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... its but early retirement for those that might be nearing retirement age (Kuzlowski, Chao, Smith, & Hedlund, 1993). Some other employees might welcome the idea of the change of employment or the ability to switch to the status of a consultant (Kuzlowski, Chao, Smith, & Hedlund, 1993). Quite often, these individuals will use this to start their own business, which is a dream for many individuals in his country (Kuzlowski, Chao, Smith, & Hedlund, 1993). There is a danger, however, and offering this type of voluntary separation may cause many of the best workers at the company to be the first ones to accept it and leave (Kuzlowski, Chao, Smith, & Hedlund, 1993). Much of this has to do with the fact that these individuals have many other employment alternatives and are likely to receive attractive offers from other companies (Kuzlowski, Chao, Smith, & Hedlund, 1993).
Companies who wish to offer these types of voluntary separations must manage them very carefully so that they do not lose many of their key people and the skills and competencies that they have (Kuzlowski, Chao, Smith, & Hedlund, 1993). Companies that have downsized in a successful manner often work with high performers in their company by making sure these individuals can understand how highly they are valued in the company and how much the management would wish them to stay (Kuzlowski, Chao, Smith, & Hedlund, 1993). This is usually done once the downsizing has actually been announced (Kuzlowski, Chao, Smith, & Hedlund, 1993). Only after voluntary separations and early retirement are offered to all employees who wish to take them should forced layoffs be considered (Kuzlowski, Chao, Smith, & Hedlund, 1993). This helps to show that management is concerned about the needs of the various employees instead of just its own necessary reduction in cost (Kuzlowski, Chao, Smith, & Hedlund, 1993). There can be some upfront costs incurred with this type of strategy and it also may take longer but through the amount of increased trust that will be given by the surviving employees these costs will easily pay for themselves (Kuzlowski, Chao, Smith, & Hedlund, 1993).
A credible vision of what is to come must also be crafted (Kuzlowski, Chao, Smith, & Hedlund, 1993). Downsizing is not a short-term fix and it must be made clear to all in the company as to how downsizing will actually help to create a competitive advantage, and why downsizing is actually the best choice to make (Kuzlowski, Chao, Smith, & Hedlund, 1993). A corporate improvement plan is often created for this purpose and the vision of the company is usually part of that (Kuzlowski, Chao, Smith, & Hedlund, 1993). It shows the firm's overall strategic position and how downsizing will help this (Kuzlowski, Chao, Smith, & Hedlund, 1993). The chief executive officer over Malden Mill Industries, Aaron Feuerstein, has downsized virtually continually, and has not harmed the morale of his workforce at all (Kuzlowski, Chao, Smith, & Hedlund, 1993). He is greatly in favor of downsizing, and much of this is a result of various technological advances or good industrial engineering (Kuzlowski, Chao, Smith, & Hedlund, 1993).
If he grows the company fast enough, new jobs can be given to many of the people that are displaced by technology, and unnecessary jobs are weeded out (Kuzlowski, Chao, Smith, & Hedlund, 1993). This does not harm the spirit of those who work for him because these employees understand that there is no scheme created to hurt them but simply a change in employment status and work ideals due to changing technology (Kuzlowski, Chao, Smith, & Hedlund, 1993). Having a vision for the company helps to show that the downsizing is credible and this will help to reinforce much of the trust that employees have in senior management (Kuzlowski, Chao, Smith, & Hedlund, 1993). It will allow employees to see these managers as competent leaders and will see that the firm is going to be revitalized and the competitive advantage restored (Kuzlowski, Chao, Smith, & Hedlund, 1993).
