Currently viewing the tag: "Downsizing"

Sequestration’s here, cuts and changes are in the winds of Washington and the surrounding country. Will it cause firms, contractors, organizations, programs and agencies to downsize, reorganize, or eliminate positions? No one knows for sure, but it’s hard to imagine that it won’t be likely for some, especially in the DC area.

Are people, firms and agencies worried? “Every government contractor I speak to is putting a contingency plan together,” says Gary Cluff, founder of Project S.A.V.E., a free networking group for area employment professionals and job seekers.

Downsizings happen all the time. I’ve had a career working with firms and organizations that merged, dissolved, reduced, reorganized or just developed new products or services that needed a different talent mix or skill set than the one they had. I’ve seen it done well, and I’ve seen – and heard about – it being done poorly. Unfortunately, it’s too often done poorly, especially if we look at longer-term effects.

A 2008 article in The Economist that discussed “Idea: Downsizing,” referenced an American Management Association survey of 1000 companies on the effects of downsizing. “Only 48% of those that had cut jobs… said their profits went up afterwards,” the survey reported. The Economist’s “Idea: Downsizing,” article also cited an earlier special report in Business Week on the changing structure of the workplace that warned, “the great risk of downsizing was that it simply resulted in fewer people working harder. It did little to change the way we work….”

But that doesn’t have to be. There are firms, organizations and agencies that reorganize, refocus and recommit through a reduction-in-force to the benefit of its employees and stakeholders. How do they do it?

ASK QUESTIONS

Management guru Peter Drucker has written numerous articles about downsizing and reductions-in-force including a classic titled “Really Reinventing Government” in The Atlantic. “The way to get control of costs,” Drucker stated, “is not to start by reducing expenditures but to identify the activities that are productive, that should be strengthened, promoted and expanded. Firms, agencies and programs would be wise to ask these questions:

1. “What is (our) mission?”
2. “Is it still the right mission?”
3. “Is is it still worth doing?”
4. “If we were not already doing this, would we now go into it?”

“The overall answer (to the last question),” Drucker added, “…is almost never ‘This is fine as it stands; let’s keep on.’ But in some – indeed a good many – areas the answer is, ‘Yes, we would go into it again, but with some changes. We have learned a few things.’”

These thoughts are international, not just about us in America. In a more recent report from the Geneva chapter of the European Baha’I Business Forum (EBBF) titled “What is the ‘Responsible Way’ to Restructure an Organization?” other useful questions for leaders, managers and employees of organizations going through restructuring were suggested including:

5. “What are the most effective and productive things we do now, and how can we enhance and expand those things?”
6. “Does our basic business/mission need to be redefined?”
7. “Can we enhance effectiveness through mergers, joint ventures or alliances?”
8. “Should we divert ourselves completely of certain businesses, programs or activities?”
9. “Is there a need to rebalance the portfolio of our businesses or services?”
10. “Should the organization divest or outsource certain businesses or activities?”
11. “Have we talked to and listened to the employees who do the work, who are in direct contact with the clients/customers we serve?”

A question we at Morris Associates Inc. always ask top executives who are planning to reduce staff is:

12. “What do you want the organization to look like, what do you want it to do and who will you need to do it AFTER notices are given and the cuts have been made?”

A result of this organizational analysis and soul-searching can be a list, says Drucker, “with activities and programs that should be strengthened at the top, ones that should be abolished at the bottom and between them activities that need to be refocused….”

DOs AND DON’Ts FOR DOWNSIZING

A well-managed downsizing/reduction-in-force is planned, prepared, announced, communicated and implemented so needs of all stake holders are met in a way that the organization can move forward quickly and productively as a good place to work that makes its mission a reality.

Do think of a downsizing as a complex project not just a cost reduction.

Do make a complete checklist of actions to be taken.

Do develop a detailed schedule for notification day: who will give notices to whom, where, and what happens then. Also, how, when, and by whom notification will be given to others in and outside the firm or organization who have a need to know.

Do provide notification meeting briefing for managers and supervisors who have to give notices to employees.

Do treat all employees with respect and dignity. Keep in mind departing employees will communicate with others; you don’t want them bad-mouthing the firm or organization.

Do plan what will be said to remaining employees after notices are given. It is important for management to have a plan for moving forward and communicate it quickly to those left who will carry out the plan.

Do encourage remaining employees to stay in touch with co-workers who were let go and be supportive. Many terminated employees have said that losing their jobs did not hurt as much as being ignored by former friends and workers after notices were given.

***

Don’t cut everything equally. One of the biggest errors firms and organizations make when they need to make cuts is to spread them evenly across all functions and departments thus making downsizing something surgeons warn against: amputation before diagnosis.

