Employee Downsizing

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Lessons from the 'Downsizing Best Practices' Companies In the late 1990s, the US government conducted a study on the downsizing practices of firms (including major companies in the country). The study provided many interesting insights into the practice and the associated problems. It was found that the formulation and communication of a proper planning and downsizing strategy, the support of senior leaders, incentive and compensation planning and effective monitoring systems were the key factors for successful downsizing. In many organizations where downsizing was successfully implemented and yielded positive results, it was found that senior leaders had been actively involved in the downsizing process. Though the downsizing methods used varied from organization to organization, the active involvement of senior employees helped achieve downsizing goals and objectives with little loss in quality or quantity of service.

The presence and accessibility of senior leaders had a positive impact on employees - those who were downsized as well as the survivors. According to a best practice company source, "Managers at all levels need to be held accountable for - and need to be committed to - managing their surplus employees in a humane, objective, and appropriate manner. While HR is perceived to have provided outstanding service, it is the managers' behavior that will have the most impact." In many companies, consistent and committed leadership helped employees overcome organizational change caused by downsizing. HR managers in these companies participated actively in the overall downsizing exercise. They developed a employee plan for downsizing, which covered issues such as attrition management and workforce distribution in the organization. The plan also included the identification of skills needed by employees to take new responsibilities and the development of training and reskilling programs for employees. Since it may be necessary to acquire other skills in the future, the plan also addressed the issue of recruitment planning.

Communication was found to be a primary success factor of effective downsizing programs. According to a survey conducted in major US companies, 79% of the respondents revealed that they mostly used letters and memorandums from senior managers to communicate information regarding restructuring or downsizing to employees. However, only 29% of the respondents agreed that this type of communication was effective. The survey report suggested that face-to-face communication (such as briefings by managers and small group meetings) was a more appropriate technique for dealing with a subject as traumatic (to employees) as downsizing. According to best practice companies, employees expected senior leaders to communicate openly and honestly about the circumstances the company was facing (which led to downsizing). These companies also achieved a proper balance between formal and informal forms of communication. A few common methods of communication adopted by these companies included small meetings, face to face interaction, one-on-one discussion, breakfast gatherings, all staff meetings, video conferencing and informal employee dialogue sessions, use of newsletters, videos, telephone hotlines, fax, memoranda, e-mail and bulletin boards; and brochures and guides to educate employees about the downsizing process, employee rights and tips for surviving the situation. Many organizations encouraged employees to voice their ideas, concerns or suggestions regarding the downsizing process. According to many best practice organizations, employee inputs contributed considerably to the success of their downsizing activities as they frequently gave valuable ideas regarding the restructuring, increase in production, and assistance required by employees during downsizing.

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