Resizing The Organization 36 doc

If the reasons for resizing the firm are made very clear to or-ganizational members, managers may be able to minimize many of the negative reactions associated with downsizing Mone, 1997.

and belief in the organization by proceeding with care and sensi-tivity, ensuring that all organizational members are treated with fair-ness, dignity, and respect An underlying key is to ensure that departing employees are treated with compassion while emphasiz-ing a commitment to establishemphasiz-ing a strong future for the company and its remaining employees Tangible signs of such caretaking— outplacement counseling and job placement efforts, stress man-agement and coping-with-change workshops, and appropriate severance packages and financial planning workshops—provide clear messages to victims and survivors that the company values its human resources Venting meetings that allow survivors an op-portunity to grieve, focusing on what was and what will be, also are useful in rebuilding a foundation for trust and commitment (Marks, 1994; Young & Brown, 1998)

If the reasons for resizing the firm are made very clear to or-ganizational members, managers may be able to minimize many

of the negative reactions associated with downsizing (Mone, 1997) For example, by explaining that the resizing strategy eliminates only jobs and functions that were rendered obsolete by relevant technological and industry and market changes, managers signal

to their remaining workers that they do not need to fear becom-ing victim to another round of downsizbecom-ing (Edwards, 2000) Open and honest communication can prevent or dispel rumors, and it signals to organizational members that upper management is aware of what is happening, is in control, and is concerned about the impact of its decisions on employees (Applebaum & Donia, 2000; Noer, 1995) In contrast, giving false hope to employees, rais-ing expectations that are likely to be shattered by foreseen cutbacks and retrenchment plans can have dire long-term consequences (Kets de Vries & Balazs, 1997)

Involving organizational members in the decision process also can make them feel valued and supported, enhancing their com-mitment to the organization By communicating the need to realign the organization with the competitive realities of the marketplace and asking for employee input, proposed solutions can serve to empower organizational members (Applebaum & Donia, 2000) For example, Weakland (2001) reports on a manufacturing firm that established teams of employees from all organizational levels

to challenge organizational practices, policies, and procedures and

THE HIDDEN COSTS AND BENEFITS OF ORGANIZATIONAL RESIZING ACTIVITIES 331

Team-Fly®

recommend changes Team-based suggestions included outsourc-ing key tasks, negotiatoutsourc-ing new contracts with internal and external vendors, changes in work-related processes, and a related downsiz-ing plan that was perceived as fair and accepted by organizational members Especially in highly technical areas, the people actually performing the work often have the best insight on where to cut jobs and responsibilities (Perron & Shanley, 1999) Where staff cuts are deemed necessary, involuntary separations often can be avoided through a combination of careful planning, managed at-trition, reduction of overtime, retraining, and reassignment of or-ganizational members (Umiker, 1999) These steps are crucial, especially when a resizing organization might be faced with hiring new people with a critical skill set in the wake of terminating other organizational members

Involving key employees in the decision-making process, de-livering the bad news in person rather than using impersonal and indirect approaches (such as pink slips and memo notifications), providing clear and honest explanations, and ensuring consistency

in determining where cuts will be made reflect the values of the organization Some firms are even modifying their employee ap-praisal and compensation systems, including stock option and gain-sharing programs not previously available, to emphasize the survivors’ stake in the new organization (Freeman, 1999; Weak-land, 2001) By looking at the ramifications of resizing from both the organization and the employee perspective, the pain that de-parting employees experience can be minimized, while preparing survivors for the new responsibilities and challenges they will face

