Hazara University Haripur Campus

On Downsizing

Subject :

Marketing Managment (2nd semester)

Submitted to: Sir Adil Ibrahim Paracha

Alveena Habib Muhammad Asif Khakan Numan Taj Waqar Khan Sadia Basri Shabana Adil Shah

Acknowledgment

This research project would not have been possible without the support of many people.specialy our teacher Sir.Saqib Awan who was abundantly helpful and offered invaluable assistance, support and guidance. I am almost thankful to all my group members who contribute their time and their utmost dedication in completion of this task. I would have not finished this project without the support of my family who has always been there for me whenever I need them, the encouragement they give to keep me going and their love to empower me that never fails all the time. Thank you. To my brother whose support has always been my source of strength and inspiration. To my friends who helped me in researching on different fields concerning this project. Thank you. I would also like to thanks to my senior Ehtisham Bhai,Bilal bhai and as given me a chance to prove that I can do things on my own. He gave me a lot of positive perspective in life. Who taught me things far more of my understanding. I thank them challenging me to do this project. To you sir, I give you lots of thanks and respect. Thank you. I thank Mr.Abid Zaman who is the Manager of National Bank of Pakistan (Hattar Branch) ring his valuable time and for giving me helpful information to finish this project. Thank you.

By.Muhammad Asif Khakan

Downsizing
Downsizing and layoffs, once phenomena associated mainly with individual company distress or larger economic downturns, have become permanent features of the global business landscape. This entrenchment of job-shedding activity has been driven by a number of factors. These factors include: more rapidly evolving technologies and business cycles, intensified pressure to improve stock performance, and mergers and acquisitions. At the same time, a growing body of evidence has shown that companies often fail to realize anticipated gains from downsizing, and nearly always suffer from substantial hidden costs. Employers therefore have begun to understand that simply reducing headcount may not be a strategy for long-term advantage. (For purposes of this overview, "downsizing" - defined as a net reduction in a company's workforce - also includes "layoffs," which can take place in one part of a company concurrent with hiring in another part of the same company.) Leadership companies recognize the myriad implications of downsizing and take any of a variety of approaches to what has become known as "responsible restructuring." Strategies can include adopting business practices that avoid the need for layoffs, embracing training programs that redeploy "redundant" employees to different jobs within the company, and employing other innovative means to avoid or reduce the need to downsize. When downsizing must occur, leadership companies adopt practices that eliminate or reduce potential problems, including open communications, fair severance benefits, transition services for those being downsized, and adequate attention to "survivors" - the employees left behind to work inside a downsized company. Business Importance Businesses are recognizing that there are hidden and often very significant costs associated with layoffs and downsizing. This is particularly true when job cuts are poorly planned and implemented, a state of affairs common to companies seeking short-term results from downsizing. At the same time, many companies are understanding that significant benefits may be realized through strategies that avoid downsizing and layoffs altogether, or carry out these activities in more strategic - and, ultimately, less-costly - ways. Among the business rationale for responsible downsizing: Traditional downsizing doesn't achieve its goals. A wealth of evidence indicates that the benefits companies frequently hope to realize from downsizing fail to materialize or, if they do, are limited and short-lived. For example: Cost Savings: While downsizing is intended to reduce a company's overhead, the savings frequently are less than expected or, in some cases, nonexistent. Research at the University of Wisconsin at Milwaukee showed that while nearly all Fortune 1000 companies downsized between 1985 and 1990, fewer than half

met their cost-cutting goals. A 1995 study by Watson Wyatt Worldwide found that only 46 percent of companies surveyed met their expense-reduction goals after downsizing, and fewer than 33 percent met their profit objectives; only one in five enhanced shareholder return on investment. Profits and Performance: These, too, are expected to rise following a downsizing, although this often isn't the case. The American Management Association, in its 1998 Staffing and Structure Survey, concluded that firms that showed a workforce decrease in the 1990s are far more likely to report long-term decline in worker quality, product quality, operating profits, and shareholder value than they are to report a long-term improvement. Meanwhile, a 1997 study by business school professors at the University of Colorado at Denver, which analyzed downsizing trends at Standard & Poor's 500 firms over a 12-year period, found that companies that downsize are generally no more profitable than those that do not. Share Price: Downsizing often doesn't pay off in shareholder value, according to several studies. For example, a 1997 Wharton School of Business analysis of 52 studies involving several thousand companies found that corporate restructuring had little if any positive impact on earnings or stock performance. The year Watson Wyatt study mentioned above found that only one in five downsizing companies enhanced shareholder return on investment. The "downstream" costs can be large. Several studies indicate that downsizing can have hidden and very significant costs that emerge over time. Among them: Reduced Productivity: The morale and reduced productivity of employees that survive downsizing - those that represent the future of the company - are frequently a problem. They may be required to take on additional workloads and adapt quickly to new work situations, often in an environment undermined by reduced trust and increased uncertainty. Loss of Key Talent: In a downsizing environment, companies often find that their key employees and top performers depart the company, stripping it of valuable human capital, critical skills, and institutional memory. In some cases, downsizing disrupts or destroys the informal networks of employees that often contribute significantly to company productivity. For example, the Economist magazine in April 1996 reported on an insurance company whose claim settlements rose sharply following staff cuts in its claims department. Further investigation found that a few long-time employees who had lost their jobs had created an informal but effective way to screen claims, which disappeared after the downsizing. Decreased Risk-Taking and Entrepreneurism: A 1995 study by McGill University and the Wharton School of Economics found that "Downsizing seems

