Serving the American Public - University of North Texas€¦ · Serving the American Public: Best Practices in Downsizing SEPTEMBER 1997 Benchmarking Study Report. ... public—organizations

Vice President of the United StatesAL GORE

Serving the American Public:Best Practices in Downsizing

SEPTEMBER 1997

BenchmarkingStudy Report


Serving the American Public:Best Practices inDownsizing

BenchmarkingStudy Report

SEPTEMBER 1997

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CONTENTS

STUDY PARTICIPANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SECTION 1: LEADERSHIP STRATEGIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SECTION 2: COMMUNICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

SECTION 3: ADVANCE PLANNING AND PREPARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SECTION 4: EXTERNAL AND INTERNAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SECTION 5: SETTING STRATEGIC DIRECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

SECTION 6: IMPLEMENTATION: TRANSLATING STRATEGIC

DIRECTION INTO ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

SECTION 7: PERFORMANCE EVALUATION AND REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

APPENDICESA. DOWNSIZING RESOURCES ON THE INTERNET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

B. TRAINING AVAILABLE TO FEDERAL MANAGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

C. GOVERNMENT RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

D. AGENCY CONTACTS AND OTHER SOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

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STUDY PARTICIPANTS

BENCHMARKING STUDY PARTNERS

BENCHMARKING STUDY SPONSOR

Bell SouthBethlehem Steel CorporationCanadian GovernmentCity of Charlotte, North CarolinaDefense Mapping AgencyDelta Air LinesDepartment of Energy

Department of LaborGTE Government SystemsOffice of Personnel ManagementSocial Security AdministrationState of WashingtonU.S. Information Agency

National Performance Review

BENCHMARKING STUDY ORGANIZERSWilett Bunton, NPR Benchmarking Team Leader

Lori Byrd, NPR Benchmarking TeamDolores Livingston, NPR Benchmarking Team

Linda Nivens, NPR Benchmarking Team

BENCHMARKING STUDY TEAM LEADERRon Massengill, Department of Defense

BENCHMARKING STUDY TEAM MEMBERS

Girtha Burks, Department of EnergyLoren Casement, Department of CommerceCraig Conlin, National Aeronautics and

Space AdministrationPhilip Demarais, Department of DefenseJames Ellis, Department of DefenseSusan Lehotsky, Internal Revenue Service

Maynard Malabey, Social Security AdministrationDavid Murray, Department of EducationRobert Page, Department of Veterans AffairsRobert Warren, Department of DefenseLewis Waters, Department of EnergyLette Weinrich, Social Security Administration

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When the history of the United States during the final 20 years of the 20thcentury is reviewed, one issue that will be seen as defining the Americanworkforce for the period is downsizing and the loss of the perceived “socialcontract” of lifelong employment in the public and private sectors with a

single employer. According to a March 1996 series of articles in the New York Times, “TheDownsizing of America,” more than 43 million jobs have been lost in the United States since1979, affecting nearly one-third of all households.

Whether it is called downsizing, rightsizing, delayering, reduction in force, redundancy elim-ination, or any of a host of other terms, the expectation of lifelong employment with oneemployer has now become the exception rather than the rule. Both in the federal governmentand the private sector, the loss of that sense of security—combined with the familiar scenario inwhich the number of employees is reduced but the amount of work remains unchanged—canhave devastating effects on the remaining employees, otherwise known as the “survivors.”

Providing improved service with fewer workers is the hallmark of a successful downsizing. Asmaller federal government from which the American people obtain improved service is theessence of the Clinton Administration’s goal of a government that “works better and costs less.”To help achieve that goal, it is important to review and learn from the experiences of organiza-tions that have downsized—and recognize that downsizing does not always achieve theintended results.

The fundamental reasons for downsizing in the federal government, and also among stateand local governments, are different from those cited by organizations in the private sector.Private sector entities must reduce costs to remain competitive in an increasingly globaleconomy and to maximize the returns of their shareholders. Public sector downsizings areprimarily driven by budget reductions and technology improvements that allow fewer workersto do the same amount of work. The most recent—and the largest ever—federal workforce

EXECUTIVE SUMMARY

SERVING THE AMERICAN PUBLIC:

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reduction stemmed from President Clinton and Vice President Gore’s decision to reinvent thefederal government by making it smaller and more efficient. Despite these different motivationsfor downsizing, the reactions and needs of the workers are the same across both public andprivate sectors. For this reason, much can be learned from the experiences of private—andpublic—organizations that have downsized in recent years.

STUDY FINDINGS

Following are some of the highlights of the Downsizing Study Team’s findings from our inves-tigation of benchmarked organizations:

Senior leadership plays a vital role in downsizing. We found that successful downsizingresulted when senior leadership became involved early on in the process and continued toparticipate actively, remained visible and accessible, and was perceived by employees to be theirsource of communications concerning major downsizing actions.

