...and other observations from finance-savvy HR experts about the difficult job of downsizing.
David McCann, CFO.com | US
January 15, 2009
Excerpts from the book 'Leading with Wisdom: Spiritual-Based Leadership in Business' co-authored by Peter Pruzan, Kirsten Pruzan Mikkelsen and Debra and William Miller. "If you look back at the Oticon story, there were two phases. One was the downsizing and the other was the building of the new company. In the downsizing phase we were under extreme pressure because the whole company was falling apart. And the pressures were coming from everywhere. I met with the management of our bank once a month and they were looking critically at everything we were doing. We were pressed to an extent that most people simply cannot imagine. We were forced to reduce staff very dramatically. On one occasion we cut away 10% of the staff overnight. I was really under pressure to determine which principles we should use to make the decisions as to who to lay off.. I took the decision, which no one understood, that we would not fire anyone over 50. Neither would we fire people who were so essential that we didn't think we could survive without them. But other than that, we would let those people go who we thought would have the best chance of getting another job quickly - even though these were obviously the ones I would have preferred retaining. I just couldn't look into the eyes of all of the people that we would kick into prolonged unemployment in order for the rest of us to make money and prosper. I just couldn't do that. I must admit that I simply made these decisions and I didn't really think about where they came from, which was from my conscience. Normally someone in my position would let the department heads talk to the people. But I didn't do it that way. I talked to every single person that was to be laid off and told each of them that they were going to be fired and that we would work with them to get a new job the best we could. I was experiencing all their bad feelings as I was confronting myself with the doubts and fears of all of these people. To me it would have been an act of cowardice to let others do this for me. I made the decision. Then I explained it to my managers - and I explained to those being fired why I had chosen to do what we were doing. The interesting point was that we got through this amazingly well. There was total acceptance, even though no one really understood it. But once it was done, people said "wow" and really respected my decision. I maintained a number of the people who were fired as very good friends because they respected that it was necessary. It turned out that we managed to work with almost all of them to get new jobs. Obviously this had a price for me and for the company as well, and the price was that there were lots of people that I would have rather laid off that we retained. Later I realised that this was really an expression of my spiritual principles. But I must admit that while doing it I didn't think much about it.. Yes, I did follow my conscience and that is certainly the voice of spirituality." About the Authors: Peter Pruzan, a Professor Emeritus at Copenhagen Business School, is a synonym for academic research on Corporate Social Responsibility. He has degrees from Princeton (BSc), Harvard (MBA), Case Western Reserve (PhD) and the University of Copenhagen (Dr Polit.). Kirsten Pruzan Mikkelsen is an eminent journalist and former newspaper editor at Berlingske Tidende, a major daily national newspaper in Denmark. Debra and William Miller are co-founders of Global Dharma Center, a non profit, non sectarian spiritual institution, inspiring and empowering people from all professions to live and work from a spiritual basis. The authors of this book were engaged in this research work as a service, and thus do not take royalty from the sales of the book.
Posted by Ajith Sankar | January 24, 2009 08:04 am
If you are effectively managing the performance of your employee team, there is no "deadwood" to eliminate when experiencing a severe economic downturn. Instead, you reduce the compensation of all on the team, with the optimum approach via a reduction in the standard work week for all, and commensurate reduction in compensation, regardless whether hourly or salary employees. As Zickerman observed, it is definitely a morale boost, at a time when the business environment is a negative force on employee morale. Moreover, the company is well-positioned to most effectively handle growth, when that opportunity returns.
Posted by Joseph Feig | January 24, 2009 06:31 am
The articles I've read address the economic impact on the bottom line. Which unfortunately sometimes has to be managed through head count. How's about we cut our enrgy consumption say only 50% !How about if at the same time we were able to reduce our crabon emissions OVER "115 MILLION metric TONS. Why not we as leaders do so with a little more VISION. It's the future I'm referring to. Everyones!!
Posted by James Smith | January 15, 2009 09:37 pm© CFO Publishing Corporation 2009. All rights reserved.