July, 1996
YOU'VE SHRUNK THE ORGANIZATION until it's reached fighting trim, with the workforce lean and mean. The downsizing days are over, but something seems to be the matter. For one thing, the leanness looks more like malnutrition. For another, the meanness resembles the snarl of a cornered dog. And the newly trim seem to have lost their will to fight. So instead of being ready to charge the competition's front line, your employees have the shell-shocked look of soldiers trapped too long in the Battle of the Bulge. Unbeknownst to you, your best workers are laying plans to leave. The rest have hunkered down, hoping simply to preserve their pay and pension. ("Hey, dude, it's a job.") This wasn't what Reengineering for the New Paradigm was supposed to be about, was it?
The above is a dramatization, but companies, divisions, plants and departments across the corporate landscape have found that restructuring often fails to produce the desired results. Productivity improvements end up smaller than contemplated, and the group of employees who were spared the ax have taken to looking over their shoulders. Gallows humor is in the air, idealism has given way to cynicism and the old get-up-and-go has gotten up and gone. As for employee loyalty, it walked out the door with the dear departed.
You, the manager, are stuck unfortunately with the results.
This is not the time (nor is this newsletter the place) to debate the wisdom of actions already taken. Now is the time to energize the organization, restore devotion to duty and get people focused on the future.
It may seem like a daunting task, but think about the alternative: Can you afford not to take corrective action?
Employees are naturally curious. Corporations, on the other hand, have long operated on the need-to-know principle. Out of sight, however, does not mean out of mind.
If your organization needs a prescription for renewed productivity and morale, consider taking some of the following steps.
If it's over, say so. Especially if there has been more than one bloodletting, or if a single downsizing has extended over a lengthy period, employees may be wondering what's next. You can gain some points in the candor column by advising them when (and if) the restructuring program has run its course. Here, however, are two caveats: (1) Unless you control 100 percent of the stock and own a crystal ball, don't promise it will never happen again. And, (2) don't promise the remaining employees they will have a job for life, can forget about looking for outside employment, have nothing more to fear, or similar statements that could make you the defendant someday in a wrongful discharge suit.
Explain the realities of modern-day life. "As you are well aware, Acme Widgets operates in a complex environment. Day in and day out, we must respond to the changing nature of our markets, the needs of our customers, the actions of our competitors and the expectations of our stockholders. Quite frankly, we got a little bloated over the past few years and were unable to make our widgets for the same low cost that our competitors could. That's why we took actions to streamline our operations by reducing the number of people required to make and market our line of products. You and we must guard against the temptation in future months and years to become bloated all over again. I know we can count on your support."
Put people in charge of their own destinies. As a result of benchmarking your competitors' principal strengths, perhaps you've identified six needs for corrective action (e.g., 20 percent greater productivity, faster customer responsiveness, zero manufacturing defects, etc.). These are actions that will strengthen the company and create employment stability. Instead of imposing top-down programs for reaching each goal, try letting your employees determine how they will strive to keep their jobs. Not only will they feel enhanced responsibility for a successful outcome, they also may contribute fresh ideas.
Implement pay for performance. If your company has been granting what amount to lock-step cost-of-living raises, scrap them for a compensation program that pays for the attainment of short- and long-term goals. Tailor rewards to specific positions and position levels. It may make sense, for instance, to award quarterly bonuses to assembly-line workers who meet or exceed specified production, quality and safety goals. At the same time, a senior executive may be best incented by a combination of stock options and deferred compensation (the latter perhaps tied to a rolling three-year average of profit or stock-price improvement).
Recruiter-proof your organization. Executive search consultants know that the most vulnerable employees in any company are those who believe they have a compelling reason to want to leave. It may be organizational instability, corporate politics, an insufferable boss, being passed over for a promotion, not having a corner office or any of a dozen other grievances real or imagined. If headhunters can get at this information, why can't your managers? As part of your next round of performance appraisals, ask employees to design their ideal career path and use the responses as an opportunity to discuss their goals and frustrations. If Mary came in second for a key promotion, help her understand why and what can be done to improve her opportunity in the future. Your employees will thank you.
Show a tangible vote of confidence in the organization. Celebrate the new era (and end of the old) with a one-time bonus, the announcement of a new employee benefit, a picnic or whatever your budget can afford. Say, "Thank you for sticking with us during the recent downsizing and for helping keep the place on an even keel. Your support is much appreciated. Here's to a happy and profitable future!"
Deep-six the catchy slogans. Two events in corporate life are always accompanied by slogans: sales meetings and reorganizations. In the latter case, companies seem to regard "Rightsizing Our Way to a New Tomorrow" and similar platitudes to be inspirational. Employees, on the other hand, regard them as code words for firing people. Now that you're the right size, it's time to recognize that tomorrow has arrived.
Position eliminations and reductions in force must be exactly that, unless a company wants to run the risk of violating employment discrimination laws. Sometimes during a corporate restructuring, however, a key employee leaves voluntarily for greener pastures -- and the position must be filled.
If the position can be filled internally with a qualified person, this course of action will generally boost employee morale and restore faith in "the system." If not, it is best to engage a competent search professional to fill the position promptly, thus removing a potential source of employee rumor and speculation.
Similarly, if brand-new positions are to be created with "fresh blood," take the same decisive action. The goal is to have the new organization in place -- and functioning -- as quickly as possible, with few or no distractions. Armed with full awareness of your organizational strategy, a search consultant can help you achieve that goal.
Restructurings are rarely anyone's favorite cup of tea. But sooner or later the hard times end. Then it's time to let the good times roll.
If you work in a large, multi-unit organization, others – including the corporate Human Resources and MIS Departments – might appreciate copies of this issue. These can be ordered from your Sanford Rose Associates search consultant.
©1999 SRA International, Inc. All rights reserved, including electronic reproduction or alteration. This SRA Update is published for the clients of Sanford Rose Associates.