It’s Not Just the Market…Other Roadblocks to Flexible Downsizing as Alternative to Layoffs

Last week I discussed the ways in which market pressures reward layoffs, discouraging more creative approaches to corporate downsizing.  I believe that market pressure is a main motivation behind the immediate jump to "layoffs," which ignores options like reduced schedules, job sharing and sabbaticals.  But there are other less obvious influences that have been brought to my attention this past week.  (For more, join me for the U.S. Dept. of Labor's free Flex-Options teleconference on 2/12 from 2-3pm ET, "Using Workplace Flexibility as Part of a Downsizing Strategy").

"We've laid people off, and we may need to do more layoffs in the future." 

It’s never too late to incorporate work life flexibility into your downsizing strategy.  I’m always fascinated by the "all or nothing" mentality individuals bring to their personal work+life choices.  But I’m beginning to see this same thinking in organizations as they consider downsizing.  Remember, there’s historical precedence from the early 80’s for using flexibility to manage labor costs.  It’s not a choice between flexible downsizing or layoffs.  There’s room in your downsizing strategy for both options—they’re not mutually-exclusive.  And an organization gets work+life bonus points for including all the options at their disposal.

"Our systems are incompatible with multiple employment scenarios." 

In other words, "It’s too difficult and too expensive for our systems to account for and track some people working a reduced schedule, while other people share jobs, take sabbaticals, or become project-based employees.  So, because our systems can’t handle it, it’s easier to lay people off."  I know this makes sense to the people who have to deal with the system, but there’s a pretty clear cost/benefit rationale (as described here) for trying to figure it out.

"But we have to do something!  And figuring out all of those different scenarios takes too long."  

I will acknowledge that the 4th quarter 2008 economic downturn was rapid and surprising.  And I recognize that some companies were already on the brink of catastrophe, and forced to take drastic measures. 

But I find it hard to believe that for most organizations a) there wasn’t an early indication that circumstances might require creative thinking about how to continue operating profitably and b) there isn’t still some time to think carefully about all of the alternatives and their ramifications (again, here’s the cost/benefit)

"We just aren’t comfortable with flexibility." 

This is probably the most honest reason why more organizations aren’t considering reducing schedules, encouraging people to share jobs, offering sabbaticals, or shifting people to project-based status.  The deterioration in the market occurred rapidly and required a quick response.  Unfortunately a period of crisis may seem like the wrong time to develop and implement a business-based work life flexibility strategy, and then use it as a strategic lever to downsize.  But it’s never too late to give flexible labor cost savings a try.  Jennifer Swanberg, Executive Director of the University of Kentucky's Institute for Workplace Innovation reiterates the strong business case for flexible downsizing

As the wave of layoffs seems to grow daily, it’s important to make sure that organizations challenge their resistance and consider alternate approaches to achieving their labor cost saving goals.

My hope is that having been caught flat-footed by the recession will encourage leaders to get their companies ready to more flexibly respond to the next challenge.  Because there will be a next challenge. In his most recent book, A Sense of Urgency, management guru John Kotter predicts that, "For the next five to ten years the rate of change will continue to go up and up, with consequences for nearly everyone." Whether it’s the spike in energy costs early last year, or the steep economic downturn, rapid change is a given.  Excuses such as, "our systems aren’t compatible," "we have to do something," or "we just aren’t comfortable with flexibility," aren’t going to set organizations or individuals up for success in an era of rapid change.  

What do you think? What are some of the other reasons organizations aren’t incorporating work life flexibility into their downsizing strategies?

 

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5 Comments

  • Ilya Bodner

    Asking employees to take less is the hardest thing to do for small business owners. Even harder than losing customers.

    The reason, as we all know, is that employees are the life to all of business together.

    Small business owners should be encouraged to read this article and do whatever it takes to avoid the cut backs.

    Sincerely,

    Ilya Bodner
    Small Business Owner
    Initial Underwriting Group

  • Allen Laudenslager

    I've been working on a project by project basis for over 10 years and have found an institutional block to project centered employment at most big companies. Their "vendor qualification" process is centered around big, broad range service providers and tend to exclude individuals, projects are hard to identify for outsiders and pay schedules tend to favor companies who can wait 60 to 90 days from project completion for payment.

    A lot of talent is now being laid off but could, with changes in how the companies do business, become a resource if companies would accept doing business with a larger number of smaller providers.

    My bet is that this change will take a long time (10 to 20 years) because it demands a change in how the companies do business and that ALWAYS lags behind what is possible by a considerable amount of time.

  • Jeff Toister

    Your observations are spot-on. Many of the companies that I see downsizing are behind the curve. They should have taken action months ago to address lagging productivity, but this wasn't closely managed. Payroll expense is easier to understand because it is a line-item on their P&L, but it is also generally a backward looking indicator.

    A great example is Macy's. They've just announced they were laying off about 4% of their workforce. Walk into any Macy's store and you'll probably see sales associates standing around, talking to each other, and generally doing anything but engaging customers and selling. If Macy's had addressed THAT issue, they may not have had as many lay-offs or their workforce reduction strategy may have been different.

  • Elise Jones

    While these are all spot-on impediments to flexibility, I'd point to one reason why flexibility doesn't come up specifically in times of downsizing - because it's not already in place. In turbulent times, companies are most likely to turn to strategies that have produced predictable results in more prosperous days. I'd speculate that for most companies not already immersed in the language and practices of flexibility, the concept of flexible downsizing hasn't even entered the discussion.