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The tough test of downsizing
A downsizing program that is strategically planned and skillfully implemented by the company's human resources executive can revitalize the organization.
The Tough Test ofDownsizing Steven H. Appelbaum Roger Simpson Barbara T. Shapiro
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the aftermath of the recessions over the past decade or so, a new reality has taken hold in the North American psyche with regard to employment: Job security is a thing of the past. Cost and other competitive considerations on both a national and an international level have induced companies to become "lean and mean" in order to achieve a better balance between effectiveness and efficiency. This article will examine the issue of downsizing and suggest a strategic model that management can use to incorporate the many considerations related to downsizing into its strategic planning process. Ultimately the responsibility of managers at all levels, its inception and development must necessarily originate from top management, but its implementation is largely the concern of the human resources manager. Downsizing is the systematic reduction of a workforce by an employer in a variety of ways, usually as a result of such developments as financial losses, cashflow difficulties, and technological changes . Techniques used include hiring freezes, early retirement, transfers, and terminations. Coined in reference to the scaling
down of car sizes by automobile manufacturers, downsizing was first applied to the process of employee cutbacks when businesses and government began making major reductions to their employee bases in response to recessionary pressures. Many factors may contribute to the need for downsizing. These include : • Acquisitions and mergers, leading to reduced personnel needs. • Technological innovations, resulting in productivity improvements that reduce the number of workers involved. • International competition, causing product and employee redundancy. • Slow economic growth and a rapidly changing marketplace, heighten ing the need to be cost competitive. The primary factor, however, has been the recession of the late 19705 and early 1980s. When budget controls and purse strings became tighter at that time, employers began looking at ways to cut costs. Employees were an attractive target since they were within management's sphere of control and constituted a major portion of production costs. Companies went on crash diets in their
search for greater efficiency - and as the slimming process began, the idealism of the benignly Parkinsonian past was replaced by the bare-knuckle competition of a tough new world. Downsizing became the new prevailing philosophy as employers realized that they could get by with less. The widespread practice of downsizing has had major repercussions on both a macro and micro level. On a societal front, it has increased the strain on unemployment and welfare programs as the number of unemployed has grown. Many cases of individual depression and hardship, both economic and psychological, have also been reported. Employees lose confidence when they lose their old jobs and are unable to get new ones. The impact on "survivors" has also been traumatic. Increases in their levels of stress, conflict, role ambiguity, and job dissatisfaction, along with increased dissatisfaction with supervisors and co-workers, can undermine the organization's stability. Such problems sometimes lead to decreases in the levels of coordination and motivation within the workplace and, ultimately, in the organization's performance level. Studies have found that immediately after downsizing has occurred, many organizations enjoy an initial upsurge in productivity, but then become depressed and lethargic. Eventually, survivors settle into a condition of fearful expectancy. But not all of the effects are negative. Increased efficiency and cost competitiveness are two common results. A leaner bureaucracy and a more streamlined chain of command within management have led in some cases to increased flexibility and speed in decision making. Ultimately, reductions in the number of managers have led not only to increased cost efficiency but also to a more effective organizational decision-making and control structure - with overall improvements in job satisfaction.
Why do some companies suffer from lower morale and productivity after downsizing, while others actually enjoy higher performance levels and greater job satisfaction? The answer lies, in large part, in the careful, strategic planning and skillful implementation of the downsizing program, headed by an involved, aware human resources management team. Because the company's success, and even its survival, depend on the success of the plan, designing and implementing the program may indeed be called the tough test of downsizing. From a financial perspective, downsizing can be very expensive, but the longterm benefits are often well worth the costs. Du Pont, for example, spent $125 million in the first quarter of 1985 but expects to save $230 million each year thereafter. Union Carbide spent $70 million in 1986 for estimated future annual savings of $250 million. Clearly, long-term staff reductions are required to recover the initial outlay involved in the reorganization. Herein lies the necessity of developing a downsizing program that fits with the company's strategic plans.
DOWNSIZING AND STRATEGIC PLANNING
For a company to remain effective and efficient - i.e., competitive - after downsizing, its human resources planning and strategic planning must be well integrated. Downsizing has provided many painful lessons - especially in human grief - in companies where organizational planning had lost touch with the realities of the marketplace. Many of these companies' plans did not take into account the relationship between (1) human resources and (2) long-term market and organizational considerations. Many other companies have learned from such mistakes. As a result, strategic planning has expanded beyond the confines
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cific markets, which determine the circumstances of its downsizing effort. At all organizations, however, certain steps can be taken to make downsizing a success. A summary of ten of these steps is provided, offering an overview of this complex and intricate process. After the ten steps are described, a model for downsizing is presented.
TEN STEPS FOR DOWNSIZING
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of top management to incorporate contributions from the operational level (as a way of decreasing uncertainty and increasing control). Line managers now often formulate and implement policy with fewer restrictions and greater flexibility. Not only employees at the operational levels, but those at middle and even senior levels as well have been targeted for streamlining. Advances in information technology and the need to be more responsive have moved the chief executive closer to the center of things - thus eliminating the need for multiple layers of middle management. Every organization is faced with a certain degree of regulation, particular industrial characteristics, and the demands of spe-
The following steps were developed with the idea that the human resources department would playa leadership role. Step One: Develop a plan and manage it. Successful downsizing requires a comprehensive plan. Some points to consider in designing the plan are how severe the organization's problem is, what skills have become unnecessary, whether your company is in a hiring mode or not, and the hiring situation in the surrounding community. The human resources manager, who has a clear understanding of the company's hiring practices and current status, and of the skills and responsibilities of each employee, is ideally equipped to lead the downsizing planning effort. Do not fall into the trap of equating downsizing with terminations and layoffs. Doing so may force you to develop a termination plan. Look at other options first. It is a lot easier to influence management to consider the other options in the early planning stages than later, when they have committed themselves to a termination plan. Step Two: Define the future organization. If a total shutdown is anticipated, the future organization is of course described as being "zero." If the business is to continue, this step entails defining the anticipated new business level and describing the positions that will be needed (i.e., the types of jobs, the number of jobs, and the skills required).
