The Manager's Pocket Guide to Downsizing with Confidence

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Downsizings dont have to leave the exiting person devastated, the remaining people angry, the decision-makers stressed or the company open to litigation. With the Managers Pocket Guide to Downsizing with Confidence, you have a practical guide to planning and conducting a downsizing the right way so all the people involved come out ahead. Get straightforward answers to the 12 most often asked questions about downsizing: Why should we worry?; What are our real needs?; How much planning time do we really need?; How do we select who goes?; What can we do to show that weve been fair?; How and what do we tell the people who will exist?; How do we tell the people who will remain?; Do we do it all at once or in phases?; What about the media?; Is career transition assistance really necessary?; What if we need some of these people in nine months?; Now what? If youre a leader involved in any way with a downsizing whether 10 or 1,000 people are involved this book will provide invaluable advice. The recommendations are based on the authors 20 years of research and experience designing, reviewing plans for and coordinating large and small downsizings.

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Why should we worry?

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Litigation and Effects on

Exiting Employees

It’s pretty easy to brush a downsizing off as

“just a business decision—nothing personal.”

But if you’ve ever been “downsized,” you know it can be one of the most personal things an employee ever goes through. It can impact a person’s finances, their sense of self, their relationships with family and friends, and much more. To those directly affected, it is indeed very personal!

Our own research suggests that how a downsizing is conducted can have a tremendous impact on the person who must exit. Done well, with real respect for exiting employees, people leave with positive energy to devote to their job search, strong self-esteem, a sense of resilience, and a higher regard for the organization. Typically their job search time is shorter and less stressful. But when a downsizing is done poorly, people leave angry, confused, even shamed. Self-esteem can crumble, trust is eroded, and energy is often directed to “hitting back” at the organization or decision makers rather than toward moving forward in their careers. Oftentimes, people attempt to hit back by contacting a lawyer.

 

What are our real needs?

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What are our real needs?

You can’t adequately plan a downsizing until you know what your real needs include. The way you determine your real needs is to examine your strategic plan and the resources called for.

If you don’t, you may be like other organizations that downsized in one department while hiring in another at the same time. Or they downsized only to have to rehire six months later because they could no longer meet performance demands. That’s a tremendous waste of financial resources, time, and energy.

Besides, it makes management look like they don’t know what they’re doing.

Research suggests that many, if not most, downsizings fail to achieve the goals toward which the downsizing was directed. Often this failure can be avoided by planning more thoughtfully, carefully identifying downsizing goals, and accurately assessing what is needed to achieve your goals.

Examine Your Strategic and Business Plans

If you have not already done so, gather your best minds together and take a hard, realistic look

 

How much planning timedo we really need?

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How much planning time do we really need?

The amount of time you take from the moment the decision to downsize is made and when the downsizing actually takes place depends on how hard you work and how smart you work. In most instances, it should take only a few weeks, not months.

If you take months to plan the downsizing, your leaders will become stressed. The downsizing will be their major concern. Other, sometimes more strategic, issues will get overlooked or not given enough time or energy. The whole organization will falter. You increase the risk that downsizing plans will get leaked to the workforce (or the press) before you want that to happen.

So how long does it take?

It takes long enough to:

• Evaluate your business plan and identify the skills/positions you’ll need.

• Identify the positions that are redundant or that for some other reason you can eliminate.

• Complete a discrimination analysis of the workforce before the downsizing and after the downsizing to determine if any bias appears

 

How do we select who goes?

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How do we select who goes?

Selecting which jobs to eliminate is a fairly straightforward decision. You take a look at your business needs and then identify the number and kinds of jobs it will take to turn the plan into actuality. But selecting which jobs stay or go is different than selecting what people stay or go. What do you do if you need only 5 night supervisors and you have 8? Or you need only 15 IT people and you have 21?

How you select who goes and who stays is a significant effort. Here are five guidelines:

1. Deal with performance issues early.

If you’re considering downsizing to resolve performance issues, forget it. A downsizing is not the time to deal with people whose performance is below minimum standards.

The time to deal with those folks was before, as part of a continuous performance improvement strategy.

A downsizing is completed to make a correction in the number of human resources that a company has in order to reach organizational goals. It’s not a way to “safely” eliminate marginal employees.

 

What can we do to showthat we’ve been fair?

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Ooops! The above illustration suggests you may have done some subtle discrimination. Going from 8% to 7% in the over 60 group is probably okay. But going from 24% to only 12% in the

50–59 age bracket really suggests that you’ve targeted, intentionally or not, people in their

50s. It would be difficult to defend your actions should all those over 50 decide to pursue litigation. And it would be easy for them to say you got rid of the 50-somethings just so that you could keep the 20-somethings.

In this example, the decision makers must go back and review their criteria for person elimination. And then they need to reconfigure who goes and who stays. They must continue with the revising until the analysis shows there is no appearance of discrimination taking place.

You can do the same kind of analysis for sex, ethnic origin, educational level, years with the organization, salary levels, and whatever else you might want to consider. We’d at least recommend you do it for sex and ethnic origin.

 

How—and what—do we tellthe people who will exit?

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How—and what—do we tell the people who will exit?