Overcommunication is impossible during downsizing. We found that honest and opencommunication of what was happening to the organization during the downsizing is whatemployees most want from their organization’s leadership. Moreover, the communication flowmust be two way, with management listening to employees as well as the converse.

Planning for downsizing begins with getting the right people together. This includes seniorleadership, human resource executives, and labor representatives; all of whom play key roles instrategic downsizing planning.

Information not normally required in an organization’s day-to-day operations becomescritical during downsizing. For example, management requires information for planning andmonitoring the staff reduction, and employees need information to help them decide on acourse of action. Most of this information is supplied internally by human resource offices;additional information can be obtained from other organizations that have successfully down-sized.

Successful planning for downsizing includes the development of business plans from variousdepartments within the organization. Requiring each department within an organization todevelop a business plan helps ensure that the managers of those departments are involved in theplanning; it also builds support for the effort.

Identification of work processes that will not be needed in the future organization is vitalto the success of the downsizing action. This identification effort also helps protect thoseprocesses that are key to the organization’s future from being affected by the downsizing.

Incentives such as early retirement and buyouts work well and are popular with employees.Early retirement incentives allow employees to retire with either full or reduced pension benefitsat an earlier age than normal; buyouts provide a lump sum payment to employees in exchange

BEST PRACTICES IN DOWNSIZING

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for their leaving the organization voluntarily, regardless of whether they are eligible for early orregular retirement.

The use of multiple strategies and techniques to accomplish goals for downsizing helps toleverage the outcome. Our partners found that not all downsizing strategies worked exactly asplanned, with some not working well at all and others exceeding expectations. The concurrentuse of multiple strategies, therefore, helps ensure the success of the downsizing process.

Organizations that have successfully downsized provided career transition assistance toboth separated and surviving employees. Among the services provided are career counseling,personal counseling, career/skill and career transition training, relocation assistance, outplace-ment assistance, resume––writing assistance, access to office equipment, paid time off, childcare, financial counseling, and access to job fairs and to Internet job placement sites.

Monitoring progress is a chief component of successful downsizing. Those organizations thattook the time to periodically review their procedures, learn from their mistakes as well as theirsuccesses, and incorporate what was learned from these periodic assessments into their down-sizing procedures found that they could minimize adverse impact in ongoing downsizingprocesses and complete future downsizings in a more streamlined fashion.

SUCCESSFUL DOWNSIZING DEPENDS ON THE SURVIVORS

A key conclusion of this report is that the success or failure of a downsized organizationdepends on the workforce remaining after the downsizing. A well-planned and -managed down-sizing process, which the survivors perceive as having been fairly and humanely administered,promotes trust and faith in management and in the future of the organization among theseemployees and empowers them to provide improved service.

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INTRODUCTION

Americans don’t like big government much, and wewant less of it wherever possible. But we also expectmuch from our government and have high aspirationsfor it.

Vice President Al Gore

While it is generally acceptedthat Americans want a smallerfederal government, it is alsotrue that they expect a lot from

their government. The Federal WorkforceRestructuring Act of 1994—which requires thatfederal employment levels be reduced by 272,900during fiscal years 1994 through 1999—com-bined with budget-cutting measures, changingwork processes, evolving technology, andeliminations of functions and programs willensure a smaller workforce. The challenge federalmanagers face is organizing, training, andempowering that smaller workforce to deliver tothe American people the services they want anddeserve. At the same time, the downsizingprocess should maintain the dignity of thedeparting workers and the morale and produc-tivity of the surviving workers.

WHY IT IS IMPORTANT THATDOWNSIZING BE SUCCESSFUL

A distressing 80 percent of downsizers admit that themorale of their remaining employees has been mugged.

These sullen, dispirited, hunkered-down folk, lest weforget, are the very people who are supposed torevitalize your enterprise and delight your customers.

Ronald Henkoff in Fortune,January 10, 1994

Providing improved service with fewerworkers is the hallmark of a successful down-sizing. A smaller federal government fromwhich the American people obtain improvedservice is the essence of the Clinton Adminis-tration’s goal of a government that “worksbetter and costs less.” Unfortunately,downsizing has often been used as a one-shotmethod to achieve the singular goal ofreducing payroll costs. When this is an organi-zation’s approach, undesirable outcomesusually result.

In researching downsizing efforts in boththe public and private sectors, our team foundnumerous examples of negative impacts onemployee productivity and morale and oncustomer service and product quality. Further-more, downsizing does not always achieve theintended goals. A leading human resourceconsulting company survey of restructuringpractices among 531 large companies,conducted in 1993, revealed that althoughwell over half of the companies surveyedachieved their goal of reducing costs andexpenses, less than half achieved their goals ofincreased profitability, productivity, andcustomer satisfaction.


