COMPANIES LEARN SOME, LAG SOME WHEN IT COMES TO DOWNSIZING Five Things Most Companies Do Well…and Five They Don’t

Los Angeles, CA—With restructuring is a fact of corporate life even in times of economic expansion, it is encouraging that most companies have learned key lessons about how to conduct them compassionately and effectively, according to Rick Junius, executive vice president of global career services company Lee Hecht Harrison’s Western Region. “However, for all the collective downsizing experience they have to draw on, most companies still don’t do everything they should to facilitate the best outcomes for the employees dismissed, those who remain and the organization overall,” Junius says.

Junius indicates five aspects of downsizing that companies, for the most part, have come to do well in recent years, as well as five areas where most still need improvement:

Most companies today do: Know their employees’ skills and consider redeployment. In the late 1990s many organizations made the mistake of laying off employees who were no longer needed in their current functions, but had skills that were needed in another position or area of the business. Organizations have learned that prior to deciding whom to cut, they should assess employee skills and try to match them with what the organization needs in the short- and long-term.

Most companies today don’t: Make redeployment attractive to employees. Companies underestimate employees’ ability to say no to redeployment offers that don’t meet their personal or professional needs. Even in a poor job market and certainly in a healthy one, many people are unwilling to make internal moves that require relocation or don’t meet their career goals. Employers need to understand the limitations of redeployment programs that don’t take employee needs into consideration, and take time to figure out how to do them correctly.

Most companies today do: Communicate the business reasons for the downsizing. Companies have become much better at making their employees aware of the forces driving their downsizings, and have also learned to communicate how the cutbacks will make their organizations healthier moving forward. Doing so is critical to keep remaining employees’ morale high, especially when downsizings are motivated by strategic rather than economic reasons. If their own initiative weren’t enough, Sarbanes-Oxley and recent corporate scandals have forced companies to keep employees informed of their financial and business challenges.

Most companies today don’t: Communicate who will likely be affected. A 2003 Lee Hecht Harrison survey showed that more than three-quarters of those laid off in the prior six months anticipated their company’s downsizing, but half were surprised that they were affected. Companies too often get hung up on concerns about confidentiality during the downsizing process. It would serve their employees better to inform them of possible terminations early on so they can begin to prepare for their transition.

Most companies today do: Prepare senior managers for their roles in the downsizing. Research has shown that having senior management that is visible, forthright and accessible throughout the downsizing has a positive impact on surviving employees’ attitudes about the organization in the aftermath. As such, most organizations now coach their top executives on how to conduct themselves and what to communicate at all stages in the process.

Most companies today don’t: Prepare line managers delivering the message. With downsizings more common, organizations often don’t invest in face-to-face training for line managers on how to convey the news to their subordinates. They assume their managers know what to do and may provide a written guide instead. However, without proper preparation, managers are likely to communicate notifications poorly—negatively impacting those dismissed and creating additional stress for managers already in a difficult position.

Most companies today do: Seek outplacement providers’ assistance in planning for the downsizing. Organizations that provide outplacement consulting to help those downsized make successful career transitions now tend to take advantage of those companies’ expertise in strategic planning for the event as well.

Most companies today don’t: Promote outplacement services to terminated employees. Too many companies that provide outplacement services fail to emphasize it amidst all the other information given upon termination. The name of the outplacement provider may be buried on page 12 of an individual’s release. As a result, the employee may miss out on critical career transition services, and the employer loses the psychic, financial and legal benefits of offering outplacement.

Most companies today do: Help survivors adapt to the changes. A decade ago most organizations focused so much energy on the process of letting employees go that they overlooked the needs of those remaining. For the most part, that’s no longer the case. Organizations today take such actions as training supervisors on how to motivate surviving employees; training survivors on how to manage change and transition; encouraging employees to take advantage of EAP programs; giving employees opportunities to ask questions and share concerns; and using teams to rebuild esprit de corps.

Most companies today don’t: Reengineer the work that remains. Unfortunately, most employers still don’t appreciate the need to either reduce the workload or introduce more efficient ways of completing it once there are fewer people available to get it done. Cutting staff without having a strategy for getting work completed leads to decreased productivity, low morale, turnover, and often the need to refill eliminated positions.

Junius notes that how companies handle layoffs has a major impact on their ability to retain remaining employees, recruit new talent and maintain positive relationships with their communities. Junius expects that as the job market heats up and skilled workers begin to have multiple employment options, more companies doing strategic reorganizations will incorporate things they haven’t yet done as part of the layoff process. “Of course, it’s better late than never,” Junius says, “but conducting downsizings in a way that is sensitive to the needs of both those dismissed and those who remain is a smart business practice regardless of the economy.”

Established in 1974, Lee Hecht Harrison is the leading global career services company specializing in providing outplacement, leadership development/coaching and career development services. Its focus is helping organizations and their employees deal with career transitions, career management and the effect of change on careers, work and employability. With worldwide office locations, Lee Hecht Harrison's experience includes helping companies of all sizes effectively manage change, downsizing and internal career mobility. Western Region offices include Irvine, Los Angeles, Pasadena, Riverside, Sacramento, San Diego, San Francisco, San Jose, Walnut Creek, and Woodland Hills, California; Las Vegas, Nevada; and Phoenix, Arizona. Lee Hecht Harrison is a division of Adecco S.A., the world's largest employment services company with over 6,000 offices in 62 countries.