Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 2, Issue 29;   July 17, 2002: Double Your Downsizing Damage

Double Your Downsizing Damage

by

Some people believe that senior management is actually trying to hurt their company by downsizing. If they are they're doing a pretty bad job of it. Here's a handy checklist for evaluating the performance of your company's downsizers.

Lately, many companies are in deep financial doo-doo. Some have addressed this issue by downsizing. Basically, they fire a lot of people. Often this tactic is so harmful to the company that customers, shareholders, and employees wonder whether management is actually trying to hurt the company.

A 19th century shipwright's mast broad ax

A 19th century shipwright's mast broad axe. Photo courtesy U.S. Federal Highway Administration.

Is that really possible? To evaluate the performance of your company's Chief Downsizing Officer (CDO), use this handy checklist for executives who really want to ruin their companies in an effective manner.

Be sneaky
Don't let on that you're about to fire 20% of your employees. Giving people a heads up just lets them avoid major purchases and warn their families.
Maintain executive compensation
Don't reduce executive compensation at all. If possible, increase it. This builds resentment among employees, insecurity among customers, and fury among shareholders.
Don't downsize enough
Maintaining or increasing
executive compensation
during a time of cost
reduction and layoffs
is a great way to
build resentment
Make sure that you'll have to downsize again. Doing it twice in quick succession puts everyone on edge permanently.
Announce rolling layoffs
Tell everyone you plan monthly reductions for the foreseeable future, because rolling layoffs could reduce the total number of people affected, assuming conditions improve. But you know what will really happen — people will believe that every month is their last.
Schedule the announcement for December 24th
In Europe, Australia, and the Americas, the optimum time for downsizing announcements is just before Christmas. That way, people will already have spent more money than they would have if only they had known. No point hurting the economy too.
Don't solicit volunteers
Some people actually want to leave — they would prefer a layoff to quitting. Don't lay off people who want to leave, while you keep people who want to stay. You can do more damage if you lay off people who want to stay, while you keep people who want to leave.
Offer early retirement
Early retirement programs offer a relatively safe way to jettison your most valuable and experienced people first, without the legal risks of laying somebody off one week before they become eligible for retirement.
Don't close unprofitable operations
Keep them running. They'll probably lose even more money with only 80% of their staff. Instead, close or spin off any profitable operations, assuming you have any.
Don't cancel any initiatives
Internal initiatives, especially those with only long-term benefits, should remain at high priority. If you must cancel something, cancel anything that might immediately cut expenses or shorten the sales cycle.
Hint that there might be more
In media interviews, when asked if these cuts are the last, squirm. This signals the employees who have alternatives — who are, of course, the most difficult to replace — to get moving on job searches.

How well executed is your company's downsizing program? 1-3: ineffective; 4-7 not so good; 8-10: don't laugh — you might be next. Go to top Top  Next issue: Working Out on Your Dreadmill  Next Issue

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