to interfere with the web of informal relationships that innovators use to win support and resources for new products, and which helps mesh innovative activities with those of the firm as a whole." Potential legal and administrative costs: Many companies find that the price of downsizing can be high in the costs of legal challenges, disability claims, and other unanticipated costs. For example, a 1997 survey of 300 midsized and large companies by the American Management Association and CIGNA Corp. found that eliminating jobs can lead to an increase in disability claims, both occupational and non-occupational, particularly stress-related claims. The study also found that claims last an average of 25 percent longer than in companies that haven't downsized. A top executive at a large facilities-services firm quoted in Personnel Journal said that 90 percent of the 600 claims, charges, and cases the company had open were filed following a termination. The benefits of responsible restructuring can be substantial. A large body of studies and company experiences provide compelling reasons for companies to seek alternative, more responsible means of managing workforce size and allocation. Among the benefits: A more flexible, performance-oriented workforce. A number of successful companies attribute much of their success to having created a culture in which employees feel valued and empowered. A common element to these companies' cultures is an implicit or explicit company commitment to long-term employment. For example, motorcycle manufacturer Harley Davidson has made it clear to employees that they needn't worry about unemployment if they come up with an efficiency measure that reduces labor costs. Adapt to changing conditions. Many companies that downsized have found themselves at a competitive disadvantage when market conditions required additional employees. By contrast, companies that engaged in responsible restructuring practices have found it easier to bring back former employees and hire new ones during business upturns. For example, the goodwill created by a generous severance package offered by Aetna Inc. when it closed a facility in Kansas City allowed the company to bring back former employees when it encountered problems recruiting staff in other cities. Similarly, Lancaster, Pa.based High Steel Structures went to great lengths to preserve jobs at one plant. When the market rebounded after six months, the company's commitment to its employees paid off, enabling the company to maintain morale and job skills (as reported in the Sloan Management Review). Preserve good relations with stakeholders. Some companies have suffered public relations problems as the result of employee cutbacks, or have found themselves bitterly unpopular with their local communities when downsizing is handled badly. But companies that have downsized responsibly often are rewarded by positive media support and the cooperation of unions and

community groups. Another interested party may be investors. Since 1996, CalPERS, a large institutional investor, has stepped up efforts to persuade companies it invests in to reduce layoffs and improve employee relationships. Maintain diversity. Downsizing, particularly if not well-planned, can hit individual demographic, gender, or racial groups hard, undermining years of a company's efforts to improve its diversity. Recent Developments Downsizing has become an entrenched feature of the global business landscape, even in strong and growing economies. At the same time, companies are achieving a better understanding of the links between how they implement downsizing and their ability to achieve sustained commercial success. Among the significant developments: Downsizing Goes Global. The combination of industry restructuring, regional economic fluctuations, the spread of free enterprise, and shifting market demand has led to downsizing and layoffs in all parts of the globe. Former Soviet bloc countries are grappling with downsizing issues as they privatize industries and shrink bureaucracies. China, as it moves to revitalize its centrally planned economy, is expected to conduct one of the largest downsizing exercises in history as state enterprises privatize. Mergers and acquisitions in the U.S. have continued at a steady pace in recent years, leading to downsizing and restructuring. The next wave of mergers will be in Europe, say experts, as globalization trends continue. The Asian economic crisis has led U.S.-based companies operating there to use outplacement services at a growing rate to deal with massive layoffs. Such trends have further challenged multinational companies' efforts to adopt fair restructuring policies and practices at the same time that they have received increased pressure to do so from external stakeholders, including the media, investors, customers, regulators, and citizen groups. Changing Company Approaches. In recent years, companies have significantly changed their approaches to downsizing and layoffs. For example, a growing number of companies of all sizes and sectors are seeking alternatives to reduce layoffs or mitigate their impacts. In its 1998 Staffing and Structure Survey, the American Management Association reported that 41 percent of companies now offer voluntary separation plans, compared to 17 percent in 1989. At the same time, mandatory cutbacks -such as demotions, downgrades, transfers, and shortened work days - have decreased dramatically. The benefits offered to those laid off also are changing. A 1998 study by the New York based consulting firm Manchester found that while U.S. companies are providing less-generous cash payments to laid-off workers, they are offering a broader array of non-cash benefits, such as retraining, rsum assistance, job-finding assistance, and extended health benefits. The study attributed this trend to company cost-cutting