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The American people cannot reasonablyexpect improved service from a demoralizedworkforce—one that has witnessed colleaguessummarily dismissed by what are seen asunfeeling and unsympathetic managers andthat lives with uncertainty about future reduc-tions. Nor should the American people expectimproved service from a workforce whosenumbers have been reduced but for whom theway work is done and the amount of work tobe done remain the same. Process improve-ments that compensate for workforce reduc-tions often require systems modernization andincreased automation. Therefore, long-termsavings often depend on what can be a sub-stantial upfront capital investment.

Used as a tool in an overall reengineering/restructuring strategy, downsizing has beensuccessfully accomplished in both private andpublic sector organizations. However, thosesuccessful organizations recognized downsizingfor what it is: a management tool that must beused with other management tools to achievethe goals of reduced costs and improvedservice.

SUCCESSFUL FEDERALGOVERNMENT DOWNSIZING:THE GOOD NEWS

We owe a tremendous debt to federal employees whohave devoted their careers to public service. Becausemany of these employees have been or are likely to beseparated from federal service as we downsize thegovernment, I have directed the heads of departmentsand agencies to provide career transition assistance tosupport them as they search for other employment. It’simportant that we provide these services to the peoplewho have made possible such dramatic changes in thefederal government.

President Bill Clinton

Our study found a number of best practicesassociated with downsizing within the federalgovernment. On September 12, 1995,President Clinton issued a memorandumrequiring all executive branch agencies todevelop career transition assistance programs

to help their employees affected by reductionsin force (RIFs) find other employment. Speci-fically, agencies must establish:

• programs to provide career transitionservices to the agency’s surplus anddisplaced employees;

• policies for retraining displacedemployees for new career opportunities;and

• policies that require the selection of awell-qualified surplus or displacedinternal agency employee who applies fora vacant position in the local commutingarea before selecting any other candidatefrom either within or outside the agency.

Although the Federal Workforce Restruc-turing Act of 1994 targets reductions over the1993-99 period, some agencies began reduc-tions prior to that time. Our literature searchrevealed numerous mentions of best practicesassociated with downsizing within the federalgovernment.

• The Priority Placement Program is anautomated system in use within onefederal agency that matches employeeswho are scheduled to be separated withvacant positions for which they are quali-fied. Created in 1965, the program hasplaced over 100,000 employees. Supervi-sors reported in a survey that almost 99percent were satisfied with the employeesplaced with them through this program.

• The same agency developed anautomated registry that provides resumesof federal personnel and their spouses tosome 14,000 registered employers uponrequest. Approximately 900,000 resumesa year are referred to employers.

• This agency also developed an electronicbulletin board of employer want adsavailable for viewing by displacedpersonnel at sites worldwide. The agencyis now examining the possible expansionof these programs to the federal sector atlarge.


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In another example of federal best practicesin the area of career transition, the Office ofPersonnel Management (OPM) makes severalresources available to all federal agencies. Forexample, The Employee’s Guide to CareerTransition, dated January 1996, describes newcareer transition services that are available tohelp affected federal employees find jobs bothwithin and outside the federal government.

Also, to prevent human resource specialistsand managers from becoming overwhelmed bythe tasks required in downsizing, andrecognizing that needed skills and expertisemay not be resident in each agency, OPM hasdeveloped a suite of downsizing services avail-able to federal agencies on a reimbursablebasis. These include:

• development of an agency-specific down-sizing planning document,

• development of an agency-specific careertransition program,

• technical assistance in RIF planning,

• development of an agency outplacementprogram,

• career center design assistance,

• individual career counseling, and

• planning and conducting job fairs.

While the development of a careertransition assistance plan is important, ourstudy found that career transition assistance isonly one element of a downsizing plan. Down-sizing plans should also include—among otherelements—assessments of the current andfuture organizational structure, current work-force skills and competencies, and futureworkforce needs; and a communications plan.

THE STUDY DESIGN

We owe a special thanks to the people who have reallymade reinventing government work. The real heroesof reinvention are the men and women of the federalgovernment at every rung on the ladder, the folks whowork where the rubber meets the road. They havebuckled down and made the downsizing process

possible, and now they need our support. We willprovide it to them as they take their talents andtraining to other parts of the federal government or tothe private sector.

Vice President Al Gore

Why a benchmarking study on downsizing?Downsizing has become entrenched inAmerican culture during the 1980s and 1990s.It is difficult to pick up a newspaper or maga-zine or tune in to a television news programthat does not mention the topic in some way.Examples of successful downsizing amongpublic and private sector organizations are nothard to find. Unfortunately, examples ofunsuccessful downsizing are just as easilyfound.

