Ed is president of Legacy Bowes Group. She is an author of six books, a professional speaker and a career-management specialist. She can be reached at barb@legacybowes.com.