Any organization can be downsized. The trick is to determine what the effects of the reduction will be. If handled properly, a downsizing saves money. If mismanaged, a downsizing costs a lot more. So how is it done?
Step 1: List all of the activities for which your organization is responsible. This should include both revenue generating and cost line items. Once you have a complete list of activities, rank them in order of importance. The most important activities are those that, if you stopped doing them then your organization cannot achieve its mission, now or in the future. What is the vision of your organization? What are your strategic objectives? Some will be inclined to list everything as important and that is why the ranking is critical. What to cut is determined later.
Step 2: List all of your organization’s positions. Positions not people. What positions are most critical to your organization? Don’t think about what the person in the position accomplishes. Ask the question ‘what does this role contribute to our organizational success?’. Remember it is the role not the incumbent in the job you are assessing. Rank every position from most critical to least critical. Hint: this does not necessarily align with compensation. Also rank positions like ‘special assignment’, ‘special assistant’ and ‘receptionist’ low.
Step 3: Reflect back on the 2 lists. Given the tasks that you need to accomplish what positions do you need? What would a 5% cut look like? How many positions need to be dropped before a 5% savings is realized? Determine which outputs need to be dropped to achieve this 5% cost savings. Draw a line on your list of activities to indicate what would need to be dropped to achieve the desired savings.
Step 4: Even in unionized environments, consider performance. With a strategic mind focused on value to the organization, now and in the future, list your employees into 3 groups; must keep, would like to keep, and could survive without.
Step 5: Go back to your list of positions. How do these positions relate to your 3 employee lists? Do you have employees you placed in the ‘survive without’ category that are in your critical roles? Or are your ‘must keep’ employees in jobs you plan to cut? What would it take to align people and positions? Come up with a single list of people and positions that could be downsized.
Step 6: If you are in a unionized environment, look at your collective agreement. Yes, wait until this point. You want to have determined what reductions are best for the business before considering the process. So, what does the collective agreement say? Collective agreements rarely if ever restrict the employer’s ability to organize the operation so the reduction of positions is normally not limited. It likely does cover what happens to those employees impacted by the cutting of positions. Is their bumping? What are the severance entitlements? Do you need to consult with the union before announcing any changes? Are you able to downsize using discretion or is it by seniority? Read and re-read the collective agreement to understand the process you are required to follow.
Step 7: Brainstorm. You must follow the collective agreement. You must achieve the dictated savings. How can the organization be structured to do this? Explore all options.
Step 8: You need a communication strategy! When are you going to implement these changes? How are you going to communicate these changes? To whom? When? Who is delivering the message? How are you going to support the people who are being downsized? How will you support the people who stay? How will you engage EAP?
Step 9: Implement!
Step 10: Monitor. Are youachieving your desired outcome? If not, go back to your plan and make adjustments.
- Interesting truths about DOWNSIZING! by Taha Saif (tahasaif.wordpress.com)
- Forced Retirement and Downsizing are Common These Days. Mutual Force Announces Beta Launch of Web Consultation Platform Between Ex-employees and Previous Employers (prweb.com)
- Management Tips: Keeping Up Production After Downsizing (socyberty.com)
- Ways Your Company Can Help Employees After Downsizing (socyberty.com)
- Down with Knee-Jerk Downsizing (blogs.hbr.org)