Don’t automatically equate “positions eliminated” with “employees terminated.” Many organizations that go through RIFs retain needed workers by reassigning them to unfilled and needed positions, then eliminating their old positions. During the 1990s 3M reassigned 3,500 employees to other jobs rather than make those employees redundant. When Ronald Reagan “reorganized” the Federal government several agencies reduced staffing by more than 100 employees each either without terminating anyone, or with only giving actual notices to a small number.

Don’t wait passively to see how sequestration and economy works out. Smart managers are considering options and outlining contingency plans now.

Don’t use a voluntary a separation program open to all as an alternative to a management-planned reduction-in-force. Some senior executives think a voluntary selection-out process is a more humane way to treat people. It may be for those who take it, but it may not be for those left, or for the good of the organization and the clients and customers it serves. Three examples:

  • A Big-3 automaker offered a voluntary separation program expecting 20,000 would take it and hoping 25,000 would. Actual result: 35,000 took the offer.
  • An international telecommunications firm offered voluntary cuts many of their best and most-needed technical workers took the offer. Since many of them and their experience were virtually irreplaceable, the firm had to hire them back – as consultants, and that was after they had to pay them generous severance packages.
  • An international financial organization offered voluntary separation hoping 300 employees would take it; 500 asked for it, the firm extended it to 400 then had to tell the other 100 they could not get it, thus creating a large group of disgruntled employees.

Keep in mind, when a reduction occurs three groups of employees are affected: Those who go, those who stay and those who have to make the RIF decisions and give the notices. Often the last two groups have more problems and stress that those actually let go. Keep the needs of all three in mind, especially the last two groups since they are the ones who will have to carry on the work of the firm or organizations after notices are given.

To read Morris Associates Inc.‘s Guidelines to Managing a Reduction-in-Force click here.

Consider all three populations involved: those who leave, those who stay, and the managers who have to make the decisions and give the notices. When a reduction or reorganization occurs, a ripple effect can travel through the entire organization. People who leave have needs to be met but so do those who remain, and they are the ones the organization must now rely on to maintain service and productivity.

 

To read more from MORRIS ASSOCIATES INC.‘s most recent newsletter, CAREER MECHANICS (Issue 10.4), click here.

Enter your email in the right column to download this document as a PDF.

MIND FRAME

When a reduction or reorganization occurs, a ripple effect can travel through the entire organization. People who leave have needs to be met but so do those who remain, and they are the ones the organization must now rely on to maintain service and productivity.

Appropriate communication with all concerned is essential. What’s needed is a combination of head-to-head plus heart-to-heart communication.

If you have to terminate someone, your immediate goal should be to cause the least amount of resentment in the employee being terminated and the greatest amount of understanding by those who remain.

A managed downsizing — one that is planned and communicated well — helps those who go and those who stay to transition with dignity and with minimum disruption to their careers and personal well-being. It also helps the organization to move on and reestablish productivity as quickly as possible.

PRE-NOTICE PLANNING

To manage this process, you need to anticipate and plan actions to take before, during and immediately after notification.

To Do:

• Make a complete checklist of actions to be taken.
• Develop a detailed schedule for notification day: who will give notices to whom, where, and what happens then. Also, how, when, and by whom notification will be given to others in and outside the firm or organization who have a need to know.
• Provide notification meeting briefing for managers and supervisors who have to give notices to employees.

NOTIFICATION MEETING GUIDELINES

PRE-EVENT:

PREPARE YOURSELF: Review the outline of your discussion with the employee and get set mentally. Visualize how you want the meeting to occur.

FOUR STAGES OF THE PROCESS:

I. STATE THE FACT OF TERMINATION AND THE REASON FOR IT. GET TO THE POINT. BE DECISIVE, THEN COMPASSIONATE.

SAMPLE SCRIPT:

“Hello , please have a seat. I have some unpleasant news. Due to the market realities of our industry and the needs of our organization, we’ve had to reorganize. Some positions are being eliminated. I’m sorry to say yours is one of those positions.”

II. LET THE OTHER PERSON REACT.
Allow the person a moment to absorb the impact of what you have just said. Listen patiently to hear questions or reactions. If person does not react, go to next step.

III. PRESENT THE SEPARATION LETTER WITH SEVERANCE, BENEFIT, AND OUTPLACEMENT INFORMATION.

Mention effective date of termination, length of severance pay and organization-paid benefits (health and life insurance, accrued vacation, and outplacement assistance).

Suggest who will provide answers to questions regarding termination benefits.

Don’t defend or blame yourself or the organization. Don’t get into a confrontation, debate, or provide detailed explanations; stress the decision is final. Repeat the reason for the reorganization if need be.

Stress the reason for position elimination is reorganization, not the individual’s performance.