Step Three: Define the affected groups. During this step, you are assessing which groups of employees will be affected by the transition being planned. If some form of future organization is anticipated, define the difference between the present staff and the staff of the future organization. Step Four: Identify the people who will need placement. Keep in mind that if a job or department is to be eliminated, the incumbents will become surplus. If a department is to be reduced, those with the least seniority in the department become surplus but those with "critical skills" should be protected. Employees should not be eliminated at random. Step Five: Plan for staffing the future organization. After reorganization, current employees will keep their jobs if the jobs are to continue as at present. Employees with the most seniority (if qualified and possessing critical skills) will be included in the new department if the department is to be reduced. Plan staffing of unfilled jobs (presumably, those created as a result of firing "documented poor performers"). Analyze the organization's demographic statistics (age, sex, race, and so forth), and then adjust the staff accordingly. Step Six: Create placement opportunities. This step is not one that has to be sequential- it can be taken throughout the downsizing process. Its purpose is to soften the impact of downsizing on the employees. "Inside" strategies you can use include offering early retirement incentives, terminating "documented poor performers," anticipatory "banking" of jobs (allowing jobs to be invested until they are needed), informing employees of openings at another location, and providing incentives for voluntary separation. "Outside" strategies include seeking outplacement opportunities at other companies (including vendors you use for supplies) and outplacement.
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Step Seven: Keep communication open. To facilitate the downsizing process, it is important to communicate with employees - share the bad news and the good. Both the line and the HR functions should be involved in keeping employees informed. Work as closely as possible with individual employees, and offer resume preparation workshops, interview coaching, and employee counseling. Step Eight: Allow reasonable time for employees to find jobs elsewhere- in the company or outside of it. This is a major factor in determining the success of your plan. If the boss says in April, 'We've got to close down the plant. Reduce staff by 30% effective August Ist," your only choice is a layoff/termination program. You must notify employees at least 3 months before termination. Step Nine: Terminate or layoff, if necessary. Early in the planning process, think about the possibility of terminations and/or layoffs. If you decide terminations are necessary, you must change your placement list to a termination list. Step Ten: Provide for a healthy,
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smaller organization. To ensure the health of the future organization, retain good employees and offer them recognition and career planning. Emphasize the notion of "continuity of career" in the new organization. Encourage them to become part of the new mission. These ten steps can be implemented only after the human resources executive has formulated a strategic human resources model and this model has been approved by the CEQ. Of course, the model is not complete in every detail- but it does outline the principal steps that top management, and the human resources executive in particular, will take during the downsizing process. Exhibit 1 outlines this general model for downsizing, including how and when to determine the objectives, criteria (i.e., standards), responsibilities, and considerations involved in a downsizing project. It is not a "cookbook recipe," but a general, operational guide to help the organization avoid unnecessary problems and stay on target.
THE DOWNSIZING MODEL
Step One: Problem Recognition and Initial Decision
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The first step in any downsizing project is to recognize the need for it, and to determine that the organization's problem is caused not by a temporary aberration of the marketplace but by a permanent state of affairs. Hence an analysis of all factors relevant to the organization's performance should be done before the decision to cut back is made. A company performance level consistently below those of competitors or long-standing dissatisfaction with the return on the company's investment may be a signal that a downsizing project should begin, Beforemaking the decision to down-
Exhibit 1 DOWNSIZING MODEL*
Problem Recognition & Initial Decision Strategic Planning Consideration of Alternatives Preparatory Actions Specific Action Plans Downsizing Program Components Communications/Implementation Helping Displaced Employees Follow-Up and Rebuilding "These steps have been developed for use by a profitoriented organization. They may be applied, however, to organizations of various types.
size, however, consider the following questions: Has a thorough evaluation of the business been conducted? Do the results indicate a long-term downward trend? Is there a particular element (unit, division, department) of the business that is performing significantly better or more poorly than others are7 Does the analysis suggest a major reason for the trend, such as lower productivity, excessive labor costs, or technological changes? The impact of the last recession and a lack of strategic planning shocked many companies into realizing that they had grown fat and ineffective and hence were vulnerable to competition. This led them to increase their awareness and understanding of all factors and trends affecting the company. Step Two: Strategic Planning
Once the need for downsizing is determined, the strategic implications for the company must be analyzed. To ensure that the company stays on its strategic course, its shortand long-term goals must be reviewed. Particular areas of interest include future market possibilities and the size and nature of the company. Closely examine the impact downsizing will have on the company's various constituencies, on the employees in question,
on the competition, and on the costs and the future profitability of the company. Decisions to eliminate services and functions should not be reactive, but rather should be based on a positive assessment of their worth. Such decisions should be made by senior management and the board of directors. The decision to adopt a particular strategic plan should be made only after the following questions have been addressed . 1. Have all priorities of the company been reexamined? 2. Does the strategic planning committee include a senior human resources representative? 3. Has there been adequate consideration of alternatives? 4. Has each been analyzed thoroughly and objectively? 5. Is there a strong corporate commitment to the new strategic direction outlined for the company? 6. Has the timing been considered? For example, will employees be released in a trickle, a wave, or a flood? 7. Has the plan been approved by the Board of Directors? 8. Has an appropriately staffed executive team been created to oversee the downsizing process? Top management support and commitment are critical for the successful development and implementation of any downsizing effort and for the smooth integration of human resources planning into a company's strategic and operational plans. Such integration is crucial, since any strategic revision must consider the organization's future employment needs. The planning committee must set a new performance level for the company and describe the human resources adjustments that will be needed to meet it. The types of jobs , the number of jobs, and the skills that will be required of job holders must be determined.
