Managing Change During Downsizing

Presented by: Roll No: Presented to: Course: Dated:

1 Mrs. Zara Kiran

Mrs. Zara Kiran AN869064 Mr. Adnan Riaz HR Change Management 26th, March, 2013

Outline
Objective

Introduction
Downsizing Definition Types of Downsizing Advantages and Disadvantages Change management during Downsizing Practical Example (PTCL and NIB) Question/Answer Session

Mrs. Zara Kiran

Objective
At the end of presentation we will be able to learn: Definition Methods of implementing downsizing Reasons of downsizing Aggrieved of Downsizing Disadvantages of downsizing Strategies for Downsizing Managing change during downsizing Change Management during Downsizing in Pakistan
Mrs. PTCL Zara Kiran NIB

Managing Change During Downsizing

Organizational

downsizing is becoming very common in modern organization. Downsizing has become a major organizational change strategy It has become important feature of the organizations. Economy, Technology, Structural Change, Problems faced by an Organization, Competition, Govt. Regulation etc Process of downsizing is very complex and generate reactions from employees Mrs. Zara Kiran Downsizing doesnt mean decline, layoffs, or no

Downsizing:
Downsizing can be defined as:
It is a process of reducing the number of

workforce and employees on the operating payroll of the organization. It is strategy in which people are being laid off and forced to retire. It is strategy in which people are being laid off and forced to retire.
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Types of Downsizing
Organization use different ways of reducing the workforce: Providing Incentives for Early retirements Early Retirements Buyouts Volunteer Separation Scheme like in PTCL Pakistan, NIB, PICIC Shifting Employees to Subsidiary or Subsidiaries of the Organization Termination of Employees for certain Time Period (Seasonal Termination) Freeze Hiring Mrs. Zara Kiran Attrition

Mrs. Zara Kiran

Types of Downsizing:
Early Retirements: Providing Incentives for early

retirement like Golden Hand Shake Scheme by government to downsize the employees from public sector organization. Early Retirements Buyouts: These are offered by the organization with some benefits. These may be voluntary or forced by the organization. NIB, National Bank of Pakistan Freeze Hiring: In this method new hiring are stopped by the organizations. Government banned public sector jobs Attrition: Mrs. Zara Kiran This happened when any employee quit 8 the organization, death or retirement of employees

Types of Downsizing:
Layoffs: Layoff means the temporary downsizing in

which employees are downsized and they are called back after some time period mostly when business improves. They are placed on unpaid leaves till call back Volunteer Separation Scheme: Employees are given some benefits to leave the organization, like in PTCL Pakistan, NIB, PICIC, Pakistan Railway Seasonal Layoff: Termination of Employees for certain Time Period .Seasonal Termination like in Mobilink
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Reasons of Downsizing:
Changes in regulations of the government
State Bank of Pakistan

Economic instability Rapid changes in technology Tough competition in the market Improve financial performance through cost cutting Mergers and acquisitions Weak product demand Structural change in the organization etc

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Mrs. Zara Kiran

Aggrieved of Downsizing
Eliminated Employees: These are the employees

which are downsized and eliminated from the organization with different methods of the downsizing like lay off, right sizing etc.
Present Employees: Employees remained in the

organization after the activity of the downsizing.

Supervisors and Managers: Those managers and

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supervisors who are linked in any way with the downsizing planning, implementation, evaluation or Mrs. Zara Kiran with working the eliminated and remaining

Disadvantages
Short

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term cost cutting may lead to negative psychological reactions that harm the long term aim of increased competitiveness. It leads to less productivity as skilled workers leave the organization and remaining workers got more burdens. Downsizing creates lower morale for surviving employees. Sometime this also hurt the image of the organization. Old employees left the organization so memory of the organization becomes weak. The downsized employees are hired by the rival firms soMrs. the human resource asset is acquired by others Zara Kiran

Potential Adverse Survivor Reactions to Downsizing

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Mrs. Zara Kiran

Change Management Downsizing

during

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Mrs. Zara Kiran

Change Management during Downsizing

Distributive Justice: Organization must make the

perception of the employees that the downsizing was a justice. Management must treat the all employee equally and fairly. Procedural Justice: This relates to survivors perceptions of the fairness or otherwise of the procedures to make decisions about layoffs and downsizing. Interactional Justice: Organizations should give advance notification and explanation of downsizing decisions. Train line managers to treat leavers with Mrs. Zara Kiran 15 respect and sensitivity during their notice period.

