Being Proactive in Downsizing

How well we, as an institution, handle workforce issues will have major consequences for the morale of our employees and their commitment and productivity.

It is possible to come through a downsizing period with minimal impact on our workforce, and perhaps even an enhanced capacity to continue progress toward our institutional aspirations

“The Cycle of Failure”1. Where organizations are not proactive, the

possibility of or actual downsizing increases employee dissatisfaction and anxiety in the workplace

2. Workforce become less motivated; less “engaged” or cooperative

3. Surviving employees “look elsewhere” for better work conditions; possible loss of best employees

4. Productivity drops further affecting customer service and institutional image and reputation

5. Less productivity adversely impacts achieving institutional aspirations, and a decline in support

Studies to Inform Us

1. Downsizing leads to declines in employee morale as reported by companies - 56% (Watson Wyatt 1993); 80% (AMA 1994)

2. Negatively affect s organizational commitment - (Brockner, Grover, Reed, Dewitt, & O'Malley, 1987; Knudsen, Johnson, Martin, & Roman, 2003)

3. Job satisfaction - (Armstrong-Stassen, 2002; Luthans & Sommer, 1999)

4. Job involvement - (Brockner, Grover, & Blonder, 1988),

Studies…

5. Trust (Armstrong-Stassen, 2002)

6. Organizational commitment and job satisfaction consistently predict voluntary turnover - (Tett & Meyer, 1993),

7. Significant increases in psychological distress one month after the announcement and prior to the event itself - (Swaen et al.’s (2004)

Unintended Consequence

1. Unanticipated voluntary turnover 2. Destruction of “The Psychological Contract”

– equated with layoffs ; the most severe downsizing action

3. Lose key talent

Retaining Talent

4. 11% of workforce is highly committed; must retain these! (Corporate Leadership Council – 2004)

5. Emotional commitment is the key to retention 7 times less likely to leave Give 50% more effort

6. Organizations are 2X better overall performance

7. Manager and “open door” senior mgt are key drivers

Conclusion: Build downsizing strategies

accordingly

Agenda1. Introduction: Impact on the workforce –

data, morale, productivity, talent2. A guide to intelligently handling downsizing

– Principles3. Strategies after Downsizing

How? – SDP Triad - Say, Do, ProvideIt’s not vision or mission that motivates people, it’s

relationships.

1.Executives – trust is the key, value the employee – core values, appreciation, do everything we can, we rely on you to get us through this and position our institution for the future (Kenexa 2008)

2.Supervisors and Managers – 19 of top 25 factors (CLC 2004). What they do is critical.

3.Human Resources – inform managers of the impact of their relationships with employees; train them to work well with employees ; fair practices, safety and well-being (Ipsos Insight 2008)

Watson Wyatt Study: Factors – Successful Restructuring

Not a matter of luckCommunicate effectivelyInvolve employeesMobilize managersAdopt recovery actions Provide appropriate training to employees

How to Cut Costs Without Cutting Off Future Growth: Lessons From the Restructurings of the Early 1990s

Watson Wyatt p. 2

More Factors…Reduce their workforce only onceSelect workers carefully to minimize those

replacedPay particular attention to recovery actions…adverse impacts from restructuring

eliminated 17.5 percent of their workforceRehiring previously terminated employees

which is especially common among firms using reductions in force significantly undermine their chances of success

Workforce Principles1. Communicate to Fully Engage the Workforce. Help

direct their energy and skills to continuing to provide services in achieving institutional mission and goals.

2. Utilize a Partnership Strategy Model that Reflect Institutional Core Values. Treat people fairly and recognize their need to feel valued. Communicate honestly and directly with your employees.

3. Recognize that Talent Development and Retention Is a Top Institutional Priority: Encourage training and new opportunities.

4. To the Extent Possible, Minimize Adverse Economic Impact on Employees:  Consider a range of options – furloughs, modified work schedules, severance packages, in addition to layoffs.

5. Redesign Jobs and Work/Business Processes for Optimal Efficiency and Productivity

6. Be Mindful of Legal Issues – ADEA, Adverse Impact

More slides….more slides….

Strategies After Downsizing:

Shape the Organization for Continuity

Can’t Ignore the Reality…

1. Economic downturn has adverse impact2. Higher Ed must retrench3. We can choose how we respond

Key Elements1. Develop an organization that is consistent

with the vision, culture and core values.2. Provide/redesign/consolidate jobs, processes

and structures to achieve strategic goals and operational priorities.

3. Develop strategies to adapt to changing outside influence from economic, technical, financial, and political environments. Keep stakeholders and constituents informed.

4. Set forth the role of the campus leadership, supervisors/managers, the workforce, HR/training and development.

Develop an Institutional Effectiveness Strategy

1. Needs explicit recognition and endorsement as an institutional driver

1. An IE strategy brings together the institutional workforce at all levels – executive, administrative, managerial/supervisory, faculty, and staff - in a collaborative and integrated endeavor to improve the institution

Key Workforce Factors in Institutional Effectiveness

MoraleProductivityJob DesignBusiness ProcessesTraining and Talent Acquisition and

DevelopmentMeasurement and OutcomesWorking Relationships with Employees and

Management

Use High Involvement HR Practices1. The workforce facilitates organizational

success2. Monitor workforce attitudes – look at turnover

statistics and employee satisfaction3. Provide for “procedural justice” - grievance or

appeals process, a confidential problem-solving avenue (“hotline”), an ombudsperson designated for complaint resolution

4. Set up an explicit, targeted training program for supervisors, managers, and employees – for new/changed duties, to acquire new skills or knowledge, and to learn new/modified processes or procedures

Career Development StrategyCareer resource centerAssessment of skills, knowledge, abilitiesEducationRotation through jobs and locationsSpecial assignmentsSuccession planning Enabling voluntary transfers to provide job

breadth

Training/Development Strategy

Objective: Develop bench strength and managerial and workforce agility

In the face of cut backs on education and development, consider the following:MentoringProfessional coachesOn-the-job trainingApprenticeships

Workforce Planning Strategy

1. Collect data on employee knowledge, skills, abilities, and experience

2. Evaluate characteristics of the workforce today and the organization’s future workforce needs

3. Determine existing or anticipated gaps4. Fill urgent gaps by promoting from within

or recruiting5. Anticipated gaps can be filled by cross-

training, educating, and mentoring