measures and to a tighter U.S. labor market, which gave employers confidence their former workers would quickly find new jobs. A Growing Emphasis on Training. While the traditional notion of lifetime employment - in which employees stay with a single employer throughout their careers - has all but disappeared, an increasing number of companies are placing an emphasis on lifetime employability by stepping up training programs. By enhancing their job skills, companies not only make their employees more valuable, but also make them less vulnerable to the impacts of being laid off. Fortune magazine, in its 1998 article on the best companies to work for in America, noted that "extensive training and development" is growing in importance "because it offers valuable benefits to both employer and worker." It reported that "the 100 Best are making major investment in employee education at multimillion-dollar facilities and through generous tuition-reimbursement programs." On average, the "100 Best" offered 43 hours of training for each employee during 1998. But Fortune further noted that "Education is a sensible investment for employers only if they can hold on to the minds they have expensively trained. A partial but obvious remedy is a policy, or at least a strong bias, against layoffs." A New Definition of Loyalty. In addition to increasing training, companies are showing other signs of loyalty to employees, emphasizing long-term, if not lifetime, employment. A growing number are helping employees establish greater financial security that may be portable when they change jobs; helping employees achieve work-life balance; encouraging employee ownership; and providing incentives to employees to engage in "lifetime learning." For example, Intel Corp. has made all employees, not just top managers, eligible for its stockoption plan and spends 6 percent to 7 percent of it annual payroll on training, four times the industry average. In doing so, the company has been able to redeploy employees from declining business units to areas of high growth, helping Intel avoid layoffs. Growing Labor-Management Partnerships. There are signs that employers and unions are finding mutual value in working in partnerships to avoid or mitigate the impacts of downsizing and layoffs. "Rather than protest [layoffs], unions are more likely to help laid-off workers make the transition to new jobs, often working in tandem with the very manager who did the laying off," reported the New York Times in 1998. For example, Maytag Corp. announced a 1996 layoff at its Indianapolis facility nine months in advance and sweetened the severance package beyond what was required in its contract with the Sheet Metal Workers Union. Among other things, the company participated in a workermanagement committee that supervised retraining and counseling and added overtime in its final months to help workers reduce debts and increase savings. Maytag's approach was contrasted with that of another company that had laid off 1,000 workers on short notice and suffered adverse publicity for its actions.

External Standards There are few clear-cut external standards in the area of downsizing. In the absence of such standards, most companies have sought guidance by benchmarking peer companies or other leadership companies, and by seeking ways to avoid or mitigate the harm of layoffs and downsizing. Companies must also refer to the sometimes complex set of legal and government policies in effect in their countries of operation and origin. International Standards The International Labour Organization, as part of its Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, has a number of Conventions and Recommendations that address downsizing. Chief among these is Convention 158, concerning Termination of Employment at the Initiative of the Employer, which makes provisions for reasonable notice of termination, appeal of termination, and severance benefits. The three recommendations, while not legally binding, are the best known and most frequently cited international standards regarding terminations. They state that multinationals, particularly when operating in developing countries, should "strive to assume a leading role in promoting security of employment, and provide reasonable notice of operational changes such as mergers, takeovers, or transfers of production to appropriate government authorities and employee group representatives so that the implications may be examined jointly in order to mitigate adverse affects to the greatest possible extent. This is particularly important in the case of a closure of an entity involving collective layoffs or dismissals." Employers also are urged to take such measures as offering reduced hours, voluntary early retirement, internal transfers, and retraining in lieu of downsizing. Finally, if layoffs prove necessary, employers are urged to assist affected workers with retraining and a search for alternative employment. Legal Standards Companies around the world must comply with a wide variety of laws related to workplace practices. In addition to observing the appropriate laws for the countries in which they are operating, global corporations must refer both to their home countries' laws as well as to international standards. In most European countries, for example, companies must comply with a relatively strict body of legislation that specifically addresses downsizing. In the U.S., very little legislation specifically addresses downsizing, though a large body of federal law protects employees from discriminatory practices and a range of legal standards may come into play when an employee is terminated. Additionally, class-action suits may be filed on behalf of a group alleging discriminatory termination. Among the relevant U.S. laws:

The Worker Adjustment and Retraining Notification Act (WARN) requires employers with more than 100 employees to give 60 days or more notice in advance of plant closings and mass layoffs. The U.S. Equal Employment Opportunity Commission (EEOC) has the authority to investigate complaints, to make a finding as to whether unlawful discrimination has occurred, and to seek remedy in court. The EEOC also is empowered to issue regulations and guidelines interpreting the law. These interpretations are not binding on either employers or courts, but usually are given considerable weight by both. Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, religion, gender, or national origin. The Age Discrimination in Employment Act of 1967 protects workers who are at least 40 years old. The Americans with Disabilities Act of 1990 outlaws discrimination against people who are disabled. The Civil Rights Act of 1991 provides for financial damages in employment discrimination cases. This act has fueled a wave of wrongful-termination lawsuits, because it allows plaintiffs to be awarded not only reinstatement, back pay, and attorney's costs, but also compensatory and punitive damages, thus creating a strong incentive for both plaintiffs and their attorneys. Implementation Steps Company approaches to downsizing are many and varied and there are few templates to follow. Following are some key issues to consider: Consider downsizing's full costs. Before implementing any layoffs or downsizing, it is important to carefully consider all of the costs involved - the direct costs as well as the indirect costs. Any decision to layoff employees should make a compelling case for how the job cuts will help achieve long-term company goals. Consider such costs as the potentially reduced productivity of "surviving" employees, the loss of institutional memory, the potential legal challenges, and the potential negative public relations that may result. Consider also the costs associated with several short- and mid-term business scenarios, including the potential need to hire and train staff several months or a year later when conditions improve. Examine alternative strategies. A variety of alternatives to downsizing may provide the same or additional benefits at a lower cost. These include:

deploying surplus workers to growth areas of the company, utilizing retraining and internal placement assistance when necessary; making managers responsible for finding new positions within the company for downsized employees; identifying temporary internal work arrangements at employees' standard salaries, even if the arrangements are for jobs that traditionally pay less; establishing job-sharing or work-sharing arrangements among employees; restricting overtime, enabling more employees to share the available workload; establishing "employee exchanges," through which employees are "loaned" to customers, suppliers, or other local companies for temporary periods; assigning employees to voluntary community activities that fit with the company's philanthropic goals; encouraging voluntary time off and leaves of absence, during which employees continue to receive benefits and retain seniority; implementing wage freezes or pay cuts that apply to all employees, including managers; and implementing voluntary separation and early-retirement programs. Communicate fully and continually with employees. Research shows that employees with a full understanding of their industry and their company's situation feel less stress and more control, even if that knowledge suggests that layoffs may be inevitable. Make sure communication is clear, candid, and that employees are given the chance to ask questions and express their views. For example, ask employees about their ideas and suggestions for avoiding layoffs. Encourage them to participate in cost-cutting and efficiency measures, and to offer strategies for growth and the development of new markets that may alleviate the need for downsizing. In addition, make sure employees are the first to know about the downsizing by maintaining confidentiality about any layoff plans. Rumors and paranoia flourish - and productivity and risk-taking plummet in an atmosphere of leaks and partial information. Avoid having employees learn about their own layoffs from news reports. Provide long-term notice: If layoffs are deemed necessary, give employees as much notice as possible. Many employers now give notice a full year in advance, or even longer. When the rationale for layoffs is clearly communicated, and the package of severance benefits makes it clear that management values employee input, companies find that workers will remain productive and quality-conscious

up until the end. More than half of the 531 U.S. companies that responded to a 1993 study on best practices in corporate restructuring conducted by outplacement firm Wyatt Company reported that early communications helped companies achieve profitability goals (59 percent) and expense-reduction goals (54 percent). Respect diversity. Keep the company's diversity in mind before, during, and after the layoff process. Before deciding who to downsize, analyze the make-up of your workforce - by gender, race, and age - with statistics broken down by department, job groups and salary grades. Then, before laying off employees, analyze similar data on potentially affected employees to be sure no particular group is disproportionately affected. Similarly, form a diverse, cross-functional team to plan and manage layoffs. At a minimum, such a team should include representatives from human resources, labor relations, operations, finance, public relations, community relations, government affairs, and legal affairs. Diverse, cross-functional teams have proven to be effective at addressing the needs of employees and external stakeholders, and presenting clear messages about why and how the company is downsizing. Stay on schedule: Announce a specific timeline for implementation of downsizing activities and transition services, and stick to it. Sticking to schedules and keeping promises helps preserve credibility and trust, both among affected employees and survivors. Share the pain: Senior managers should demonstrate that they are sharing the burden of downsizing. They should not announce management bonuses or salary increases during a period of downsizing. In addition to destroying trust among laid-off employees and survivors alike, this invites criticism from external stakeholders such as investors and community groups. Craft a fair package: Develop a fair benefits package that fits the needs of affected employees. In addition to severance, these benefits may include outplacement assistance; personal, financial, and career counseling; an allowance for job retraining, education costs, or small business startup; and assistance with medical and dental insurance coverage. Prepare employees for the tax implications of their severance packages, and consider compensating them for sizable one-time liabilities. In addition, help affected employees integrate benefits available in the public sector with those offered by the company. Private Investment Councils (PICs), State Worker Dislocation Units, local organizations, and federal programs such as the Job Training and Partnership Act can provide funds for and assist with job development, training, and placement. Consider also outside experts, who often prove to be extremely useful in assisting with transition services. Nonprofit organizations such as the Council for Adult and Experiential Learning as well as a variety of for-profit companies can provide expert assistance, particularly in areas such as job placement and counseling.

Consider external impacts: Anticipate and prepare for consequences outside the workplace. Layoffs frequently trigger sharp increases in child, spousal, and substance abuse. Companies often find they can assist most effectively in these areas by providing confidential access to counseling services, and by working with and providing extra support to social service organizations that in these areas. Redesign jobs: Accompany downsizing with thoughtful restructuring of the organization and changes in work design. The negative effects of downsizing are most pronounced when survivors are simply asked to shoulder the load of those who are laid off, without accompanying changes in job descriptions and duties. Involve employees in this process. Employees are more likely to feel valued and empowered within the changed environment when management invests in them through training. Avoid "survivor guilt": Anticipate morale problems and "survivor guilt" among employees who have not been laid off, and take positive steps to help employees to recommit and reengage. Articulate a clear vision for the company and the place within it that remaining employees will have, including opportunities that will be available to them. In addition, prepare managers for what is sometimes described as "terminator guilt," morale problems they may face after implementing a downsizing. Document the process: Document the planning and implementation of all layoff-related activities. Careful documentation of a well-designed process, particularly when it demonstrates fairness to workers and good faith efforts to assist them with their transitions, goes a long way toward protecting companies from litigation.