Broader Stakeholder Orientation

Effective resizing strategies reflect an assessment and considera-tion of the needs of an array of stakeholders, from displaced em-ployees and organizational survivors, to customers, investors, and surrounding communities (Buono & Bowditch, 1989, 1990; De Meuse et al., 1997; Mishra et al., 1998) Indeed, since corporate downsizing can adversely affect employees and surrounding com-munities, the emphasis of resizing on long-term value creation is

an important element of community development and corporate citizenship (Vidaver-Cohen & Altman, 2000) Such stakeholder

ori-entations, as opposed to a sole focus on shareholders, attempt to assess and balance the competing claims that surround resizing de-cisions This realization can help organizations to determine and articulate the reciprocal nature of these relationships and their un-derlying ramifications for strategic decisions, further facilitating the creation and maintenance of a desirable organizational image and reputation (Scott & Lane, 2000)

At the Societal Level

As organizations resize and technology continues to change both the focus and locus of work, workdays themselves are likely to be-come more flexible and work location less important Some ob-servers suggest that the emerging networked economy will provide workers with more control over their lives, especially in terms of where people choose to live and how they allocate their time (Carr, 1999) As people gain greater self-control over managing their own careers (Nicholson, 1996), one outcome could be a reconnection with the larger society as people attempt to replace traditional work-related ties with those aimed at their communities and social institutions Hall (1996, p 10) suggested that the career path “to the top” is beginning to be replaced by the path “with a heart.” Clearly, there are numerous uncertainties that workers must face in the resized business world Unlike previous generations where present success typically translated into future successes, what we produce at a particular point in today’s world is no guar-antee of future achievement As we move from project to project, assignment to assignment, and organization to organization, we continually face the possibility of failure However, as Carr (1999) points out, while this dynamic may be true, the actual penalty for failure is far lower than it has been in the past Many dot-com en-trepreneurs, for example, wear their failed companies as badges

of honor, viewing an unsuccessful venture as a platform for growth and learning While many assessments of the repercussions from the wave of corporate downsizings experienced during the late 1980s and early 1990s point to the human toll, a significant num-ber of these individuals realized they had to take control over their own lives (Luban, 2001) The result was a burst of entrepreneurial

energy, creating truly innovative and dynamic companies that have created many sources of new jobs and career opportunities (Lon-don, 1996; Schein, 1996)

As organizational members adapt to the realities of a resized business world, people will need to take more and more control over their own careers The focus will increasingly be placed on employability rather than employment, continuous learning rather than past accomplishments, partnering skills and collaboration rather than traditional command and compliance directives, and self-governance skills rather than an overreliance on hierarchy and organizational rules (Allred, Miles, & Snow, 1996; Hall, 1996; Nicholson, 1996) While these changes will help people become more self-reliant, organizations can also minimize the need for gut-wrenching, sporadic downsizing decisions through effective resiz-ing Effective resizing strategies minimize the negative effects on both workers and the companies’ surrounding communities, which often are negatively affected by widespread layoffs and resulting uncertainties (Edwards, 2000)

Some companies also are beginning to experiment with inno-vative ways to resize while supporting displaced workers Cisco Systems, for example, has been cited as one of the first major cor-porations to pay downsized employees partial salaries while they work for charitable organizations (Davis, 2001) Although many of these employees earn only about one-third of their former salary during this time, they still receive company benefits and related support These individuals have not been given any guarantees that they will be rehired, but they are considered internal candidates for new positions when they become available, and for some, their involvement in social institutions has opened new career paths Similarly, in the wake of the economic disruption exacerbated by the September 11 tragedy, there does appear to be an awakening

of attention for the need for retraining and greater social support for individuals caught up in the realities of a downsized world As specific industries, such as the airline and hospitality industries, are resizing their operations and shifting foci as they adapt to the new realities, support networks such as the Commonwealth Cor-poration and Rapid Response are providing workers with retrain-ing and financial support ( Jordan, 2001)

Although resizing decisions can be very tough on specific in-dividuals in the short term, they tend to be beneficial over the long run for a far larger number of people and organizations, creating

a stronger foundation for sustainable economic and societal growth and success By minimizing the upheaval and disruption that traditional downsizing strategies have created, restraining from using workforce reductions as a cookie cutter strategy and making only changes that truly strengthen the organization (Ed-wards, 2000), organizations can enhance their role as engaged cor-porate citizens (Marsden, 2000)