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Step Three: Alternative Cons iderations In Step 3, all possible alternatives to downsizing are considered. Terminations are expensive; moreover, they may make it difficult for the organization to attract good employees in the future, when the business revives. The company is thus advised to view terminations as a last resort and to think strategically. Companies should exam ine all options, including but not limited to downsizing, before committing themselves to a position . Such an examination is the responsibility of all senior managers and department heads. The strategic planning committee should reach satisfactory answers to these questions before opting for terminations: 1. Has consideration been given to cutting nonpersonnel costs - by postponing capital expenditure decisions, conserving energy, leasing rather than buying capital equipment, speeding up order systems to reduce inventories, reducing budgets (for travel. education, memberships, etc .), and selling unprofitable assets? 2. Have other downsizing alternatives been discussed, such as a hiring freeze, a payand-benefits freeze , reductions in pay and benefits, a voluntary retirement program,
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more hours/less pay, and staff reductions through attrition? 3. If a voluntary retirement program has been considered, were the pensions, cash payments, and other forms of compensation discussed? 4. Is the voluntary retirement offer likely to attract the employees the company would like to see go, or will it also encourage desirable employees to quit? 5. If desirable personnel are lost through a voluntary retirement program, what contingency plans does the company have for replacing them? Be aware that voluntary retirement programs, if generous enough to attract employees, sometimes have surprising - and dismaying - results. Du Pont, for example, had an open-ended program designed to cut some 6,500 employees, but twice that number left-including 400 employees who had to be kept on the job until successors could be trained. AT&Tfaced a similarly embarrassing situation. Is a succession plan a key element in the plan? Since a major downsizing effort is expensive and not easily reversible, a thorough review of alternatives is in order before the decision to cut back is made. Step Four: Preparatory Actions
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Preparatory actions contribute to the smooth implementation of the downsizing program and minimize the risk that future problems will develop. In this step, management should ensure that their plan conforms to all laws, union agreements, and regulations. A communication plan must be developed for notifying the company's employees - as well as its customers, suppliers, and investors - of the downsizing plan. The notification should be handled with empathy and tact. An analysis of the affected employees should be carried out and appropriate compensation plans should be developed in
keeping with broad approved policies. The task force in charge of this step should include, as a minimum, the CEO, a human resources manager, the chief financial officer, the chief operating officer (or plant manager), legal counsel, and a pension and benefits consultant. Although these tasks constitute a collective responsibility, the role of the human resources manager is key in determining the success and employee acceptance of the program. The following considerations should guide you in taking preparatory actions: Has a legal advisor been consulted and retained? Is there any legal impediment to the proposed action in terms of contractual obligations, timing, compliance to government regulations, etc.? Has a tactical approach for dealing with unions been developed? Has a communications policy been formulated determining who will be notified and when? Has a public relations strategy been adopted? Has the human resources manager analyzed the groups and individuals affected? What relevant information is being provided to the planning group? Step Five: Specific Action Plans The objective here is to ensure that strategic planning decisions have been translated adequately into tactical plans so that no issues remain unaddressed. The downsizing task force has the responsibility of deciding specifically what to do where, when, how, and with whom. In devising a specific action plan, consider these issues. 1. Have the affected employees been identified? 2. Have appropriate selection criteria been used, such as seniority, job analyses, performance appraisals, division profits analyses, realistic forecasts, and human resources planning model outputs?
3. Has each affected employee's compensation program been developed and its costs calculated in relation to the total downsizing effort? 4. Has a decision been reached on whether individual employees or groups of employees will be terminated? S. Has a specific plan been developed to help affected employees through ongoing support and placement opportunities? 6. Will there be job assistance, counselling, job search workshops, communication with other potential employers, block advertising, and outplacement services? 7. How will the company deal with affected employees who pose a security risk (e.g., of theft, sabotage, or property damage)? 8. How will the organization minimize potentially dangerous negative reactions? 9. Has the task of notifying employees of their termination been assigned? 10. Have training and preparation been given to the "terminators" to reduce their stress? 11. Have employees to be retained been identified? 12. Has a program been designed to reassure them so the company's morale and productivity levels can be restored?
13. Has the timing of the plan's implementation been set? Downsizing companies should set up task forces to develop strategies and tactics. Many retain legal counsel early in the planning stages to advise them on the myriad relevant laws and regulations. Affected groups must be defined and employees needing placement determined. While it may be appropriate to eliminate entire departments, outstanding employees in those departments should be retained and assigned to new areas. Employees to be terminated should be identified. Computer simulation models reflecting current and future employment needs may be used to facilitate this process. Ultimately, termination decisions must be made within the broader framework of the organization's strategic plans. Establishing close communication between the human resources manager and the employees concerned can go a long way toward avoiding demoralization. In companies like Monsanto, where steps were taken to reassure employees and encourage them to communicate with human resources managers, downsizing was accomplished with a minimum of disruption and anxiety among remaining employees.
"Be aware that voluntary retirement programs, if generous enough to attract employees, sometimes have surprising-and dismayingresults. Du Pont, for example, had an openended program designed to cut some 6,500 " employees, but twice that number left.
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Step Six: Downsizing Program Components Step 6 works in tandem with Step 5 to ensure that affected employees are dealt with in a humane and equitable manner and in accordance with all laws and contract agreements. The company should now communicate formally to the employees its comprehensive program of financial compensation, moral support, and job relocation assistance. An equitable plan will minimize the damage to the company's reputation and lessen the chances that future employees will hear negative accounts of the downsizing program. This step is primarily the responsibility of the human resources manager and chief financial officeralthough they must take it with the approval of the CEO and board of directors. Step 6 should be taken only after the following issues have been considered: 1. Has the company researched compensation plans followed by other companies in similar situations and used them as a basis for predicting the effectiveness of the company plan? 2. Is the company's financial compensation plan equitable given the company's resources? Does it recognize each employee's length of service, chances for reemployment,
pension rights, unused vacation allowance, temporary continuance of benefits (life and health insurance), and legal rights? Does the plan honor all contracts, agreements, and government regulations? 3. Has a program been established to provide employees with counseling, relocation assistance, outplacement services, etc.7 What are the eligibility requirements for these programs? 4. Has the company obtained information on government training programs, unemployment insurance, etc., for the information of affected employees? S. Have key employees whom the company wishes to retain been identified and notified under conditions of strict confidentiality? 6. Have these key employees been reassured as to their value to the company? What other efforts have been made to rebuild confidence, support, and trust? Although surviving employees must be reassured, they should not be informed of the downsizing decision any earlier than is absolutely necessary, to avoid leakage and possible disruptive behavior. It is also desirable to avoid alerting an employee union to the downsizing plan. The exact timing of notification, however, must be decided by each company on the basis of the individual circumstances. Similarly, the size and schedule of severance payments depend upon the specifics of the situation (the company's profitability, type of plan, and so forth). The company, however, must meet both the statutory (provincial and federal) and common law requirements.