Our study, and other studies on down-sizing, found that many of the same elementsthat contributed to one organization’sunsuccessful downsizing, such as poorplanning and communication, can repeatedlybe found in other organizations’ experiences.The opportunity to learn from these organiza-tions’ experiences by identifying both bestpractices and lessons learned is significant andshould not be overlooked by either public orprivate sector entities. This, combined with anew perspective on downsizing as one of manymanagement tools that must be used togetherfor effective and successful organizationalrestructuring and reengineering, makes thebenchmarking study process particularlyappropriate for this topic.

Benchmarking consortium. This study is oneof a series of benchmarking studies charteredby Vice President Gore’s National PerformanceReview. The President’s Management Council,made up primarily by the Deputy Secretariesand their equivalents from the major federaldepartments and agencies, identified severalpotential topics for benchmarking studies.Eight federal agencies joined together in aninteragency team to study the topic ofdownsizing.

Selection of partners. The team conducted anextensive literature search from which a sub-stantial number of downsizing best practices


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were identified. The literature search was alsoused to develop a list of prospective partnersconsisting of organizations that have taken anactive and positive role in minimizing theadverse effects of decisions to downsize. Aquestionnaire to guide our data collection wassent to our prospective partners. We obtaineda mix of federal agencies and state and citygovernments, as well as a foreign governmentand several private sector companies—all ofwhich had been recognized for best practicesin some area of downsizing.

Based on availability, the team met withseveral best-in-class organizations. It was clearto us from the start that there was no singleexample of downsizing that could be used byall federal agencies. We recognized, however,that a considerable number of best practicesassociated with downsizing could be used byorganizations to contribute to their success.

To help us examine downsizing processes atour own agencies, the team then took on thetask of developing a model of federalgovernment downsizing.

DOWNSIZING MODEL

One of the team’s first tasks was to look athow downsizing has been conducted withinour own agencies. We found that mostagencies relied on experience and lessonslearned from previous downsizing experiences—rather than external benchmarking—to dealwith current situations. The experience withrestructuring and downsizing and the avail-ability of written plans, procedures, and guide-lines for downsizing processes varied greatlyamong agencies. This makes the developmentof a single, precise model of downsizing in thefederal government impossible. However,based on the review of processes associatedwith downsizing within our own agencies, theteam members developed a “generic” model ofdownsizing within the federal government.The figure on the following page depicts thatmodel, which is described in the narrativebelow.

Receive notice. Notice that an agency willundergo downsizing may come in varyingforms, including budget reductions or manda-tory specified reductions in the number ofemployees, and from a variety of sourcesincluding Congress, the Office of Manage-ment and Budget, elsewhere within the execu-tive branch, or internally as the result ofagency reengineering/reinvention processes.

Assess impact. Once it is acknowledged that areduction is likely, most agencies assess theimpact of such cuts by:

• converting dollar cuts to full-time equiv-alents (FTEs),

• reviewing agency mission and goals todetermine the best ways to continue tomeet them in a restructured/downsizedenvironment,

• preparing estimates of where best toapply FTE reductions (whether byprogram or location), and

• determining appropriate target date(s).

Implementation plan. The degree to whichdownsizing implementation strategies areapplied is driven by the magnitude of themandated reductions. Modest reductions arealmost always accomplished by pro rata reduc-tions across the affected agencies and aregenerally accommodated through attrition.Large workforce reductions, on the otherhand, require planning involving multipleconcurrent activities—including strategic plan-ning, labor-management relations, communi-cations, and human resources.

Strategic planning. The impact of downsizingshould be incorporated into the organization’sstrategic plan to maintain a consistent under-standing of the future of the organization andhow it will get there. The degree to which thishas been done among the agencies representedin our study varies greatly. When numericgoals are established for downsizing—as wasdone in the Federal Workforce RestructuringAct of 1994—it appears that downsizing drives


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the strategic planning process. However, whencombined with targeted supervisory ratios andreductions identified by the NationalPerformance Review to specific occupationalgroups, the goals actually represent workforceplanning (decisions on what the future work-force should look like) at the highest level ofthe executive branch.

Labor-management relations. Organizationswith unions secure union involvement as earlyin the planning process as possible, and thatinvolvement continues throughout the down-sizing process. The union is an importantparticipant in gaining employee acceptance ofthe changes that will be necessary as a result ofthe required cuts.

Communications. Communication—earlyand often—among management, employees,customers, and affected communities is a keyingredient in successful downsizing. Theimplementation plan should identify how thiswill be accomplished.

