This week two subjects for the price of one! These two are combined because they both are different forms of the same management poison.
If you own shares in a company that announces it needs to reduce force, and anywhere in that announcement are any of these words-- “Voluntary Termination, Bonus-induced” or “Attrition”, sell your shares at once. You are invested in a company in trouble whose management has neither the guts, nor the intelligence, nor the willingness to do the hard work necessary to deal with it’s problems in a progressive way.
Bonus-induced voluntary termination is perhaps the most painless, and arguably the most counterproductive, method for a CEO. In this plan, any worker who self-selects to be terminated is offered a bonus. You don’t need Management 101 to figure out the high performers and the most valuable employees are the ones most likely to opt out.
Nevertheless, the CEO can proudly declare victory, “The workforce has shrunk by X%; the downsizing program was successful.” Wall Street analysts and unhappy shareholders are temporarily appeased. But a footnote should read: We lost our most aggressive and talented employees. We are now left with an inordinate number of lower level performers who are thrilled to be working for you, or anyone, for that matter. I’ve even seen an occasional media accolade for the forward thinking-ness. Ugh.
Not all CEOs who employ this lazy-man’s practice are totally naive. In fact, some might actually anticipate the corporate talent-exodus or at least sense the impending critique from common-sense owners or directors. This more clever subset of CEOs will often then state that executive approval is required to qualify any employee for the bonus package.
While this ploy allows CEOs to temporarily convince the Board and Wall Street that they are not completely inept, it will cause even further serious detrimental effects for the organization. While most employees will go on with business as usual, the most talented and aggressive will explore alternatives as soon as the program is announced. They can smell blood in the corporate water and will swim away before their own blood is shed.
These high-performers don’t let the executive approval clause stop them. Instead they hit the CEO with an ultimatum. “Give me the bonus now and I’m history. Deny the severance package and I’ll find an even better position with the competition and leave on my own timing!” Either way, the company loses.
Bonus-induced voluntary termination programs are a cinch to implement; no employee is upset or complains. However, to camouflage the resulting organizational weaknesses, the CEO then will usually pursue an ill-fated merger or acquisition. Management weakness plus camouflage plus a big, stupid merger is an unfortunately oft-repeated story.
Attrition stated as part of a downsizing program is both destructive and misleading, for two basic reasons.
First, does the boss say “and anyone who leaves on their own for their own reasons (the usually definition for attrition) will not be replaced”? Never. They’ll count those who leave and not debit for their replacements. Because who in the world would say “even if my cfo voluntarily leaves I won’t replace him/her?” So then what it the purpose? It’s just pure b.s.
Second, the randomness of attrition mandates that there will be no organizational progress. What if the entire quality control department leaves? How will layers be removed if the departures are randomly scattered throughout? Who’s in charge?
Remember, if you hear any of these words, Voluntary Termination or Attrition, occur, sell out; fast like a bunny. This management needs to be abandoned for their lack of capability, unwillingness to do hard work, and lack of guts. Next week we'll begin discussing more progressive approaches to downsizing.
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Posted by: vahila | March 09, 2009 at 10:09 PM