Step Seven: Communication and Implementation
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Although communication is extremely important throughout the downsizing process, it becomes crucial toward the end. This step ensures that adequate communication is made
with all affected individuals at the appropriate time. Termination plans and assignments should be kept confidential until the decided time for action. Actual termination announcements should be made to groups of employees, not to individuals. After the initial announcement, however, a meeting between the human resources specialists and each affected employee should be called to inform each person of his or her severance pay, accrued benefits and, where applicable, pension package. Consider these issues in taking Step 7: 1. Has the planning for downsizing been conducted in sufficient secrecy to avoid the negative effects of the internal "grapevine"7 2. Are all announcements to be made simultaneously or in a particular order in accordance with a predetermined plan7 3. Has notification been given to those affected clearly and unambiguously7 4. Have the reasons for downsizing been clearly communicated, emphasizing that the company's (economic) predicament, not individual employee performance, has been the major factor7 S. Have the general terms and conditions of the decision, and when it will take effect, been clearly communicated? 6. Will there be written confirmation following the announcements outlining the severance arrangements7 7. Are employees aware of the ongoing support programs available7 This is often the most difficult part of the process, and also the shortest. Announcements should be brief and concise and should be made by a line manager who has the authority to release employees. The simultaneous announcement of terminations will help reinforce the message that economic necessity rather than individual performance is the primary reason for termination. The general terms and conditions of the decision, along with information about support programs, should be announced. The manager
should avoid any personalized discussions during the initial announcements since the objective here is to emphasize the collective origin and impact of the problem. Individual meetings will come later. Finally, if managers perceive any danger of negative and possibly violent reactions in the immediate aftershock of the termination, extra security measures should be taken. Step Eight: Assistance to Displaced Persons To minimize the trauma of separation, various programs to assist displaced employees should be put into effect, such as counseling seminars, job search workshops, and placement services. These facilitate the healing process throughout the company and also preserve its reputation as a responsible employer within the employee and general community. Primarily the responsibility of human resources management, these programs must also have the support of senior management. The following considerations should guide you in taking Step 8: Will there be counseling seminars and/or job search workshops7 Will selected employees be offered outplacement services7 Will space be made available on the premises where employees
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can prepare resumes and job applications? Will there be secretarial assistance? For how long? Will relocation counselors be provided? Will references be provided? Step Nine: Follow-up and Rebuilding To ensure the successful continuation of the organization, focus now on those remaining in it. The productivity and morale of surviving employees must be maintained at a high level during and after the cutbacks. Management should work actively on rebuilding employees' confidence, support, and trust in them. Similarly, the company must actively rebuild its image with shareholders, suppliers, customers, competition, financial institutions, and in the community. As many communities are affected by downsizing both directly and indirectly, a public relations program designed to rebuild confidence is essential. The company's public relations and human resources managers play key roles in this effort. Keep in mind the following questions when taking Step 9: Does the company actively counsel retained employees to reaffirm for them their value to the company? Has the company clarified for them their new roles and responsibilities to strengthen their feelings of involvement and belonging? Are training or retraining programs available for
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survivors to help them adapt to their new responsibilities? Has the company developed a broad public relations plan that outlines its reasons for downsizing and its intentions in the foreseeable future? The same amounts of time and effort that were spent on the actual staff reduction must now be devoted to rebuilding confidence, support, and trust among the supervisors. Management must be visible, honest, and supportive during this highly unstable period. Communication will facilitate the reassurance process. Above all, management must be open and honest in answering employees' questions, including those about the possibility of future terminations. Setting up a new strategic plan to address the future is crucial. The company's management must now direct their energy toward planning for the future, communicating their new goals to the employees, and infusing the company with confidence. Step Ten: The Future A downsizing project is but one of many possible tools an organization may use in attempting to gain a competitive edge or maintain or improve its performance level. Effective monitoring and evaluation after the project is complete are two important determinants of its success. Too many companies
"TOo many companies have completed the downsizing process successfully only to decline later because of complacency and a failure to make readjustments. Successful management equals long-term commitment and adaptability."
have completed the downsizing process successfully only to decline later because of complacency and a failure to make the necessary readjustments. Successful management equals long-term commitment and adaptability. These must be key elements in any human resources strategy for downsizing. Tomorrow's success is built on today's careful planning, implementation, and evaluation.
SELECTED BIBLIOGRAPHY
Discussions of the many issues and problems associated with downsizing and related human resources management concerns appear in many monographs and articles in the fields of organizational behavior, strategy, policy, and human resources. Readers interested in a macro approach to downsizing are directed to Barry Adamson and Murray Axmith's article "Managing Large-Scale Staff Reductions" (Business Quarterly, Summer 1983) for a thorough, five-stage approach. The article guides readers from a consideration of alternatives to termination all the way to advice on how to communicate with survivors. The authors are consultants who have developed and implemented downsizing programs for the past 10 years. Their approach is mostly prescriptive and offers the reader exact steps to follow. Two articles that have appeared in Fortune are quite interesting and complement each other nicely. Walter Kiechel's "Managing a Downsized Operation" (July 1985) offers a psychoanalytic perspective on the mental health/stress outcomes for companies and employees affected by downsizing, but does not analyze downsizing's economic costs. John Neilsen's work "Management Layoffs Won't Quit" (October 1985) takes a hard financial look at case studies in which well-established firms strategically decided to downsize their
management staffs. An accompanying index of the firms' cost benefits is included. Sally Luce, in her article "Human Resource Policy Under Pressure: Learning from Restraint" (The Canadian Business Review, Spring 1983), presents a strategic .corporate downsizing paradigm founded upon a recessiorilrestraint economy. She suggests integrating human resources planning with corporate strategy in downsizing to create a productive post-retrenchment organizational climate. The importance of strategy is also discussed by Duncan McDowall in his article "Restructuring the Organization: Sharp Cuts and New Directions" (The Canadian Business Review, Autumn 1985). McDowall presents guiding principles for total organizational restructuring and offers several illuminating case studies . The roles of the human resources manager and the human resources function in the downsizing operation are considered in two related works. Bruce Elligaddresses compensation problems during a downsizing operation in his article "Pay Policies While Downsizing the Organization: A Systematic Approach" (Personnel, May-June 1983). He presents several formulae to halt a financial drain brought on as a result of downsizing and explains how to develop termination pay policies. "Retrenchment, Human Resource Erosions and the Role of the Personnel Manager" (Public Personnel Management, Fall 1984), by Charles H. Levine, discusses fiscal stress, the problems of managing decrementalism, and the consequences of downsizing on public agencies. levine presents challenges for the human resources manager responsible for performing this economic and political balancing act. He stresses the importance of strategic planning. Finally, Ronald and Gordon Lippitt's "Humane Downsizing: Organizational Renewal Versus Organizational Depression" (Advanced Management Journal , Summer 1984) offers valuable insights on the need to humanize the downsizing process. If you wish to make photocopies or obtAin reprints of this or other tnticles in ORGANIZATIONAL DYNAMICS. please refer to the special reprint service instructions on pAge 80.
