Downsizing: Business Process or Business Disruption?
Nearly half of all reductions in force fail to meet their financial objectives,
according to American Management Association.
McKinsey & Company found that productivity typically
decreases by 45% during a major transition.
Harvard Business Review reports that voluntary
turnover increased by an average of 31% following even a small lay-off.
Bill Gates:
"Take my 20 best people and, virtually overnight,
Microsoft becomes a mediocre company.”
Despite the best of intentions, episodic downsizings
have a poor track record of achieving their objectives.
The event itself is often so disruptive that productivity significantly
decreases.
Unexpected turnover frequently means
that organizations lose the very talent pool
they had targeted for retention.
This “perfect storm” of diminished productivity
and talent loss can damage an organization
beyond their ability to achieve performance targets.
7 Practices for Implementing Downsizings
Without Everything Grinding to a Halt
From our 40-year history,
and engagements with hundreds of customers,
we believe that there are a number of best practices that,
if followed, will enable reductions with
minimum disrupt-tion and maximum result.
These are practices that position organizations
to approach a downsizing as an ongoing business process,
rather than a disruptive episode or event.
Each best practice includes common mistakes
that organizations make and the unintended
consequences that flow from those missteps.
1. Stress Strategic Focus; Tactical Implementation
Common Mistakes
Too secretive, too selective
Disconnect: desired future vs. immediate actions
Over-emphasize one at the expense of the other
(tactical or strategic)
The Unintended Consequences
Lapses in planning betray objectives and jeopardize business results
Damage brand, decrease resiliency
2. Select and Involve an Experienced Resource
Common Mistakes
Too insular in planning
Apply vendor/project management, rather than collaborating
with experts in organizational change
Miss opportunities to benchmark, integrate ideas
The Unintended Consequences
Increase exposure to failure; poor results
Unnecessary energy “reinventing the wheel”
Extremely difficult to reverse plans once in progress
3. Project Your Strategy in the Selection Process
Common Mistakes
"Last in, first out” is easy; rarely strategic
Neglect linking selection criteria to future needs
Assessors and decision makers too far removed from impacted group
The Unintended Consequences
Unwanted turnover
Decreased productivity
Ask for a copy of DBM's "Checklist for Organizational Readiness"
to assess your organization's current state of readiness to
plan and implement reductions-in-force and
avoid the affects of unintended consequences.
4. Train and Support Notification Teams
Common Mistakes
Misjudge competence and confidence of notifiers
Under-estimate difficulty and variability of termination conversations
Neglect training investment
The Unintended Consequences
Damaging messages delivered with the company name behind them
Erodes employer brand, creates negative exposure
Jeopardizes results
5. Communicate Frequently, Purposefully, Consistently
Common Mistakes
Overlook some stakeholders; external groups
Internal resources misaligned on message
Underestimate most trusted communication source
Falsely rely on one major communication
The Unintended Consequences
Garbled messages create confusion, stall resiliency
Employees, vendors, customers, investors are unclear of company’s status, future; act wary
People create and act on their own message
6. Preserve Dignity in Notification and Separation Practices
Common Mistakes
Choose strict measures to guard against a small minority of reactions
Disregard impact on retained employees
Incorrectly correlate tough decisions with tough messages
The Unintended Consequences
Tarnished employer brand; difficulty attracting and retaining talent
Jeopardizes relationships with external groups, including customers
7. Attend to the Retained Employees
Common Mistakes
Wrongly assume that employees consider themselves fortunate
and will do whatever it takes to succeed
Fail to realize the impact when jobs go away at
a greater rate than the work does
The Unintended Consequences
Performance and productivity suffer
Unwanted turnover increases
While these practices may be straight-forward
and time-tested, in our experience,
there are details behind each that if not properly addressed,
can derail a downsizing and jeopardize objectives.
We have found that organizations that attend to the details
are more likely to accomplish their objectives,
enhance employer brand and build a change-hardy organization.
About DBM
DBM (www.dbm.com) is a leading global outplacement, coaching,
and career management firm providing services to private
and public companies, not-for-profits and governments.
When companies make decisions that impact careers,
DBM provides services to support the organization,
the employees who stay and the employees
who need to leave. DBM also helps organizations and
leaders improve their performance through coaching.
DBM has a 40-year legacy of creating innovative
best practice solutions, most of which have become industry standards.
DBM has 200 locations around the globe
serving 85 countries and has partnered with
70 percent of the Fortune 500 and 80 percent of the Global 500 companies.
Worldwide Headquarters
DBM
750 Third Avenue, 28th Floor
New York, NY 10017
Tel: 212-692-7700
Fax: 212-297-0426