Managing after Downsizing

A Manager's Guide to Coping With Layoffs Your organization has just experienced one of the most unsettling events in modern corporate life and now YOU are expected to make things work under the new rules. But what are the new rules? How will you re-engage the traumatized workforce and get the business back on track? As bad as it seems... You are not the first to got through this and you won't be the last. Once viewed as extreme measures, downsizing, de-layering, restructuring, and other dramatic changes in the workplace are now "normal" business practice. Change management has become an important leadership skill for all managers. People and organizations DO survive and adjust to the new reality. Not only does life go on, but many people actually prosper and grow as a result of having change thrust upon them. It is often true that "when one door closes another is opened." There is help available from those who have gone through this experience before you. The insights and suggestions that I offer you on this site come directly from my own experiences in numerous workforce reductions and organizational upheavals. There are websites, books, courses and consultants who can all help you get through and lead others through the ensuing chaos that results from downsizing. What you are dealing with... Downsizing is a very personal and emotional experience for people caught up in the events. Some managers believe that those who are not dismissed will feel relieved, even grateful that they survived to keep their jobs. This might be true in some cases, where the cuts are few and widely felt to be justified. However, in the large scale cutbacks that result in a decimated organization where long term working relationships are severed and people are expected to take on new roles, something quite different occurs. People go into shock. Strange as it seems at first, those who survive the downsizing process may suffer as much as those who don't! The survivors experience an emotional shock that prevents them from suddenly changing direction. They freeze like a "deer in the headlights." The familiar pattern is broken and the momentum that comes from routine and

repetition will take time to recover. Not knowing what to do, people will wait and see what happens. They are waiting for leadership, someone to tell them what to do next. Even more than the loss of familiarity and momentum is the sense of personal loss that many people feel at seeing their friends leaving or their positions eliminated. It feels very much like a death in the family and needs the compassion and time for mourning that we expect whenever a loved one is lost. A good manager will have the compassion for the human need to cope with the shock and fear that people feel, combined with a sense of optimism, direction and mission that will help them through the often painful transition from what was to what is to be. There are actually 3 steps that will need to be accomplished before the new organization is back on its feet. Endings - People need to understand and come to accept that the changes are real and not reversible. The old organization, the old ways are gone and won't be restored. Something has ended...forever. It is reasonable and proper to mourn for the loss, but eventually it is necessary to move on. Transitions - There is an in-between time when you are letting go of the old and getting familiar with the new. It is a time of uncertainty and often confusion, discomfort and high stress. People may even feel incompetent until they master new tools, new skills and new roles. This is the wilderness through which managers have such a critical role of leadership if the new organization is to take hold and prosper. New Beginnings - As people come to accept and master their new roles, the structure of the organization begins to gel and once again a routine and sense of "normalcy" begin to become apparent. The old ways fade into memory and the new ways become the expectation. People feel competent and confident again. Productivity increases as people focus on the job at hand rather than dwelling on personal anxieties.

Tips for Managing After Downsizing...

Recognize that downsizing or any dramatic change will be met with an emotional response that will be as intense as the situation is threatening. In many cases people will fee victimized and will need to mourn their loses before they can move on. Try to buy them time and professional counseling if you can. In any given group, expect that 70 to 80% will be apathetic or take a "wait and see" attitude. They need to be led. Another 10 to 15% will be openly hostile or will subtly sabotage the changes and try to return to the way things were before. The remaining 10 to 15% are your leaders. They will proactively try to help you make things work. Put them in charge of the others.

Try to exude optimism and "can do" regarding changes that need to be made. Promote optimism and positive thinking and speaking as much as possible. Don't deny the trauma and pain that is occurring, but find the bright spots and emphasize those rather than dwelling on the loses, the difficulty of making the transitions or all the work that is piled up and needs to be done. Minimize criticism and fault finding. Celebrate every success, no matter how minor. Develop a vision of the future that draws people toward doing the right things. Specifics can be developed as you go along, but it is essential that people have a clear and understandable picture of the goal in their minds. It is also important that they see something in it for themselves so they will begin to get on board and lend their voluntary support. Build teamwork. Create a sense that "we are all in this together and need each other to make it." Acknowledge that everyone's contribution is essential and their input is valued. Encourage group discussions where people can freely express their feelings and offer suggestions. Bring treats. Sometimes even a bag of cookies can offer some comfort and break the ice. Get people kidding and laughing, even if some of the humor is "gallows humor." If you can see what is coming with some time to prepare, then start creative problem solving as soon as possible. Get training for managers and other leaders in the human aspects of change. In good times, most managers are 80% technically oriented and 20% people oriented. During times of crisis, those numbers should reverse until routine is established again. Most technical managers will need human resources training and support. Read books and take courses on managing change...before you have to implement. Way over communicate everything. When things seem to be coming apart, the normal communication links break down just as suspicion and mistrust begin to predominate. Some news is always better than no news, even if it is the same old news. If people don't hear anything, they fear the news is so bad that no one wants to tell them. Bore them to tears with as much detail as often as possible. Trust will build. Be honest about the realities and future expectations. Don't say "the layoffs are over" if there is any uncertainty that the business situation has stabilized. It is not uncommon for a series of changes to occur during the process of readjustment. If people begin to relax their guard only to get more shocking news, they will be much slower to trust any statements in the future. Empathetic leadership is far more effective than being a threatening autocratic boss. Certainly some things need to be pushed, but during the traumatic transition period, don't focus too much on efficiency, mistakes or poor attitudes. Instead spend your efforts in coaching and encouraging people to be successful in bridging the gap between the old and new. Reward each success and let the

