As the difficulty and courage in implementing a downsizing goes up, so do the results (assuming good judgment and intelligence is applied of course)! As with across-the-board reductions, targeted workforce reductions occur in every department. A targeted reduction plan, however, now forces the CEO to make some tough decisions, to really earn his or her pay.
No organization on the earth is perfectly balanced, and very few are even close approximations. So you must take the opportunity presented in a downsizing to also do a re-balancing. Make lemonade out of lemons, as they say. This approach finally (as we come up from the bottom of the scale of bonus-induced voluntary terminations) meets my bare minimum of acceptable performance during a downsizing.
One department may be reduced by a whopping 20% while another only 3 percent. Individuals with longevity may not be retained. Entire organization chart layers may be eliminated. The decisions becomes personal, often painfully so.
Middle managers likely won’t be helpful: probably their departmental personnel are over-evaluated due to misplaced loyalties or for salary increase purposes, they may need to feed self-esteem by overstating their department’s tasks, and they’ll display resistance to retreat from a previously done and inappropriate departmental expansion.
There will be the inevitable chaos during the process; the CEO may even face a palace revolt. But that’s why CEOs make the big bucks. The best defense is to go on the offense. Bravely claim personal ownership of the overall plan and the individual decisions. Communicating in a straightforward way and confirming individual responsibility is powerful.
After undertaking the first targeted downsizing plan at Paradyne, my position was both simple and unapologetic: “I know the plan is far from perfect. It represents my best shot at getting our expenses in line and creating an effective organization going forward. With regard to all the decisions, the buck stops here!” Approaching the downsizing process with blatant honesty was a critical element in achieving a major turnaround in morale, profitability, and shareholder wealth. Next week, the whole banana.
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