Employee Downsizing

Lessons from the 'Downsizing Best Practices' Companies Contd...

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 (Refer Exhibit III). 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.

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Case Details

Case Code : HROB016
Themes: HR concepts and issues
Case Length : 09 Pages
Period : 1990-2001
Organization : Varied
Pub Date : 2001
Teaching Note : Available
Countries : USA, India, etc...
Industry : Varied

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