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The Tough Test ofDownsizing Steven H. Appelbaum Roger Simpson Barbara T. Shapiro
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the aftermath of the recessions over the past decade or so, a new reality has taken hold in the North American psyche with regard to employment: Job security is a thing of the past. Cost and other competitive considerations on both a national and an international level have induced companies to become "lean and mean" in order to achieve a better balance between effectiveness and efficiency. This article will examine the issue of downsizing and suggest a strategic model that management can use to incorporate the many considerations related to downsizing into its strategic planning process. Ultimately the responsibility of managers at all levels, its inception and development must necessarily originate from top management, but its implementation is largely the concern of the human resources manager. Downsizing is the systematic reduction of a workforce by an employer in a variety of ways, usually as a result of such developments as financial losses, cashflow difficulties, and technological changes . Techniques used include hiring freezes, early retirement, transfers, and terminations. Coined in reference to the scaling
down of car sizes by automobile manufacturers, downsizing was first applied to the process of employee cutbacks when businesses and government began making major reductions to their employee bases in response to recessionary pressures. Many factors may contribute to the need for downsizing. These include : • Acquisitions and mergers, leading to reduced personnel needs. • Technological innovations, resulting in productivity improvements that reduce the number of workers involved. • International competition, causing product and employee redundancy. • Slow economic growth and a rapidly changing marketplace, heighten ing the need to be cost competitive. The primary factor, however, has been the recession of the late 19705 and early 1980s. When budget controls and purse strings became tighter at that time, employers began looking at ways to cut costs. Employees were an attractive target since they were within management's sphere of control and constituted a major portion of production costs. Companies went on crash diets in their
search for greater efficiency - and as the slimming process began, the idealism of the benignly Parkinsonian past was replaced by the bare-knuckle competition of a tough new world. Downsizing became the new prevailing philosophy as employers realized that they could get by with less. The widespread practice of downsizing has had major repercussions on both a macro and micro level. On a societal front, it has increased the strain on unemployment and welfare programs as the number of unemployed has grown. Many cases of individual depression and hardship, both economic and psychological, have also been reported. Employees lose confidence when they lose their old jobs and are unable to get new ones. The impact on "survivors" has also been traumatic. Increases in their levels of stress, conflict, role ambiguity, and job dissatisfaction, along with increased dissatisfaction with supervisors and co-workers, can undermine the organization's stability. Such problems sometimes lead to decreases in the levels of coordination and motivation within the workplace and, ultimately, in the organization's performance level. Studies have found that immediately after downsizing has occurred, many organizations enjoy an initial upsurge in productivity, but then become depressed and lethargic. Eventually, survivors settle into a condition of fearful expectancy. But not all of the effects are negative. Increased efficiency and cost competitiveness are two common results. A leaner bureaucracy and a more streamlined chain of command within management have led in some cases to increased flexibility and speed in decision making. Ultimately, reductions in the number of managers have led not only to increased cost efficiency but also to a more effective organizational decision-making and control structure - with overall improvements in job satisfaction.
Why do some companies suffer from lower morale and productivity after downsizing, while others actually enjoy higher performance levels and greater job satisfaction? The answer lies, in large part, in the careful, strategic planning and skillful implementation of the downsizing program, headed by an involved, aware human resources management team. Because the company's success, and even its survival, depend on the success of the plan, designing and implementing the program may indeed be called the tough test of downsizing. From a financial perspective, downsizing can be very expensive, but the longterm benefits are often well worth the costs. Du Pont, for example, spent $125 million in the first quarter of 1985 but expects to save $230 million each year thereafter. Union Carbide spent $70 million in 1986 for estimated future annual savings of $250 million. Clearly, long-term staff reductions are required to recover the initial outlay involved in the reorganization. Herein lies the necessity of developing a downsizing program that fits with the company's strategic plans.
DOWNSIZING AND STRATEGIC PLANNING
For a company to remain effective and efficient - i.e., competitive - after downsizing, its human resources planning and strategic planning must be well integrated. Downsizing has provided many painful lessons - especially in human grief - in companies where organizational planning had lost touch with the realities of the marketplace. Many of these companies' plans did not take into account the relationship between (1) human resources and (2) long-term market and organizational considerations. Many other companies have learned from such mistakes. As a result, strategic planning has expanded beyond the confines
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cific markets, which determine the circumstances of its downsizing effort. At all organizations, however, certain steps can be taken to make downsizing a success. A summary of ten of these steps is provided, offering an overview of this complex and intricate process. After the ten steps are described, a model for downsizing is presented.
TEN STEPS FOR DOWNSIZING
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of top management to incorporate contributions from the operational level (as a way of decreasing uncertainty and increasing control). Line managers now often formulate and implement policy with fewer restrictions and greater flexibility. Not only employees at the operational levels, but those at middle and even senior levels as well have been targeted for streamlining. Advances in information technology and the need to be more responsive have moved the chief executive closer to the center of things - thus eliminating the need for multiple layers of middle management. Every organization is faced with a certain degree of regulation, particular industrial characteristics, and the demands of spe-
The following steps were developed with the idea that the human resources department would playa leadership role. Step One: Develop a plan and manage it. Successful downsizing requires a comprehensive plan. Some points to consider in designing the plan are how severe the organization's problem is, what skills have become unnecessary, whether your company is in a hiring mode or not, and the hiring situation in the surrounding community. The human resources manager, who has a clear understanding of the company's hiring practices and current status, and of the skills and responsibilities of each employee, is ideally equipped to lead the downsizing planning effort. Do not fall into the trap of equating downsizing with terminations and layoffs. Doing so may force you to develop a termination plan. Look at other options first. It is a lot easier to influence management to consider the other options in the early planning stages than later, when they have committed themselves to a termination plan. Step Two: Define the future organization. If a total shutdown is anticipated, the future organization is of course described as being "zero." If the business is to continue, this step entails defining the anticipated new business level and describing the positions that will be needed (i.e., the types of jobs, the number of jobs, and the skills required).