ones who adjust more quickly be examples for the struggling members of the group. Remember that personal strength and strong supportive relationships are often forged in the fires of adversity. When the crisis has passed, many people will be surprised by some of the skills they exhibited that they would otherwise never have realized. They may well be on the road to new careers, happier lives and better jobs. Remember: in today's business environment...change is the norm, not the exception.

Downsizing
Leading Those That Remain Downsizing...Right-sizing, lay-offs or workforce adjustment, whatever the current "correct" terminology, the fact remains that it is the most difficult thing that managers will deal with in their careers. There are two (only two?!) issues regarding downsizing. First, the period of downsizing brings with it incredible anxiety for everyone. Both managers and employees have to "get through" this period where downsizing is announced and individuals are notified. While this is the period of greatest short term stress, it is an acute situation. The second problem, and one of much more long term significance is the issue of those that remain. Somehow managers have to deal with the fall-out from the downsizing process, and move their organizations beyond the grief, the anger and the loss of morale that characterizes these major organizational events. It is those that remain that will determine what happens to the organization. We are going to talk about the long term issues here. The First Few Weeks In the first few weeks after downsizing even those who still have jobs will feel a lot of difficult things. Grief, anger, sense of betrayal, and depression are common "normal" reactions. Typically productivity drops as people work through their feelings by talking with each other. This applies to you as the leader of your organization. However, as a leader you have an important role to play in helping employees get past the initial reactions. During this time, it is important that you do not pressure employees unduly, either in the areas of increasing productivity, or in expressing feelings about the change. Some people want to talk, others not. Some will work harder and some will not. Your job is to help by gently talking to them, both in group settings and individually about their reactions, and how you can help. Listening is key here. Ask questions and keep your own comments to a minimum, and don't exhort or pressure people. By showing concern and interest, you will be working towards repairing the sense of broken trust that accompanies downsizing.

During this period, you need to take stock of your own emotional situation. Your ability to lead people through the tough times will depend on your own physical and emotional health. Try not to cut yourself off. Talking to colleagues outside your organization is a good idea, or at least, venting your own feelings with someone unconnected with your organization. If you find yourself plagued by sleeplessness, mood swings and depression and guilt, don't hesitate to take advantage of support services that are available. Normalizing The initial shock of downsizing is likely to linger for some time, certainly for more than the two weeks mentioned. Unfortunately, you and your staff have goals to accomplish, people to serve. At some point there is a need to get on with it, to normalize the situation. It is difficult for leaders to determine when it is time to start sending the message that "business as usual" must prevail. Too early and you alienate and anger staff...too late and you end up wallowing. It is best to start normalizing slowly and gently. The situation in your organization can be helped if you start to address any operational problems that might have been caused by the downsizing. Any shifting in staff will result in new challenges in terms of doing business, and there can be some confusion and chaos regarding how you are going to go about doing "business" with a smaller staff complement. It is important that the chaos be reduced. Normally this will mean clarifying with staff any concerns they have about getting the business done, and problem-solving around the issues. The longer that there is confusion, the more likely there will be permanent effects on organizational health and morale. During this period, both group problem solving meetings and individual discussions are appropriate and recommended. Bring ALL staff into the discussion, and make sure everyone is clear what they should be doing. While the feelings of employees are important during this phase, staff need to be slowly moved back to getting the job done. By getting clear understandings of the changes, you will create a climate of stability, which is necessary for the "recovery" of people in the organization.

Futuring

The first part of adjusting to downsizing is to address the feelings of those that remain. The second is to focus on dealing with the operational problems stemming from the changes, and the third step deals with the future. People need a vision of the future, a sense of what they are trying to achieve, and they also need to know that they are part of a goal-oriented team pulling in the same direction. While we have talked above about "getting through", futuring involves people in trying to create (or confirm) a vision of the organization, and it's goals, values, purpose, etc. It is the creation and commitment to these things that will work to revitalize an organization that has been downsized. The futuring process is usually a group process, and can extend to undertaking strategic planning, re-examination of priorities, operational planning, and review of role and mission. By doing these kinds of things you promote a sense that the future will bring positive, exciting things. Organizations that have lost staff need to have that sense if they are to rebuild. Recap Leading staff through downsizing requires the leader to exercise superior judgement and decision-making. It's a complicated task that involves the leader in recognizing the natural reactions of those that remain in the organization, and determining the right timing for moving the organization from the emotional reactions to a focus on the present and future. While it is difficult, the consequences of mis-managing or under-managing the situation are severe. Both management and staff will suffer if the timing is wrong, or managers deny or avoid dealing with the fall-out from downsizing.