Human resources. The element involving thegreatest use of resources in downsizing is theprocess for handling human resources. Typicalactivities in this area include:

• a workforce demographics review, toinclude retirement and other loss projec-tions and assessments of the age,diversity, and skills of the workforce;

• assessment of available options to avoidinvoluntary separations, such as hiringfreeze, buyouts, early retirement,retraining, and relocations;

• detailing FTE reductions by year,location, program, occupation, position,and person;

• conducting RIFs;

• providing career transition/job placementassistance;

• providing assistance for survivors ofdownsizing; and

• ensuring that an adequate retrainingprogram is in place.

Functional reviews and processreengineering. Although some agenciesconducted functional cross-cutting reviews intheir efforts to reengineer processes, we foundthat, at most agencies, this has been done afterthe fact as a reaction to downsizing instead of

ASSESSIMAPCT

PLAN

TRIGGER

APPLY HRMECHANISMS

REENGINEERWORK

MAJORPROGRESS

Communicate• Employees

• Managers

• Community

• Administration

• Congress

Obtain Input• Strategic Direction

• Customer Requirements

• Union Involvement

DOWNSIZINGPROCESS MODEL


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employing reengineering in the planningprocess.

Monitoring. Most agencies includemonitoring systems in downsizing plans, eitherin the form of preexisting reviews or reviewsdesigned specifically to assess progress inachieving downsizing goals. Some agenciesproduce reports that can then be used asguides for future downsizing activities.Wherever the workforce reduction allows,human resource options are reviewed withannual budget preparation. A reassessment isdone of the requirement for RIFs, and FTEsare reallocated among suborganizations.

ORGANIZATION OF THISREPORT

In producing this report, our intention is toprovide a compendium of best practices from

which federal government agencies and otherorganizations can choose when developingtheir strategic, business, and implementationplans for downsizing. For convenience, wehave organized this material into seven areas,albeit with some overlap:

• leadership,

• communication,

• advance planning and preparation,

• external and internal information needs,

• strategic direction,

• implementation, and

• performance evaluation and reporting.

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Today, more than ever before, seniorleadership’s most challenging role isto become managers of change.Responsible leadership prepares its

personnel for change by providing clear andconcise reasons for change as early in theprocess as possible through open, accuratecommunication. While acknowledging thenegative aspects of downsizing, leaders shouldpresent this change as an opportunity to insti-tute needed improvements within the organi-zation.

INVOLVEMENT OF SENIORLEADERSHIP

Senior leadership plays a vital role in down-sizing. While the methodologies they useddiffered, organizations that have downsizedsuccessfully all sought to achieve organiza-tional goals and objectives with no appreciableloss in quality or quantity of service. Seniorleaders in all of our benchmarking partnersand other organizations researched wereinvolved in the planning that occurred fortheir downsizing actions. It was the degree towhich their participation continued during theimplementation of the downsizing plan thatset certain organizations apart.

We found that successful downsizingresulted when senior leadership became

involved early on in the process and continuedto participate actively, remained visible andaccessible, and was perceived by employees tobe their source of communications concerningmajor downsizing actions. A high level ofinvolvement, perceived interest, and concernon the part of senior leadership had a positiveimpact not only on those who were eventuallyseparated but on the survivors and their fami-lies as well.

Where downsizing was effectively imple-mented, senior leadership was able to foster acommitment to the organization by impartingthe necessity for the downsizing, the futuredirection of the organization on a strategiclevel, and the survivors’ role in helping theorganization get there. Senior leadership saw—and conveyed—a direct correlation betweenefficiently managing the downsizing processand maintaining the viability of theorganiztion.

Senior leadership must recognize thatemployees consider a destabilized environmentto be potentially threatening to their careers,and that uncertainty surrounding their jobfuture causes them to look elsewhere foropportunities. Moreover, experience has shownthat in a destabilized environment, the bestemployees go first—which causes a significantdrain on the workforce at the very time thosepersonnel are needed most.

SECTION 1:

LEADERSHIP STRATEGIES


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INVOLVEMENT BY HUMANRESOURCE MANAGERS

If the only factor organizations had to payattention to when they downsized was howmany fewer employees would be on the payrollnext year compared to this year, then thewhole process would be much simpler. Seniorleadership would just have to agree on thenumbers and then turn the process over to thehuman resource manager who, in turn, wouldeither enforce and monitor a hiring freeze orconduct a reduction in force.

Effective and successful downsizing,however, is not that simple. In fact, the processcan be quite complex and multifaceted—andhuman resource managers play an integral partin its success.

In our literature search and among our part-ners, we found an almost universal convictionthat, unless an entire organization is beingclosed down, straight-across-the-boardpersonnel reductions are inadvisable. Suchreductions can cause critical programs, vital tothe organization’s future, to suffer whileleaving other programs overstaffed. To avoidsuch outcomes, successful downsizing meansworkforce planning. Notably, these basic ques-tions must be answered:

• How will attrition be managed?

