Employee Downsizing

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Lessons from the 'Downsizing Best Practices' Companies Advance planning for downsizing also contributed to the success of a downsizing exercise. Many successful organizations planned in advance for the downsizing exercise, clearly defining every aspect of the process. Best practice companies involved employee union representatives in planning. These companies felt it was necessary to involve labor representatives in the planning process to prevent and resolve conflicts during downsizing. According to a survey report, information that was not required by companies for their normal day-to-day operations, became critical when downsizing. This information had to be acquired from internal as well as external sources (the HR department was responsible for providing it). From external sources, downsizing companies needed to gather information regarding successful downsizing processes of other organizations and various opportunities available for employees outside the organization.

And from internal sources, such companies need to gather demographic data (such as rank, pay grade, years of service, age, gender and retirement eligibility) on the entire workforce. In addition, they required information regarding number of employees that were normally expected to resign or be terminated, the number of employees eligible for early retirement, and the impact of downsizing on women, minorities, disabled employees and old employees. The best practice organizations gathered information useful for effective downsizing from all possible sources. Some organizations developed an inventory of employee skills to help management take informed decisions during downsizing, restructuring or staffing. Many best practice organizations developed HR information systems that saved management’s time during downsizing or major restructuring by giving ready access to employee information. The major steps in the downsizing process included adopting an appropriate method of downsizing, training managers about their role in downsizing, offering career transition assistance to downsized employees, and providing support to survivors. The various techniques of downsizing adopted by organizations included attrition, voluntary retirement, leave without pay or involuntary separation (layoffs). According to many organizations, a successful downsizing process required the simultaneous use of different downsizing techniques. Many companies offered assistance to downsized employees and survivors, to help them cope with their situation.

Some techniques considered by organizations in lieu of downsizing included overtime restrictions, union contract changes, cuts in pay, furloughs, shortened workweeks, and job sharing. All these approaches were a part of the 'shared pain' approach of employees, who preferred to share the pain of their co-workers rather than see them be laid-off. Training provided to managers to help them play their role effectively in the downsizing process mainly included formal classroom training and written guidance (on issues that managers were expected to deal with, when downsizing). The primary focus of these training sessions was on dealing with violence in the workplace during downsizing. According to best practice companies, periodic review of the implementation process and immediate identification and rectification of any deviations from the plan minimized the adverse effects of the downsizing process. In some organizations, the progress was reviewed quarterly and was published in order to help every manager monitor reductions by different categories. These categories could be department, occupational group (clerical, administrative, secretarial, general labor), reason (early retirement, leave without pay, attrition), employment equity group (women, minorities, disabled class) and region. Senior leaders were provided with key indicators (such as the effect of downsizing on the organizational culture) for their respective divisions. Some organizations tracked the progress and achievement of every division separately and emphasized the application of a different strategy for every department as reaction of employees to downsizing varied considerably from department to department. Though the above measures helped minimize the negative effects of downsizing, industry observers acknowledged the fact that the emotional trauma of the concerned people could never be eliminated. The least the companies could do was to downsize in a manner that did not injure the dignity of the discharged employees or lower the morale of the survivors.

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