Adjusting to Downsizings and Mergers

Firm’s often use downsizing – reducing, usually dramatically, the number of people the firm employs to better their financial position. Yet many firms discover operating earnings don’t rise after major cuts. Low morale among those remaining may be part of the problem.

From a practical point of view, firms can take steps to reduce the remaining employees’ uncertainty and to boost their morale. A post-downsizing program at Duracell, Inc., (now part of Dow), illustrates what you can do. The program had post-downsizing announcement activities, including a full staff meeting at the facility; immediate follow up in which remaining employees were split into groups with senior managers to express their concerns and have their questions answered; and long term support, for instance by encouraging supervisors to meet with employees frequently and informally to encourage an open door atmosphere. Other companies, such as the Diners Club subsidiary of Citigroup used attitude surveys to help management monitor how post-downsizing effort are progressing.

Regardless of why you’re downsizing, think through the process, both to avoid unnecessary consequences and to ensure the process is fair. Here are some guidelines for implementing a reduction in force.

Identify objectives and constraints: For example, decide how many positions to eliminate at which locations, and what criteria to use to pinpoint the employees to whom you’ll offer voluntary exit incentives.

Form a downsizing team: This management team should prepare a communication strategy for explaining the downsizing; establish hiring and promotion levels; produce a downsizing schedule; and supervise the displaced employees’ benefit programs.

Address legal issues: You’ll want to ensure that others won’t view downsizing as a subterfuge to lay off protected classes of employees. Therefore, review factors such as age, race, and gender before finalizing and communicating any dismissals.

Plan post-implementation actions: Activities such as surveys and explanatory meetings can help maintain morale. Similarly, some suggest a hiring freeze of at least six months after the layoffs have taken effect.

Dress security concerns: As with any large layoffs, it may be wise to have security personnel in place in case there’s a problem from one or two employees and to follow the dismissal checklist discussed earlier.

Downsizings needn’t necessarily suggest the horror stories the press occasionally characterizes them as. Information sharing in terms of providing advanced notice regarding the layoff, and interpersonal sensitivity in terms of the manager’s demeanor during lay-offs can both help cushion the otherwise negative effects.

One lawyer contends that when employees seek out lawyers after layoffs it’s often because they’re unhappy with the layoff was achieved. The people who will actually be announcing the downsizing and dealing with the employees need to be able to explain factually what is happening and what the employees’ rights are, and must limit their comments to what is true.

In terms of dismissal, mergers and acquisitions are usually one-sided. One company essentially acquires the other, and it is often the employees of the latter who find themselves looking for new jobs. In such a situation, the remaining employees in the acquired firm may be hypersensitive to mistreatment of their colleagues. Seeing your former colleagues fired is bad enough for morale. Seeing them fired under conditions that smack of unfairness poisons the relationship. As a rule, therefore:

* Avoid the appearance of power and domination
* Avoid win-lose behavior
* Remain businesslike and professional in all dealings
* Maintain as positive a feeling about the acquired company as possible
* Remember that the degree to which your organization treats the acquired group with care and dignity will affect the confidence, productivity, and commitment of those who remain.

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