• How is the workforce distributed in thetarget organization?

• What are the skills needed for the new ortargeted organization?

• Does the current workforce have thoseskills and competencies?

• Can the current workforce be trained toacquire those skills?

• Is some recruitment necessary to acquirefuture skills that are needed?

The precision with which an organizationcan answer these questions—most of whichfall within the realm of responsibility of thehuman resource manager—largely depends onthe clarity of the organization’s strategic vision

and the quality and quantity of information itpossesses about its current workforce. It alsoheavily depends on the organization’s humanresource information systems.

INVOLVEMENT BY MANAGERS ATALL LEVELS

Senior leadership at our benchmarking part-ners used a vast array of innovative downsizingtechniques and tools to ensure that the organi-zation’s downsizing goals were met. However,these leaders usually are too far removed fromface-to-face contact with employees to ensurethat downsizing is done humanely—and there-fore, is ultimately successful. Involvement isneeded throughout the organization. As onepartner representative said, “Managers at alllevels need to be held accountable for—andneed to be committed to—managing theirsurplus employees in a humane, objective, andappropriate manner. While Human Resourcesis perceived to have provided outstandingservice, it is the managers’ behavior that willhave the most impact.”

OVERCOMING ORGANIZATIONALTRADITION

One of the greatest obstacles for seniorleaders, as the managers of change duringdownsizing, is to overcome organizationaltradition—that is, to challenge the “way thingshave always been done.” It is very difficult foremployees to understand why their jobs arebeing eliminated or their work processeschanged dramatically when they are doing asgood a job—if not better—than they havealways done. This can be especially true inpublic sector downsizings caused by budgetaryreductions or a change in the political climate.

One of our partners attributed its success inovercoming the power of tradition to consis-tent and committed leadership. This organiza-tion’s leaders made it clear from the start thatthis was to be a serious, long-term effort.Consistency was the key in overcoming the


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“this is just another management initiative”attitude.

Senior leadership should demonstrate com-mitment to change and—more importantly —

remain consistent in its communications duringdownsizing. This will help overcome anyemployee denial of reality and combat traditionalattitudes toward organizational change.

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programs, flexible working arrangements,the training and education allowance,and other topics relevant to downsizing.A substantial portion of each brochure isdevoted to commonly asked questionsand answers.

• One partner distributed “An Employee’sGuide to Reduction in Force,” whichthoroughly describes the process toemployees, explains their rights, andincludes a section of tips for employees.

THE ROLE OF SENIORMANAGEMENT

Senior management should explain toemployees why the downsizing is necessary.Our partners told us that one of the mostimportant roles for senior leadership in down-sizing is to establish effective communicationabout the process. Employees want to knowwhat is happening, even if it is bad news—andthey want to hear it from the top. A full andopen explanation of the reasons behind thedownsizing helps prevent feelings of unfairnessand promotes the sentiment that the down-sizing is a shared experience.

One important benefit of having seniorleadership explain the reasons for downsizingto employees is that it helps dispel rumors—which are almost always worse than reality.

SECTION 2:

COMMUNICATION

Overcommunication is impossible during organiza-tional change.

A Benchmarking Partner

Our partners found that honest andopen communication of what washappening to the organizationduring the downsizing is what

employees most want from their organization’sleadership. Some of the best practices employedby our partners to communicate thisinformation include the following.

• One partner developed and disseminateda one-page RIF facts handout whichprovided the reasons for RIFs; advisedemployees as to what they should bedoing (for example, ensuring that theirseniority dates were correct on personnelrecords); and explained what wouldhappen during the RIF process.

• Another partner ensured open communi-cations with employees by using everycommunication mode (e-mail, bulletinboards, town hall meetings) available toannounce all incentive and reorgani-zation/consolidation options.

• One partner distributed to its employeesa series of brochures entitled “People inTransition: Knowing Your Options.”These brochures describe incentive


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frequency of “all-staff ” meetings frommonthly to weekly. A survey conductedwithin that organization revealed that 84percent of the respondents wanted infor-mation updates at least weekly orbiweekly. Over a third said they wantedto be “swamped” with information andwould take responsibility for sorting outand interpreting it themselves.

COMMUNICATION SHOULD BETWO WAY

Our partners stressed the importance oflistening to employees and actively seeking outtheir ideas during the downsizing process.Such two-way communication helps ensurethat employee concerns are aired—and thatemployee suggestions are heard.