Step Three: Define the affected groups. During this step, you are assessing which groups of employees will be affected by the transition being planned. If some form of future organization is anticipated, define the difference between the present staff and the staff of the future organization. Step Four: Identify the people who will need placement. Keep in mind that if a job or department is to be eliminated, the incumbents will become surplus. If a department is to be reduced, those with the least seniority in the department become surplus but those with "critical skills" should be protected. Employees should not be eliminated at random. Step Five: Plan for staffing the future organization. After reorganization, current employees will keep their jobs if the jobs are to continue as at present. Employees with the most seniority (if qualified and possessing critical skills) will be included in the new department if the department is to be reduced. Plan staffing of unfilled jobs (presumably, those created as a result of firing "documented poor performers"). Analyze the organization's demographic statistics (age, sex, race, and so forth), and then adjust the staff accordingly. Step Six: Create placement opportunities. This step is not one that has to be sequential- it can be taken throughout the downsizing process. Its purpose is to soften the impact of downsizing on the employees. "Inside" strategies you can use include offering early retirement incentives, terminating "documented poor performers," anticipatory "banking" of jobs (allowing jobs to be invested until they are needed), informing employees of openings at another location, and providing incentives for voluntary separation. "Outside" strategies include seeking outplacement opportunities at other companies (including vendors you use for supplies) and outplacement.
Roger Simpson is tile auditor general of Canada. He received Ir is M .8.A. degree from Con cordia Univ ersity in M ontreal and is a member of tile Institute of Clrartered A ccol",tant s i,1 England and Wales (FCA) . tire Inst itute of Taxation (UK ) (AT //). and tire Institute of Clrartered A ccountants of Ontario (CA ).
Step Seven: Keep communication open. To facilitate the downsizing process, it is important to communicate with employees - share the bad news and the good. Both the line and the HR functions should be involved in keeping employees informed. Work as closely as possible with individual employees, and offer resume preparation workshops, interview coaching, and employee counseling. Step Eight: Allow reasonable time for employees to find jobs elsewhere- in the company or outside of it. This is a major factor in determining the success of your plan. If the boss says in April, 'We've got to close down the plant. Reduce staff by 30% effective August Ist," your only choice is a layoff/termination program. You must notify employees at least 3 months before termination. Step Nine: Terminate or layoff, if necessary. Early in the planning process, think about the possibility of terminations and/or layoffs. If you decide terminations are necessary, you must change your placement list to a termination list. Step Ten: Provide for a healthy,
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smaller organization. To ensure the health of the future organization, retain good employees and offer them recognition and career planning. Emphasize the notion of "continuity of career" in the new organization. Encourage them to become part of the new mission. These ten steps can be implemented only after the human resources executive has formulated a strategic human resources model and this model has been approved by the CEQ. Of course, the model is not complete in every detail- but it does outline the principal steps that top management, and the human resources executive in particular, will take during the downsizing process. Exhibit 1 outlines this general model for downsizing, including how and when to determine the objectives, criteria (i.e., standards), responsibilities, and considerations involved in a downsizing project. It is not a "cookbook recipe," but a general, operational guide to help the organization avoid unnecessary problems and stay on target.
THE DOWNSIZING MODEL
Step One: Problem Recognition and Initial Decision
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The first step in any downsizing project is to recognize the need for it, and to determine that the organization's problem is caused not by a temporary aberration of the marketplace but by a permanent state of affairs. Hence an analysis of all factors relevant to the organization's performance should be done before the decision to cut back is made. A company performance level consistently below those of competitors or long-standing dissatisfaction with the return on the company's investment may be a signal that a downsizing project should begin, Beforemaking the decision to down-
Exhibit 1 DOWNSIZING MODEL*
Problem Recognition & Initial Decision Strategic Planning Consideration of Alternatives Preparatory Actions Specific Action Plans Downsizing Program Components Communications/Implementation Helping Displaced Employees Follow-Up and Rebuilding "These steps have been developed for use by a profitoriented organization. They may be applied, however, to organizations of various types.
size, however, consider the following questions: Has a thorough evaluation of the business been conducted? Do the results indicate a long-term downward trend? Is there a particular element (unit, division, department) of the business that is performing significantly better or more poorly than others are7 Does the analysis suggest a major reason for the trend, such as lower productivity, excessive labor costs, or technological changes? The impact of the last recession and a lack of strategic planning shocked many companies into realizing that they had grown fat and ineffective and hence were vulnerable to competition. This led them to increase their awareness and understanding of all factors and trends affecting the company. Step Two: Strategic Planning
Once the need for downsizing is determined, the strategic implications for the company must be analyzed. To ensure that the company stays on its strategic course, its shortand long-term goals must be reviewed. Particular areas of interest include future market possibilities and the size and nature of the company. Closely examine the impact downsizing will have on the company's various constituencies, on the employees in question,
on the competition, and on the costs and the future profitability of the company. Decisions to eliminate services and functions should not be reactive, but rather should be based on a positive assessment of their worth. Such decisions should be made by senior management and the board of directors. The decision to adopt a particular strategic plan should be made only after the following questions have been addressed . 1. Have all priorities of the company been reexamined? 2. Does the strategic planning committee include a senior human resources representative? 3. Has there been adequate consideration of alternatives? 4. Has each been analyzed thoroughly and objectively? 5. Is there a strong corporate commitment to the new strategic direction outlined for the company? 6. Has the timing been considered? For example, will employees be released in a trickle, a wave, or a flood? 7. Has the plan been approved by the Board of Directors? 8. Has an appropriately staffed executive team been created to oversee the downsizing process? Top management support and commitment are critical for the successful development and implementation of any downsizing effort and for the smooth integration of human resources planning into a company's strategic and operational plans. Such integration is crucial, since any strategic revision must consider the organization's future employment needs. The planning committee must set a new performance level for the company and describe the human resources adjustments that will be needed to meet it. The types of jobs , the number of jobs, and the skills that will be required of job holders must be determined.