Change Management Downsizing

during

Respecting Employees Dignity: It is important that

employees perceive that they have some influence over the downsizing change process. They must be treated with respect. Relevant and Specific Communication: Employee must be communicated given all the relevant and required information. Job Redesign: Downsizing also has changed the design of the organization.
Reduce the quantity of work to be done in the downsized

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organisation. Redesign survivors jobs so that they provide job Mrs. Zara Kiran enrichment and empowerment.

Change Management during Downsizing in Pakistan

Different organizations working in Pakistan have downsized their workforce. Pakistan Telecommunication Company Limited (PTCL) NIB Wateen Telecom Pakistan Railway PIA

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Mrs. Zara Kiran

Pakistan Telecommunication Company Limited

PTCL is the largest telecommunications provider in

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Pakistan. Leader in infrastructure provider to other telecom operators and corporate customers Transformed from a legacy public sector organization into a responsive and competitive enterprise Implementation of forward looking Human Capital Development and management strategy Objectives of strategy is to optimize the workforce Voluntary option of separating from PTCL in exchange for financial compensation
Mrs. Zara Kiran

PTCL Offered VSS its Regular Staff

PTCL offered VSS to all regular status employees

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under the age of 58 at 15th November, 2007 Time was given for 60 days from time of announcement to complete the performs and documentation It was completely voluntary Additionally PTCL established a VSS support center to assist employees The Support Officers helped employees understand his individual VSS package and answer any questions he may have. Around 29,920 employees opted VSS to pursue Mrs. Zara Kiran other career opportunities

Change Management in Downsizing

PTCL has taken the following steps to manage the change in downsizing process: 1. Notice of two months: Prior notice was given to submit and complete the documentation 2. Voluntary Scheme 3. Support Centre

Support centre was established Staff were trained in how to promote the scheme and manage its implementation

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Achievements through VSS Process

Decrease in the surplus and not required staff of 29,920 2. Decrease in the 40% of future payments in terms of:
1.

Pensions Old age benefits etc.

Opened new opportunities for the new highly qualified and trained staff. 4. Induction of fresh blood 5. Replacement of the untrained staff 6. Improvement of corporate image of PTCL.
3.
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NIB Bank
Merger of Pakistan Industrial Credit and Investment

Corporation (PICIC) Prime Commercial Bank Limited (PCBL) with NIB took place in 2007. Present paid-up capital of Rs. 103 bn is amongst one of the highest in banks in Pakistan. The major focus of NIB Bank has been on providing finances to the SME and Consumer segments of the economy. NIB Bank has dedicated 96 branches to developing business with small SMEs under the brand name Salaam Banking and another 35 branches for midsized SMEs. Mrs. Zara Kiran 22

Reasons for Downsizing in NIB

The economic downturn in Pakistan Banks remained unable to generate the required

profit Power shortages (energy crises) in Pakistan Restrictions imposed by State Bank of Pakistan Poor performance of the SME sector

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Mrs. Zara Kiran

Change Management in Downsizing

Clear

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Information about Schemes: Schemes was applicable to regular employees of the organization of Grade 3 to 15. The Scheme is a discretionary scheme, NIB Bank has retained the sole discretion to decide whether an employee may or may not participate in the Scheme This Scheme was not be applicable to Clerical and non-clerical employees Payment of normal legal dues with extra amount depending on the job grade and the number of years of employee's service. Mrs. Zara Kiran

Any question?...

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Mrs. Zara Kiran