Many of our partners cited employee inputas an important factor in the success of theirdownsizing actions. Employees frequentlycontribute ideas on how the organizationshould be restructured and how to increaseproductivity as well as ideas on what assistanceshould be provided to employees seeking newjobs. Our partners told us that provisionsshould be made for employee ideas to besubmitted both confidentially and in openforum meetings where they could be discussedby employees and management.

Employee suggestions can benefit an orga-nization and empower the employees. Forexample, one of our partners established teamsthat included employees from all levels of theorganization. One team was authorized tochallenge any of the practices, policies, andprocedures of the organization and to recom-mend changes. The team came up withsuggestions representing $2.8 million insavings in one year. These suggestions includednegotiating a new contract for long distancetelephone call rates, which resulted in a 30percent reduction of these costs.

Another benefit is that it demonstrates to theeventual survivors that senior management isaware of what is happening, is in control, andis concerned about the impact of its decisionson employees. This communication alsoprovides senior management with an opportu-nity to stress to the survivors that the result ofthe downsizing will be a healthierorganization.

Our partners implemented this best practicein a variety of ways. Town hall meetings wereparticularly effective as were smaller groupmeetings, depending on the size of the organi-zation. These latter work particularly wellbecause they allow employees to ask questionsof senior leadership and vent their frustrations.Larger organizations use videos and writtencommunications. These tools are also effective,although they do not allow for direct two-waycommunication between senior leaders andemployees.

Senior leadership should remain visible andaccessible during the downsizing. Besidescontinuing periodic town hall and smallergroup meetings between senior leadership andemployees, our partners used numerous meansto promote accessibility and visibility of seniorleadership throughout the downsizing process.

• Employee information hotlines—whether using phone or fax numbers ore-mail addresses—proved to be veryeffective. Generally, these services weresupported by promises from senior lead-ership to get answers back to employeeswithin a short time frame—48 hours, forexample.

• One of our partners increased thefrequency of publication of its existingemployee newsletter from weekly to dailyso that the latest developments andemployee questions and answers could bedisseminated in an official forum.

• Similarly, a 175-employee organizationundergoing shutdown increased the

17


Much has been written about strategic plan-ning. How to do it successfully has been thesubject of many publications, including arecent National Performance Review bench-marking study report, Serving the AmericanPublic: Best Practices in Customer-DrivenStrategic Planning. Our purpose here is not tosuggest how to do strategic planning, but toemphasize that strategic planning is essential increating a shared vision of the future of thedownsized organization. Should the organiza-tion be smaller? Perhaps, but it should also bemore focused and more customer-oriented.The strategic planning process has the powerto turn what might otherwise be a brutalamputation into a regeneration.

LESSONS LEARNED

We found numerous examples of the priceorganizations have paid when they did notsufficiently plan for downsizing:

• Organizations have suffered from down-sizing “success.” Appropriate numbers ofpeople leave, but the organization fails toretain some of the best minds in areaswhere it takes years to develop expertise.Thus, there are too many people incertain divisions and not enough inothers.



SECTION 3:

ADVANCE PLANNINGAND PREPARATION

Our partners believe that somethingis wrong if a description of thefuture state of an organization canbe summed up in the single word

“smaller.” Implementing downsizing withoutreviewing the fundamental mission, processes,services, and products of the organization canresult in fewer people available to do the sameamount of work. In addition, the work per-formed may not be work that has value for theorganization or its customers. This review ofmission, process, output, and customers isstrategic planning. It answers the question“What should the organization look like threeto five years from now?”

This insistence on the importance ofstrategic planning is also found in the litera-ture. For example, the General AccountingOffice, in its August 1996 report FederalDownsizing—Better Workforce and StrategicPlanning Could Have Made Buyouts MoreEffective, concluded that unintended results ofdownsizing can be prevented by adequatestrategic and workforce planning. The reportstates that “Such planning would have helpedagencies to clearly define the agency’s missionand identify the workforce mix needed tosuccessfully accomplish that mission. Suchplanning would have increased the likelihoodthat employees with the needed skills andtraining were retained.”


18

• Morale is lowered when there is noclarity regarding the reasons for thedownsizing. Everyone needs to have thesame clear understanding of the environ-ment.

• When budget is the only driver behinddownsizing, denial can take hold.Managers and workers will resist changewhile they wait for revenue to pick up orfor the results of the next election.

• A common mistake is to assume thateach part of the organization has anequal share of excess staff; hence, theorganization may make erroneous across-the-board cuts in personnel.

• Productivity and quality often sufferwhen there is no change in the way workis done—i.e., the same workload is redis-tributed among the survivors, rather thanrethought and reconfigured.

• When a key portion of the workforce islost, so too are valuable contacts, knowl-edge, and experience. Organizations thateliminate people they later need can facecostly increases in overtime, temporary,

and contract work—expenses that canexceed the savings created by job cuts.

