RIGHTSIZING, axing jobs, or retrenchment - call it by whatever name, but downsizing is one of the ugly realities of the modern workplace. It is an oft-adopted practice to reduce cost and increase productivity.
However, more often than not, this exercise itself turns into the foundation of the company's ruin.
The work environment becomes averse to risks and functions with low morale. The laid off employees turn hostile and resentful while the survivors feel insecure and demotivated. It proves to be the final nail in the coffin of a company that is already on the downhill path.
For example, Scott Paper laid off 10,500 employees, causing a dramatic decrease in profitability, until competitor Kimberly-Clark eventually bought them out.
However, when Xerox Corporation cut its workforce, it turned more productive and customeroriented, being thereafter able to bring new products to the market more quickly.
Well, the difference lies in the approach and planning. The authorities have to manoeuvre the pitfalls delicately for a win-win situation. Using these thumb rules can help you to emerge as a winner.
The crucial `Why'
Determine the whys and wherefores of the need. What has triggered it? Is it fuelled by falling profits or a surfeit of employees? Base it on sound business reasons; let it not be driven by panic. Have a clear and well-defined vision of what you wish to accomplish, it may otherwise lead to a second and third round of cuts that will further widen the productivity gap.
Whose heads will roll?
If the layoff is based on head count or period of employment, you will end up throwing away valuable talent and possibly invite litigation as well.
Decide what the post-layoff future will be and what talent is requisite to achieve future goals. Choose whom to discharge based on redistribution of work to achieve organisational efficiency and a positive outcome.
A decent farewell
Try to downsize ethically with a humanitarian approach and an employee-centric strategy. After all, how you deal with laid off employees is how the remaining employees assume they will be treated.
Managers prefer to keep news of the downsizing quiet until actual implementation to avoid paranoia. However, giving advance notice could help forewarn and prepare employees for the ordeal ahead, and let them plan their future.
Maintain visibility and try to interact with the employees. Be available to answer their questions.
Making false promises will aggravate the situation. Endeavour to offer general but accurate explanations for the layoff and emphasise its necessity. Empathise with the people that are losing their jobs, treat them with respect and value their contribution. Let them express their pain and anger without trying to judge.
You can also offer severance pay and help them in finding another job.
As John Challenger, CEO of Challenger, Gray, and Christmas says, `Management cannot hide under a rock.
They have to rally the troops, tell the truth and be very open about what's going on.' The employees have done a lot of good work; they warrant a dignified exit at the least!
What about the survivors?
An American Management Association survey states that, of the companies that downsized, operating profits increased in only 44 per cent and productivity went up in only 31 per cent, whereas employee morale declined in 77 per cent.
The fear of possible termination will create apprehension in the remaining employees and take its toll on their effectiveness. The management has to tread on eggshells if it wishes to retain valued and high-performing staff members that are not part of the retrenchment. Ease the transition and help them overcome the loss of their co-workers.
Give them adequate space to discuss as well as accept the unsettling event. Get their morale back on track by inspiring confidence, rebuilding self-esteem and showcasing your reliability.
It will help them to accept downsizing as an inevitable part of business survival and they will continue to innovate and give their best performance.
After all, companies like Charles Schwab, Compaq, Cisco Systems, Accenture and Motorola succeeded because they adopted responsible downsizing strategies, took active steps to manage the sentiments of the survivors and generated goodwill among employees who left.
Downsizing can either be a stumbling block or a stepping-stone in your path. The outcome lies in your hands. Step up to the challenge to soar to new heights of accomplishment!
However, more often than not, this exercise itself turns into the foundation of the company's ruin.
The work environment becomes averse to risks and functions with low morale. The laid off employees turn hostile and resentful while the survivors feel insecure and demotivated. It proves to be the final nail in the coffin of a company that is already on the downhill path.
For example, Scott Paper laid off 10,500 employees, causing a dramatic decrease in profitability, until competitor Kimberly-Clark eventually bought them out.
However, when Xerox Corporation cut its workforce, it turned more productive and customeroriented, being thereafter able to bring new products to the market more quickly.
Well, the difference lies in the approach and planning. The authorities have to manoeuvre the pitfalls delicately for a win-win situation. Using these thumb rules can help you to emerge as a winner.
The crucial `Why'
Determine the whys and wherefores of the need. What has triggered it? Is it fuelled by falling profits or a surfeit of employees? Base it on sound business reasons; let it not be driven by panic. Have a clear and well-defined vision of what you wish to accomplish, it may otherwise lead to a second and third round of cuts that will further widen the productivity gap.
Whose heads will roll?
If the layoff is based on head count or period of employment, you will end up throwing away valuable talent and possibly invite litigation as well.
Decide what the post-layoff future will be and what talent is requisite to achieve future goals. Choose whom to discharge based on redistribution of work to achieve organisational efficiency and a positive outcome.
A decent farewell
Try to downsize ethically with a humanitarian approach and an employee-centric strategy. After all, how you deal with laid off employees is how the remaining employees assume they will be treated.
Managers prefer to keep news of the downsizing quiet until actual implementation to avoid paranoia. However, giving advance notice could help forewarn and prepare employees for the ordeal ahead, and let them plan their future.
Maintain visibility and try to interact with the employees. Be available to answer their questions.
Making false promises will aggravate the situation. Endeavour to offer general but accurate explanations for the layoff and emphasise its necessity. Empathise with the people that are losing their jobs, treat them with respect and value their contribution. Let them express their pain and anger without trying to judge.
You can also offer severance pay and help them in finding another job.
As John Challenger, CEO of Challenger, Gray, and Christmas says, `Management cannot hide under a rock.
They have to rally the troops, tell the truth and be very open about what's going on.' The employees have done a lot of good work; they warrant a dignified exit at the least!
What about the survivors?
An American Management Association survey states that, of the companies that downsized, operating profits increased in only 44 per cent and productivity went up in only 31 per cent, whereas employee morale declined in 77 per cent.
The fear of possible termination will create apprehension in the remaining employees and take its toll on their effectiveness. The management has to tread on eggshells if it wishes to retain valued and high-performing staff members that are not part of the retrenchment. Ease the transition and help them overcome the loss of their co-workers.
Give them adequate space to discuss as well as accept the unsettling event. Get their morale back on track by inspiring confidence, rebuilding self-esteem and showcasing your reliability.
It will help them to accept downsizing as an inevitable part of business survival and they will continue to innovate and give their best performance.
After all, companies like Charles Schwab, Compaq, Cisco Systems, Accenture and Motorola succeeded because they adopted responsible downsizing strategies, took active steps to manage the sentiments of the survivors and generated goodwill among employees who left.
Downsizing can either be a stumbling block or a stepping-stone in your path. The outcome lies in your hands. Step up to the challenge to soar to new heights of accomplishment!
PAYAL AGARWAL
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