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Step Three: Alternative Cons iderations In Step 3, all possible alternatives to downsizing are considered. Terminations are expensive; moreover, they may make it difficult for the organization to attract good employees in the future, when the business revives. The company is thus advised to view terminations as a last resort and to think strategically. Companies should exam ine all options, including but not limited to downsizing, before committing themselves to a position . Such an examination is the responsibility of all senior managers and department heads. The strategic planning committee should reach satisfactory answers to these questions before opting for terminations: 1. Has consideration been given to cutting nonpersonnel costs - by postponing capital expenditure decisions, conserving energy, leasing rather than buying capital equipment, speeding up order systems to reduce inventories, reducing budgets (for travel. education, memberships, etc .), and selling unprofitable assets? 2. Have other downsizing alternatives been discussed, such as a hiring freeze, a payand-benefits freeze , reductions in pay and benefits, a voluntary retirement program,
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more hours/less pay, and staff reductions through attrition? 3. If a voluntary retirement program has been considered, were the pensions, cash payments, and other forms of compensation discussed? 4. Is the voluntary retirement offer likely to attract the employees the company would like to see go, or will it also encourage desirable employees to quit? 5. If desirable personnel are lost through a voluntary retirement program, what contingency plans does the company have for replacing them? Be aware that voluntary retirement programs, if generous enough to attract employees, sometimes have surprising - and dismaying - results. Du Pont, for example, had an open-ended program designed to cut some 6,500 employees, but twice that number left-including 400 employees who had to be kept on the job until successors could be trained. AT&Tfaced a similarly embarrassing situation. Is a succession plan a key element in the plan? Since a major downsizing effort is expensive and not easily reversible, a thorough review of alternatives is in order before the decision to cut back is made. Step Four: Preparatory Actions
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Preparatory actions contribute to the smooth implementation of the downsizing program and minimize the risk that future problems will develop. In this step, management should ensure that their plan conforms to all laws, union agreements, and regulations. A communication plan must be developed for notifying the company's employees - as well as its customers, suppliers, and investors - of the downsizing plan. The notification should be handled with empathy and tact. An analysis of the affected employees should be carried out and appropriate compensation plans should be developed in
keeping with broad approved policies. The task force in charge of this step should include, as a minimum, the CEO, a human resources manager, the chief financial officer, the chief operating officer (or plant manager), legal counsel, and a pension and benefits consultant. Although these tasks constitute a collective responsibility, the role of the human resources manager is key in determining the success and employee acceptance of the program. The following considerations should guide you in taking preparatory actions: Has a legal advisor been consulted and retained? Is there any legal impediment to the proposed action in terms of contractual obligations, timing, compliance to government regulations, etc.? Has a tactical approach for dealing with unions been developed? Has a communications policy been formulated determining who will be notified and when? Has a public relations strategy been adopted? Has the human resources manager analyzed the groups and individuals affected? What relevant information is being provided to the planning group? Step Five: Specific Action Plans The objective here is to ensure that strategic planning decisions have been translated adequately into tactical plans so that no issues remain unaddressed. The downsizing task force has the responsibility of deciding specifically what to do where, when, how, and with whom. In devising a specific action plan, consider these issues. 1. Have the affected employees been identified? 2. Have appropriate selection criteria been used, such as seniority, job analyses, performance appraisals, division profits analyses, realistic forecasts, and human resources planning model outputs?
3. Has each affected employee's compensation program been developed and its costs calculated in relation to the total downsizing effort? 4. Has a decision been reached on whether individual employees or groups of employees will be terminated? S. Has a specific plan been developed to help affected employees through ongoing support and placement opportunities? 6. Will there be job assistance, counselling, job search workshops, communication with other potential employers, block advertising, and outplacement services? 7. How will the company deal with affected employees who pose a security risk (e.g., of theft, sabotage, or property damage)? 8. How will the organization minimize potentially dangerous negative reactions? 9. Has the task of notifying employees of their termination been assigned? 10. Have training and preparation been given to the "terminators" to reduce their stress? 11. Have employees to be retained been identified? 12. Has a program been designed to reassure them so the company's morale and productivity levels can be restored?
13. Has the timing of the plan's implementation been set? Downsizing companies should set up task forces to develop strategies and tactics. Many retain legal counsel early in the planning stages to advise them on the myriad relevant laws and regulations. Affected groups must be defined and employees needing placement determined. While it may be appropriate to eliminate entire departments, outstanding employees in those departments should be retained and assigned to new areas. Employees to be terminated should be identified. Computer simulation models reflecting current and future employment needs may be used to facilitate this process. Ultimately, termination decisions must be made within the broader framework of the organization's strategic plans. Establishing close communication between the human resources manager and the employees concerned can go a long way toward avoiding demoralization. In companies like Monsanto, where steps were taken to reassure employees and encourage them to communicate with human resources managers, downsizing was accomplished with a minimum of disruption and anxiety among remaining employees.
"Be aware that voluntary retirement programs, if generous enough to attract employees, sometimes have surprising-and dismayingresults. Du Pont, for example, had an openended program designed to cut some 6,500 " employees, but twice that number left.
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Step Six: Downsizing Program Components Step 6 works in tandem with Step 5 to ensure that affected employees are dealt with in a humane and equitable manner and in accordance with all laws and contract agreements. The company should now communicate formally to the employees its comprehensive program of financial compensation, moral support, and job relocation assistance. An equitable plan will minimize the damage to the company's reputation and lessen the chances that future employees will hear negative accounts of the downsizing program. This step is primarily the responsibility of the human resources manager and chief financial officeralthough they must take it with the approval of the CEO and board of directors. Step 6 should be taken only after the following issues have been considered: 1. Has the company researched compensation plans followed by other companies in similar situations and used them as a basis for predicting the effectiveness of the company plan? 2. Is the company's financial compensation plan equitable given the company's resources? Does it recognize each employee's length of service, chances for reemployment,
pension rights, unused vacation allowance, temporary continuance of benefits (life and health insurance), and legal rights? Does the plan honor all contracts, agreements, and government regulations? 3. Has a program been established to provide employees with counseling, relocation assistance, outplacement services, etc.7 What are the eligibility requirements for these programs? 4. Has the company obtained information on government training programs, unemployment insurance, etc., for the information of affected employees? S. Have key employees whom the company wishes to retain been identified and notified under conditions of strict confidentiality? 6. Have these key employees been reassured as to their value to the company? What other efforts have been made to rebuild confidence, support, and trust? Although surviving employees must be reassured, they should not be informed of the downsizing decision any earlier than is absolutely necessary, to avoid leakage and possible disruptive behavior. It is also desirable to avoid alerting an employee union to the downsizing plan. The exact timing of notification, however, must be decided by each company on the basis of the individual circumstances. Similarly, the size and schedule of severance payments depend upon the specifics of the situation (the company's profitability, type of plan, and so forth). The company, however, must meet both the statutory (provincial and federal) and common law requirements.