The Downsizing Process

The sorting and clearing process is by far the most DAUNTING part of making a later life move (or preparing for later life even if a move is not part of the plan). Below are some tips and suggestions for starting the process of going through years of accumulated belongings in your home.

WHERE TO DIG IN

Begin in the areas of the house that you are currently not USING. Many older adults are still living in the same houses where they raised their families. In most situations, there are areas of the house that are currently not being used -upstairs bedrooms, the basement family room, etc. Start the sorting and clearing process in these rooms because it will be least DISRUPTIVE to everyday life. These areas also often contain lots of items that have not been used in a considerable length of time and that will not be missed when passed on to children, grandchildren, charity or the auction house.

TACKLE THE BIG STUFF FIRST Start with the large items in each room and work your way down to the small items. The rationale for this? It's easier to start with furniture and the bigger pieces and you'll feel like you are making some PROGRESS. If you start with the small items, you may get overwhelmed and frustrated before you even get started. With large items, either prepare a list of your decisions (e.g. dresser -keep; will work well in a smaller bedroom), or use stickers and mark the items as you decide what to do with each piece.

CATEGORIZE AS YOU GO Sort the items in each room as follows: items that you want to KEEP as you move forward items that will be passed on to FAMILY or friends items that will be SOLD via a garage sale or auction items that will be given to CHARITY items that need to be thrown away Again, keep a list of your decisions, separate the items into separate piles, or mark the items with stickers. The goal is to GET RID of as much stuff as possible as you work through the downsizing process. What does this mean? This means putting items to be thrown away into garbage bags and setting out this trash for pickup each week. This means calling your charity of choice and arranging for a pickup as soon as you have enough items to justify their making a trip. This means asking family and friends to make arrangements to get their items, or to have their belongings mailed to them.

GIVE IT BACK TO YOUR KIDS I always tell people that one of the easiest places to start with clearing a house is telling their family that it's time to come get their stuff! Tell your KIDS that it's time for them to collect the things that they still have STORED at your house. TAKE IT EASY Allow plenty of flexibility and time for the sorting and downsizing and trust the process. Plan to spend maybe one or two hours at a time (at most) working through the sorting process. This is not a task that you can do for LONG PERIODS of time at any age -- there will be too many emotions and memories stirred up because in essence you are sorting through the years of your life. Take time for recalling memories, to shed tears as you need to, and to share stories with friends and family. And be easy on yourself and flexible when making decisions. GIVE YOURSELF TIME This is a very important and valuable part of the later life transition process. Allow yourself time to REMEMBER and to grieve losses. Don't rush yourself to make too many decisions at once. If you need to discuss with family or friends what to do with certain items or belongings, take time to do so. If you can't make a decision about something, then set it aside and THINK about it for awhile until you do come to a decision. Also remember that you can change your mind about any item as long as it's still in your possession. If you've started early and are planning ahead, you should be able to work at a pace that is comfortable for you and your situation. GETTING A GRIP For many people, starting the sorting and decision-making process is as difficult at walking out to a yard piled with leaves in the fall and deciding where to begin raking. The task appears to be so OVERWHELMING! All you can do in this situation is to START somewhere and to approach it step by step, pile by pile until the job is finished. FOCUS, FOCUS, FOCUS I stress keeping focused as much as possible because it's so easy to do a little bit here, a little bit there and never feel like you're getting anywhere. I see this happen with my clients all the time. I leave them with a list of things to do and

return after a week and though they tell me they've been very busy, I can't see that anything has been accomplished. And neither can they. Start working in a specific room in your house or even a specific area of this room (say a closet or drawer) if you need to start smaller. Stick with what you are working on until it is FINISHED. You'll feel better because you'll be able to see what you have accomplished and this will give you momentum to continue the sorting and downsizing process. KEEP THE END RESULT IN MIND Remember that your goal is to SIMPLIFY your life. I always tell my clients that they don't need to get rid of everything but they do need to pare down their years of accumulated belongings to the key things, the favorite things they want to have around them and that they need or enjoy using. Think about what you really use in your home on a day-to-day or week-to-week basis and I bet you'll see that this amounts to a FRACTION of what you have in your house. PART OF THE CYCLE Try to think of sorting and downsizing your belongings as a natural process of completing and RELEASING -- like leaves falling from the tree in autumn. You can do this -- and believe me, you will feel so good when this job is done and you have new, clutter-free space in your home and in your life! Improving Employee Retention Before and After Downsizing In a down economy organizations sometimes forget that retaining employees is an important issue. When organizations go through the difficult process of downsizing its natural to overlook the need to develop retention programs meant to keep the remaining people happy and productive. Shouldnt the employees who survived a downsizing be thankful their jobs were saved? Perhaps, but employees who see their friends and colleagues let go will be fearful and disconcerted. They will wonder if the company is still the best place for them to pursue their careers. Given a chance to go someplace they think is more secure, employees may begin to be disengaged and jump ship. As always, the employees most likely to have the opportunity to get a job elsewhere are precisely the ones you least want to see go. Working to improve employee retention after downsizing is a wise tactical move. In this article well show how its done. Getting off on the Right Foot Companies that do the right things pre-downsizing will have the fewest problems with retention post-downsizing. The key is to engage employees in the

