Lending sanctity to staff reduction

Let’s not kid ourselves—in these odd times, even excellent employees have no guarantee that they will stay forever in an organization because like it or not, the downsizing phenomenon has caught the imagination of many corporate managers. Gone are the days when corporations focused on recruitment as a strategy to boost production and productivity and thereby rake in huge profits over the long haul.

Most of the time, downsizing is justified by many creative management thinkers by using a euphemism: “rightsizing” which from the perspective of management may mean “optimizing the size of staff” instead of the cruel “layoff” or “cutting staff to reduce labor costs.”

In some cases, rightsizing may be necessary to ensure the viability of a business and its healthy financial performance. And for corporate leaders who view rightsizing as a tool by which to optimize human resources, the best time to begin this process is before financial constraints require staff reductions, says Patti Medvescek in an article titled “Rightsizing the right way,” written for the Medical Laboratory Observer.

Medvescek in his article gives corporate leaders and HR managers some important things to remember when downsizing has become inevitable—from picking the ones who will remain based on seniority, skills, performance, knowledge and attendance to preparing for the worst.

Turnover

First of these, Medvescek says, is that management should expect employee turnover. After preparing notifications to employees including severance packages, a department or organization that has undergone some downsizing should anticipate successive voluntary resignations. “Good employees will be recruited away by another organization when rumors about staff reductions start to fly,” Medvescek writes.

“But one of the worst effects of staff reduction is cutting too deep. The message is negative, when following a layoff, overtime or temporary workers are needed to complete daily operations,” he says.  “When the temps are not available, the remaining staff will be forced to work substantially harder (since the same amount of work will still have to accomplished by fewer people), unless systems are revised to balance staff changes.”

As a result, employee negativity will be high, and morale low. In the end, productivity will suffer. “The remaining employees will need lots of attention as they grieve for their co-workers who were let go,” Medvescek says.

This necessitates enforcing an effective employee relations program assuring the “survivors” that there will be no further staff reductions, or personally talking to them, asking them what they need, and being sincerely concerned about their welfare.

Do’s, don’ts

When planning to rightsize, Medvescek says, managers should remember some do’s and don’ts, which surprisingly are based on common sense and an understanding of basic issues concerning employee relations.

The staff should be kept informed. “Don’t make them work hard and be stingy with positive feedback,” Medvescek adds.

Medvescek also advises managers to solicit help from every employee to develop cost containment programs as a first step in rightsizing. He cites the example of a hospital that has been downsized. Medvescek says hospital management sought ideas from networks of lab professionals about creative staff scheduling. One hospital scheduled its outpatient staff on eight-hour shifts with frequent overtime. “At the suggestion of the employees, the institution tested 10-hour shifts. The overtime disappeared,” Medvescek says. “And employees were pleased that they had an opportunity to be problem solvers.”

Organizations contemplating rightsizing should also review systems, and base new staffing levels on meaningful and realistic productivity standards and goals, Medvescek says.

Medvescek, however, advises against any reduction in the workforce before all other means of cost savings have been exhausted. Likewise, “don’t downsize to match a current slump in volume of work without having an operational strategy in place when volume increases,” Medvescek says.

As in a just war, downsizing in organizations may be necessary – and may be justified to make way for perfect staffing patterns for a business to perform financially well. But when it’s used to “make over” some staff reduction tactics, or substitute “downsizing” with “rightsizing” in the name of political correctness, its ethical dimension will be suspect.  But that’s the subject of another writeup.