Employees also have a stronger sense of empowerment, direction, and meaning when they have a vision for the company (Kuzlowski, Chao, Smith, & Hedlund, 1993). This helps to avoid much of the ambiguity and uncertainty that many of these employees are facing when they know that downsizing and layoffs are coming (Kuzlowski, Chao, Smith, & Hedlund, 1993). The employees that survive after a downsizing has taken place will begin to see that they have a future with the company and by looking at the company's vision they will see where they fit in (Kuzlowski, Chao, Smith, & Hedlund, 1993). This will help them to feel that they have more control over what is happening to them than they would have previously had (Kuzlowski, Chao, Smith, & Hedlund, 1993).
Second, the downsizing must be planned (Mishra, 1996). All of the needs of various stakeholders must be considered when a plan of this nature is implemented (Mishra, 1996). A plan must help and comfort not only shareholders but the surviving employees and the laid off employees as well (Mishra, 1996). They must feel that they have control over much of their destiny even if they see that that destiny is going to involve a layoff (Mishra, 1996). Research indicates that nearly 50 percent of the effort that goes into downsizing should be done before the actual announcement of downsizing is made (Mishra, 1996). Managers who are well respected and well-trained know the business and the people in it and therefore must do much of this planning (Mishra, 1996).
When managers downsize without a great deal of planning they not only look incompetent but they are seen to initiate random and poorly thought-out cuts of employees (Mishra, 1996). A cross-functional team should be formed to plan and implement the downsizing that will take place and should represent the interests of all members so that employees are able to see that management is looking at the needs and concerns of everyone involved (Mishra, 1996). Representatives should be included from labor relations operations, human resources, public relations, finance, and legal affairs at a minimum (Mishra, 1996). Technical and customer relations should also have some say in the downsizing because they are considered key parts of the company (Mishra, 1996).
The responsibility for communicating the downsizing to the stakeholders should be divided up among the team (Mishra, 1996). Public relations will deal with the media and the general manager should give the employees the information (Mishra, 1996). There should be reasons for the downsizing that are clearly agreed on by the team so that workers do not see any type of disagreements occurring among the team members (Mishra, 1996). This will help to benefit the trust that these individuals have (Mishra, 1996). Constituents should be identified (Mishra, 1996). These include the employees of the firm, the community, and the press (Mishra, 1996).
Usually, the local media is all that is necessary but in cases of very large companies the national media may become involved as well (Mishra, 1996). Another constituent would be any type of government agency that may be affected by the layoffs (Mishra, 1996). By looking at the needs and potential risks for all of these constituents each one can be dealt with in the formulation of action plan (Mishra, 1996). It is quite possible that outside experts will be brought in during this time because areas such as job placement and counseling may need expert advice (Mishra, 1996). There are funds that can also be applied for to help with job development, job placement, and training for workers that will be leaving (Mishra, 1996).
These can be received through the Job Training and Partnership Act but take two months to receive so planning for downsizing must include starting this particular process early (Mishra, 1996). There are also outplacement companies that can be utilized and firms that offer financial counseling to workers that have been downsized (Mishra, 1996). Not only should the employees who are leaving be helped but those who are remaining should also be counseled and spoken with because they may have a great deal of distrust when they are concerned that the next job to go may be their own (Mishra, 1996). Managers should also have training because communicating the downsizing announcement is very difficult and they should be able to do it correctly with the least amount of damage (Mishra, 1996).
These managers need practice and skills in telling various employees that they will be losing their jobs (Mishra, 1996). They should be able to answer any types of questions that these individuals will have about their jobs and they should be able to convey the announcement convincingly and empathetically as well (Mishra, 1996). It is often difficult to share bad news with employees and many managers have a lot of guilt when this takes place (Mishra, 1996). Sometimes laid off workers will become angry at the individual who is delivering the message rather than the top management who has made the decision (Mishra, 1996). Managers who have been counseled in the proper ways to discuss downsizing with employees should be prepared to deal with the emotions that come from these employees and the guilt that may be felt by having to give the announcement (Mishra, 1996).
Counseling and support for these managers after the news is shared is also important to help them deal with the stress and the guilt that they may be facing (Mishra, 1996). Third, when the announcement is made, it is important to ensure that quest...
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