downsizing process; they need to feel that downsizing was done with them not to them.

Involving employees in downsizing is counterintuitive; the natural tendency of managers is to shut themselves behind closed doors and call all the shots. At a minimum, very open and honest communication before, during and after the downsizing process helps maintain employee morale. Even better is to ask employees for their ideas on saving money and generate new revenuenot only do you get good ideas, you prove to employees that downsizing is only being used as a last resort. Keeping employees engaged not only improves retention, it improves productivity at a time when reduced headcount makes productivity more important than ever. Information and Engagement Another way to improve retention is to survey your employees to find what their likes/dislikes, ideas for improvement, etc. Employers often are hesitant to do a survey after downsizing fearing they will get bad news, but it is a powerful way to engage and retain those who remain. In addition to the usual survey questions, you can ask questions aimed specifically at finding out how people are feeling about the downsizing process and life in the organization after downsizing. The survey process needs to include not just asking the right questions, but also analyzing and publishing the results then working with your people to implement change. For example Drakes HR consulting team performed an overarching HR audit for a chain of restaurants and that audit included an employee survey. The company suspected that people were not happy with their compensation. However, the survey showed that people were not unhappy, they were just confused. Employees didnt know if they would get a bonus or not and what it would be based on. The company didnt need to increase the compensation, just do a better job of communicating how it workedwhich is exactly what they did. Digging for More Insights Another basic but underutilized tool is exit interviewing. When anyone leaves after a downsizing event, HR should be doing exit interviews to get as much intelligence from the employee as possible. However, just as with surveys, it is not enough simply to collect information. It is important that every six months or every year you gather up the data, summarize the results and communicate to employees what you are learning from the exit interviews. Then, explain what you are doing in response to what youve learned.

If you fail to summarize and communicate or dont make positive changes employees will suspect that you may be hiding the results and all your good intentions will be undone. By doing these things, not only do you make the changes needed to improve retention, the simple fact of listening to employees drives engagement making it less likely they will leave.

One client asked Drakes HR consulting team to conduct online and telephone exit interviews for their call centre business across North America. The client believed the high turnover was caused by poor compensation and poor supervisory skills. But the exit interviews showed that people were actually leaving because they simply didnt like the job. This result showed why the recent investments in training supervisors and increasing compensation were not having an effect. After the HR consulting intervention the client changed their recruiting process to ensure candidates got a realistic sense of the job before they were hired. Listening to employees through exit interviews, and acting on what was learned, enabled the call centres to improve retention. A Sense of Belonging Finally, organizations should look at a variety of culture building activities that create a sense of team. People will stay to support their team members even when times are tough. Being on a team can improve morale and help people focus on bigger goals. You dont need sophisticated or expensive HR consulting interventions to create a sense of team. Meetings to discuss shared objectives, celebrations of successes, and group meals are all simple ways to create a sense of belonging. All the actions we have discussed are good HR processes at any time. What companies overlook is how these processes are particularly valuable after a downsizing event when morale is fragile and the organization absolutely needs the best from every employee. Drakes Approach Drake has many decades of experience helping small and mid-sized firms with their HR needs. Weve learned how to take off-the-shelf solutions and tailor them to the specific needs of the clients businessbecause every company truly does have some unique issues. We take a consultative approach focused on generating Exponential Impact (tm) for your business, through a long-term relationship. Our focus is on helping you engineer an improved bottom line through the efficiency and effectiveness of your people. If we cant do thatthen you shouldnt work with us!

Conclusion
Downsizing Organizations in every segment of business, industry, government, and education are downsizing. Downsizing is and has been a controversial phenomenon in the last few years. The controversy that surrounds downsizing may be better described as a debate in organizational theory about whether change is adaptive or disruptive. The issues which establish the outcome of the controversy include why the downsizing is taking affect, how it is implemented, and what steps are taken to enhance its effects on organizational performance. The reasons for corporate downsizing are presented in many forms. Some companies downsize due to technological changes such as automation, which brings about the need for a reduction in the production workforce. Others may feel that competitiveness with other companies warrants the need for a reduction in the workforce. Financial setbacks due to customer demand, market shares, and loss of revenue could also initiate the need for downsizing. When will it end? Experts say it won't. For instance, the North American Free Trade Agreement (NAFTA) was established as a universal trade agreement between the US, Cannada, and Mexico to allow free imports and exports.

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