IV. CLOSE THE MEETING.

While it is important to convey, “this decision is final,” it is also important to be considerate and supportive and to let the other person maintain dignity. If your firm provides career transition services to employees who are let go, introduce the service firm’s representative at this time.

DO:

• Keep the meeting short and focused (10-15 minutes maximum).
• Emphasize the decision is final.
• Be empathetic, show you care.
• Allow the individual to ask questions, to react to the news you have just given them.
• Encourage individual to call the Morris Associates’ outplacement counselor and take advantage of the job search assistance being made available.

DON’T:

• Don’t say “Good Morning” — it isn’t.
• Don’t take longer than 10 or 15 minutes.
• Don’t be defensive or argumentative.
• Don’t defend or blame yourself or the organization.
• Don’t discuss what is happening with any other employees.
• Don’t discount the employee’s emotions or make them “wrong.”
• Don’t try to lighten the tension with humor.
• Don’t talk about old times or give advice.

FREQUENTLY ASKED QUESTIONS AT NOTIFICATION

Q: Why me? You’re keeping others with less experience.

A: We had to make the decision and all levels of management concurred with this move. The factors considered were strategic need and future workload.

Q: This seems like a clear-cut case of age discrimination to me!

A: As you know, management has a history of a strong EEO stance and is committed to its Affirmative Action program. The factors considered were strategic need and future workload.

Q: I want to talk with (senior executive).

A: Of course you’re free to ask for an appointment to see him/her, but I must tell you that he’s/she’s fully aware of the decision and supports it.

Q: With a company this big, I can’t understand why I can’t be considered for another position in the firm!

A: Before this decision was made, every effort was undertaken to explore all other options here.

Q: What am I going to tell my wife/husband/significant other?

A: Your Morris Associates’ consultant will be able to give you specific help with this matter.

Q: How can you do this to me after X years?

A: This decision was made because of the realities of the market place and the needs of the organization.

Q: You’re not going to get away with this / I’m going to get even with you.

A: I’m sorry you feel that way, but I want to emphasize that we are committed to helping you establish yourself in a new position as quickly as possible. I strongly urge you, regardless of your feelings now, to meet with the Morris Associates’ consultant and begin the work of making a transition to a new position.

Q: Was Jane/John Smith let go?

A: I’m not going to answer any questions about other employees. I know you would want such consideration extended to you.

Q: Will the organization give me a recommendation?

A: (This answer will have been prepared in pre-termination planning.)

GUIDELINES FOR MEETINGS WITH REMAINING
EMPLOYEES AFTER NOTICES ARE GIVEN

PREPARE YOURSELF:

Think through the needs of your group. Review tough questions and prepare logical responses. Visualize how you want the meeting to go.

Conduct the meeting with concern and dignity but without apology for the necessary action.

Have no other agenda for the meeting but to handle the reassurance well.

GIVE INFORMATION:

The same as you told those who received notices — factually and without embellishment.

Review reorganization of functions and new lines of communication within your unit.

ANSWER QUESTIONS AND REASSURE EMPLOYEES:

Outline the changes in the unit that affect everyone. Defer detailed items affecting only individuals for discussion later.

Ask for questions/reactions. Be open and listen. Encourage two-way communication, don’t just present information.

Do not promise that nothing will happen to any of them — none of us can predict the future. Stress that careful planning and review went into the process.

Discuss how to handle incoming calls for individuals no longer employed.

Encourage people to provide leads and referrals for those let go whenever possible. Encourage everyone to move ahead.

WALK AROUND:

For the week or so after notices, be visible and available. Practice “management by walking around.”

SAMPLE PREPARATION CHECKLIST

DATE COMPLETED: _________________________________

__________ Reference policy.
__________ Written reason for reorganization / reduction.
__________ List of key external contacts to be notified.
__________ Severance letters prepared.
__________ Unused vacation calculated.
__________ COBRA forms, explanations.
__________ Loans.
__________ 401K forms.
__________ Pension forms and information.
__________ Phone and name for security.
__________ Phone and name for medical.
__________ Phone and name for benefits.
__________ Printed cards for receptionist(s).
__________ Press release prepared.
__________ Press spokesperson identified.
__________ Petty cash for cab fares.
__________ Decommission access cards.
__________ Secure computer files.
__________ Arrange evening/weekend access to clear work areas & personal items.
__________ Provide boxes/cartons to aid in removal of personal items.
__________ Alternate plan to collect keys, iPad, iPod, iPhone, Blackberry, Laptop, vehicle and cards.
__________ Alternate notification plan for absentees.

SECURITY: ( ) ______________________ NAME: _______________________
MEDICAL: ( ) ______________________ NAME: _______________________
BENEFITS: ( ) ______________________ NAME: _______________________

© 2011 MORRIS • ASSOCIATES INC. ALL RIGHTS RESERVED