Conclusion

Over the long term, successful companies will be the ones that can effectively align their business goals with marketplace demands and consumer needs as well as the needs, aspirations, and commitment

of their workforce A truly strategic approach to resizing requires ongoing analysis of the organization’s direction with a focus on the future, the firm’s fit with the larger environment, and the actions and skills required to ensure that the organization accomplishes its objectives Such continuous alignment mandates careful analy-sis and incremental processes, based on gradual and meticulous planning rather than approaching such change in a quick-fix fash-ion Effective resizing initiatives must be part of a long-term, well-planned strategy rather than a shortsighted attempt to reduce costs and boost profits (Applebaum & Donia, 2000; Mirvis, 1997; Mrocz-kowski & Hanaoka, 1997) However, once the decision is made, it

is just as important to ensure expeditious implementation with full consideration for the emotional responses of departing employees and the training and developmental needs of survivors (Apple-baum & Donia, 2000; Umiker, 1999) Keeping the prospect of on-going layoffs dangling over the heads of survivors creates a climate

of fear and distrust and contributes to organizational paranoia that feeds productivity declines to the point of potential paralysis (Kets

de Vries & Balazs, 1997)

Clearly, there is no one set of prescriptions that is a perfect fit for all organizations Rather, effective resizing should be thought

of as a continuous rather than an episodic, discrete event (Kerber,

2001; Kets de Vies & Balazs, 1997; Weick & Quinn, 1999) Man-agers must not only engage in an ongoing process of reconfigur-ing the organization to function effectively in the present, they also need to prepare the organization to do so in the future as well (Hitt et al., 1994) Companies can build a solid foundation on which to build the new organization by using multiple communi-cation channels to ensure that organizational members are fully informed about the problems that contributed to the resizing de-cision and the wider plan that is linked to the firm’s long-term po-tential (Greenhalgh et al., 1986; O’Daniell, 1999) Yet the pressures

to resize the organization, engaging in significant restructuring, reengineered jobs, and reengineered processes often are suffi-ciently significant that organizations often move far faster than they think, acting in much more of a reactive than proactive manner Although there are definite benefits that can be achieved, or-ganizational resizing is a high-risk strategy, though clearly neces-sary The alternative to thoughtful resizing efforts is a reactive, wholesale binge-and-purge mentality (Rosenwald, 2001) Hence, the key is to ensure that such decisions are informed and rational, based on long-term strategic assessments, and focused on specific business goals rather than head count reductions (Edwards, 2000; Mroczkowski & Hanaoka, 1997) Emphasis should be placed on or-ganizational redesign efforts that focus on eliminating low value-added tasks and a redeployment of existing personnel into higher value-added tasks As this chapter has noted, key considerations are (1) employee involvement and participation in the diagnosis and planning processes, (2) full and honest disclosure of assess-ments and plans, (3) broad outplacement assistance for those being laid off, (4) increased retraining initiatives and related sup-ports for survivors, and (5) a focus on organizational renewal, re-building morale, reestablishing trust, and reformulating a basic foundation for performance enhancements and revitalization As Feldman (1990) has suggested, open and honest information about the changes and the reasons behind them, a recommitment

to survivors where they are ensured of their status with the com-pany, and ongoing support through assistance and feedback mech-anisms are crucial to successfully addressing and managing the concomitant disruption that accompanies such change Rather than focus on a single activity or a single set of concerns, managers

must take a broader, holistic view of the organizational dimensions touched by resizing strategies and prepare themselves to juggle a number of processes and activities simultaneously (Freeman, 1999)

Resizing is a stressful strategy for all organizational members, managers and employees alike Nevertheless, if it is conducted in a thoughtful, well-planned manner, greater levels of trust, commit-ment, and employee empowerment can create sources of com-petitive advantage for the organization

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