By now, several critical decisions have been made. You’re confident that the downsizing is the best choice to meet business needs, and you know the resources it’s going to take to achieve your goals. You’re confident that your criteria for selection are fair and unbiased. You know who will be leaving and when. And now you wonder,

“How do we tell the people who will exit?”

You tell the people with care and control, with class, and with empathy. There have been lots of horror stories over the years about how not to do it. One bank manager walked into her office one morning and found an envelope on her desk with her name written on it. She opened it and read, “Dear Terminated Employee.” That’s not the way to do it.

You also don’t do it the way some of the dotcoms downsized. You don’t just close down people’s computers and wait for them to realize their screen is dead and they no longer have access to do their work. Nor should you send an employee an e-mail informing them that their job has been eliminated and they have

 

How do we tell the peoplewho will remain?

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How do we tell the people who will remain?

Of all the downsizings in which WorkLife Design has participated, one of the very first set the standard for telling remaining employees. You tell them direct, in person, and as quickly as possible.

In one insurance company of about 750 employees, the downsizing was conducted in one day.

People whose jobs were eliminated were told by departments. As soon as everyone was told in one department, the team moved on to the next department. It worked in that culture.

After exiting people had been told, the CEO returned to each department. He brought with him people to answer department phones and to handle other immediate work needs. Then he gathered the remaining employees around him. He stood in the middle and briefly told the people what had happened, and why. He talked about the severance policy that was in place, and the kinds of assistance exiting employees were receiving. Then he asked for questions.

 

Do we do it all at onceor in phases?

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Do we do it all at once or in phases?

That’s a tough question, because there are advantages and disadvantages to either strategy.

What is essential is to remember care and control. Do all you can to show the people—both those exiting and those remaining—that you care about them. And do all you can to stay in control of the process.

If you have more than one location, then a phased downsizing might be a viable option. Or if you have a large downsizing, informing people by departments might be an option. Example:

You inform IT today, R & D tomorrow, and so on. Here are advantages and disadvantages.

Advantages of a Phased Downsizing

In a phased downsizing, you implement the downsizing by location, or department, or level, or whatever makes sense to you. Here are several advantages:

1. With a phased downsizing, fewer employees are involved at one time. You typically notify one department or location at a time, which means there are fewer people immediately impacted. In most situations, there is less

 

What about the media?

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What about the media?

Will you have to deal with the media? Probably.

Is it important how you deal with the media?

You better believe it!

Here’s an example of why it’s important how you deal with the media. Two organizations in the same city downsized within three weeks of each other. The first organization, with several thousand employees, downsized by only ten managers—not a big number. But it made the newspaper’s front page below the fold the morning after the downsizing took place. And two days later, there was another major article on the front page of the business section.

The articles reported all the details of the downsizing and described the organization’s problems, how the people were told (in a group meeting), and that no assistance was provided to the terminated employees. The articles also reported how difficult it was to get information from the organization’s leaders. Those leaders mistakenly did not make themselves available until after the first article appeared.

 

Is career transition assistancereally necessary?

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The Deems Job Loss

Reaction CycleTM

In an earlier career, Richard Deems spent a good deal of time coaching people who had terminal illness or who had watched a loved one die. He became very familiar with the death and dying reactions of people, outlined and discussed in detail by Elisabeth Kübler-Ross. When Richard went through his own job loss, he tried to apply the several-stage Kübler-Ross paradigm to his own situation. It didn’t always match.

That began many years of researching what happens to people who have lost their jobs. As he talked with others, and kept in mind his own experience of job loss, Richard began to identify a six-stage process. His research indicates that everyone who loses a job goes through all the stages. Some take longer than others. Most get to Acceptance and Affirmation within a few weeks. A very few never move out of Shock and

Disbelief or Anger and Resentment.

 

What if we need some ofthese people in nine months?

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What if we need some of these people in nine months?

The crunch for good people will increase in the coming years. Why? There simply aren’t enough good people to go around. If you read the earlier section on Future Recruiting Status

(see Question 1), then you understand why you need to be careful about how you do a downsizing. After all, you may well need some of those people down the road.

If you didn’t read Future Recruiting Status in the Question 1 discussion, then turn to it now and read it. Then return to Question 11.

Downsizings are temporary actions. They are conducted to reduce costs so that your organization can continue to be healthy. If you lead well, then you may need some of these people you’re letting go at some point in the future—maybe in six months, nine months, or two years. But unless you really messed it up, your drive to make the organization successful will put you back in the growth mode. Then you’ll be competing for an increasingly shrinking pool of real talent.

 

Now what?

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Now what?

You have read this downsizing book, you’ve considered all the issues, and you’ve developed your plan. You’ve reviewed it, slept on it, noodled it in the middle of the night, and even spent those extra dollars to have someone go over your plan with you to identify any weak spots. And you made the corrections.

Now what?

Do it!

If you’re convinced your plan is thorough, then the next action is to schedule the downsizing.

The longer you wait, the more difficult it will be for you to carry out those plans with the energy you will need. Look at the calendar and identify the day when you can do your downsizing. And then plan on getting extra sleep, more exercise, good nutrition, and less alcohol and caffeine between now and then.

You’ll need all the energy you can get to implement a downsizing that doesn’t leave the exiting employees devastated, the remaining employees angry, the decision makers stressed, and the company open to litigation or lost business.

 

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