Step Seven: Communication and Implementation
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Although communication is extremely important throughout the downsizing process, it becomes crucial toward the end. This step ensures that adequate communication is made
with all affected individuals at the appropriate time. Termination plans and assignments should be kept confidential until the decided time for action. Actual termination announcements should be made to groups of employees, not to individuals. After the initial announcement, however, a meeting between the human resources specialists and each affected employee should be called to inform each person of his or her severance pay, accrued benefits and, where applicable, pension package. Consider these issues in taking Step 7: 1. Has the planning for downsizing been conducted in sufficient secrecy to avoid the negative effects of the internal "grapevine"7 2. Are all announcements to be made simultaneously or in a particular order in accordance with a predetermined plan7 3. Has notification been given to those affected clearly and unambiguously7 4. Have the reasons for downsizing been clearly communicated, emphasizing that the company's (economic) predicament, not individual employee performance, has been the major factor7 S. Have the general terms and conditions of the decision, and when it will take effect, been clearly communicated? 6. Will there be written confirmation following the announcements outlining the severance arrangements7 7. Are employees aware of the ongoing support programs available7 This is often the most difficult part of the process, and also the shortest. Announcements should be brief and concise and should be made by a line manager who has the authority to release employees. The simultaneous announcement of terminations will help reinforce the message that economic necessity rather than individual performance is the primary reason for termination. The general terms and conditions of the decision, along with information about support programs, should be announced. The manager
should avoid any personalized discussions during the initial announcements since the objective here is to emphasize the collective origin and impact of the problem. Individual meetings will come later. Finally, if managers perceive any danger of negative and possibly violent reactions in the immediate aftershock of the termination, extra security measures should be taken. Step Eight: Assistance to Displaced Persons To minimize the trauma of separation, various programs to assist displaced employees should be put into effect, such as counseling seminars, job search workshops, and placement services. These facilitate the healing process throughout the company and also preserve its reputation as a responsible employer within the employee and general community. Primarily the responsibility of human resources management, these programs must also have the support of senior management. The following considerations should guide you in taking Step 8: Will there be counseling seminars and/or job search workshops7 Will selected employees be offered outplacement services7 Will space be made available on the premises where employees
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can prepare resumes and job applications? Will there be secretarial assistance? For how long? Will relocation counselors be provided? Will references be provided? Step Nine: Follow-up and Rebuilding To ensure the successful continuation of the organization, focus now on those remaining in it. The productivity and morale of surviving employees must be maintained at a high level during and after the cutbacks. Management should work actively on rebuilding employees' confidence, support, and trust in them. Similarly, the company must actively rebuild its image with shareholders, suppliers, customers, competition, financial institutions, and in the community. As many communities are affected by downsizing both directly and indirectly, a public relations program designed to rebuild confidence is essential. The company's public relations and human resources managers play key roles in this effort. Keep in mind the following questions when taking Step 9: Does the company actively counsel retained employees to reaffirm for them their value to the company? Has the company clarified for them their new roles and responsibilities to strengthen their feelings of involvement and belonging? Are training or retraining programs available for
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survivors to help them adapt to their new responsibilities? Has the company developed a broad public relations plan that outlines its reasons for downsizing and its intentions in the foreseeable future? The same amounts of time and effort that were spent on the actual staff reduction must now be devoted to rebuilding confidence, support, and trust among the supervisors. Management must be visible, honest, and supportive during this highly unstable period. Communication will facilitate the reassurance process. Above all, management must be open and honest in answering employees' questions, including those about the possibility of future terminations. Setting up a new strategic plan to address the future is crucial. The company's management must now direct their energy toward planning for the future, communicating their new goals to the employees, and infusing the company with confidence. Step Ten: The Future A downsizing project is but one of many possible tools an organization may use in attempting to gain a competitive edge or maintain or improve its performance level. Effective monitoring and evaluation after the project is complete are two important determinants of its success. Too many companies
"TOo many companies have completed the downsizing process successfully only to decline later because of complacency and a failure to make readjustments. Successful management equals long-term commitment and adaptability."
have completed the downsizing process successfully only to decline later because of complacency and a failure to make the necessary readjustments. Successful management equals long-term commitment and adaptability. These must be key elements in any human resources strategy for downsizing. Tomorrow's success is built on today's careful planning, implementation, and evaluation.
SELECTED BIBLIOGRAPHY
Discussions of the many issues and problems associated with downsizing and related human resources management concerns appear in many monographs and articles in the fields of organizational behavior, strategy, policy, and human resources. Readers interested in a macro approach to downsizing are directed to Barry Adamson and Murray Axmith's article "Managing Large-Scale Staff Reductions" (Business Quarterly, Summer 1983) for a thorough, five-stage approach. The article guides readers from a consideration of alternatives to termination all the way to advice on how to communicate with survivors. The authors are consultants who have developed and implemented downsizing programs for the past 10 years. Their approach is mostly prescriptive and offers the reader exact steps to follow. Two articles that have appeared in Fortune are quite interesting and complement each other nicely. Walter Kiechel's "Managing a Downsized Operation" (July 1985) offers a psychoanalytic perspective on the mental health/stress outcomes for companies and employees affected by downsizing, but does not analyze downsizing's economic costs. John Neilsen's work "Management Layoffs Won't Quit" (October 1985) takes a hard financial look at case studies in which well-established firms strategically decided to downsize their
management staffs. An accompanying index of the firms' cost benefits is included. Sally Luce, in her article "Human Resource Policy Under Pressure: Learning from Restraint" (The Canadian Business Review, Spring 1983), presents a strategic .corporate downsizing paradigm founded upon a recessiorilrestraint economy. She suggests integrating human resources planning with corporate strategy in downsizing to create a productive post-retrenchment organizational climate. The importance of strategy is also discussed by Duncan McDowall in his article "Restructuring the Organization: Sharp Cuts and New Directions" (The Canadian Business Review, Autumn 1985). McDowall presents guiding principles for total organizational restructuring and offers several illuminating case studies . The roles of the human resources manager and the human resources function in the downsizing operation are considered in two related works. Bruce Elligaddresses compensation problems during a downsizing operation in his article "Pay Policies While Downsizing the Organization: A Systematic Approach" (Personnel, May-June 1983). He presents several formulae to halt a financial drain brought on as a result of downsizing and explains how to develop termination pay policies. "Retrenchment, Human Resource Erosions and the Role of the Personnel Manager" (Public Personnel Management, Fall 1984), by Charles H. Levine, discusses fiscal stress, the problems of managing decrementalism, and the consequences of downsizing on public agencies. levine presents challenges for the human resources manager responsible for performing this economic and political balancing act. He stresses the importance of strategic planning. Finally, Ronald and Gordon Lippitt's "Humane Downsizing: Organizational Renewal Versus Organizational Depression" (Advanced Management Journal , Summer 1984) offers valuable insights on the need to humanize the downsizing process. If you wish to make photocopies or obtAin reprints of this or other tnticles in ORGANIZATIONAL DYNAMICS. please refer to the special reprint service instructions on pAge 80.
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