PLANNING: AN INCLUSIVEPROCESS

We asked our partners which personswithin their organizations were involved inplanning downsizing actions. The results aredisplayed in the chart at the bottom of thispage. All of our partner organizations includedtop management and the human resourceexecutive in this planning; most includedunion representatives as well. These personnelwere also cited as the three key players instrategic downsizing planning in a June 1995study conducted by a nonprofit, nonpartisanorganization. That study found that more andmore, the human resource executive isbecoming a full business partner in modernorganizations and has developed competencein business as well as in human resourcespecializations. As an example, the director ofpersonnel for one of our partner organizationsreports directly to top management and isconsidered part of the executive staff. Human

Community Reps

Other Stakeholders

Employees

1st Line Supervisors

Union Reps

Middle Managers

HR Manager

Top Mgmt

0 1 2 3 4 5 6 7 8 9 10 11 12

Number of Partners

2

3

4

6

8

10

12

12

INVOLVEMENT IN DOWNSIZING PLANNING


19

sizing planning from the outset. This partneremphasized that any lingering issues from pastproblems between labor and management beresolved so that all of their combined energiescould be focused on working together on thedownsizing. This partner’s advice tomanagement of other organizations was to“Make your peace with them now.”

resource executives are relied on to integratethe human element into an organization’sstrategic planning for downsizing.

One of our partners stressed the importanceof the labor representative in preventing andresolving conflict during downsizing; this orga-nization also noted the importance of labor’sinvolvement at the strategic level of down-

21




SECTION 4:

EXTERNAL AND INTERNALINFORMATION

Several types of information not normallyrequired in an organization’s day-to-dayoperations become critical during down-sizing. Management requires infor-

mation for planning and monitoring the staffreduction. Employees need various informationto help them decide what course of action theyshould take. The source of all this informationfor our benchmarking partners is primarilyinternal, and the burden for providing it fallsmostly on their human resource offices. How-ever, several of our partners tap external sourcesfor information in the form of other organi-zations that have successfully downsized.

EXTERNAL INFORMATION ANDBENCHMARKING

Our partners recognize the advantages oflearning from other organizations that havecompleted downsizing processes. To exploitthis learning opportunity, they benchmarkexternally with other organizations and inter-nally so that follow-on downsizing effortswithin their own organizations can benefitfrom prior experiences.

For example, when establishing a careertransition center, one of our partners usedcompetitive benchmarking to design anextremely effective career transition program

based on the experience of a large organizationthat had undergone extensive downsizing.Another partner benchmarked organizationalstructures in developing its plan for reducingmanagement layers. Still another partnerbenchmarked the programs other organiza-tions used to provide incentives to encourageemployees to retire.

One of our partners used internalbenchmarking. Specifically, this organizationmade special efforts to ensure that the resultsof specific downsizing actions were docu-mented so that best practices and lessonslearned could be shared with sister organizat-ions. Another partner held regular debriefingsof personnel officers after major downsizingactions were completed. These debriefingswere used to make changes in the process andto help develop a list of lessons learned fromdealing with downsizing-related problems. Asa direct result of these briefings, this organiza-tion developed a question and answer report tobe used by the next unit affected by the orga-nization’s downsizing.

INTERNAL INFORMATION

Organizations require several types ofinternal information in preparing to downsize,including data for management planning andinformation for employee decisionmaking.


22

Management needs information forplanning and monitoring purposes. Forexample, organizations preparing to downsizeneed extensive demographic data on theirentire workforce. This personnel informationmight consist of data by organization or dataon positions, pay grades, years of service,retirement eligibility, age, gender, and diversityof employees. These data must be assembledand analyzed, first to forecast normal attrition,and, second, to establish a baseline againstwhich progress can be tracked.

Data on the numbers of employees thatwould normally be expected to resign or beterminated must be gathered and analyzed aswell as data on the number of employeeseligible for normal or early retirement. Predic-tions must be made as to the number ofemployees expected to retire or accept otherincentive packages. The quality of this infor-mation will greatly affect the organization’ssuccess in planning for the number and cost ofincentives to induce employees to leave or takeearly retirement.

Some of our partners also developed aninventory of employee skills so that manage-ment could make informed decisions aboutorganizational structure and staffing. Thisinventory included a solicitation of interestcategory to account for employees’ desires touse those skills.

Management also needs information on theimpact downsizing has on minorities, women,people with disabilities, and older employees.A seniority-based layoff or RIF strategy, suchas that required by regulations covering federalworkers, affects these groups dispropor-tionately. The impact on them should beprojected and monitored during the down-sizing to help avoid a disproportionate impactif possible. If unavoidable, managers will atleast have facts available to help them indealing with potentially adverse publicity.

Employees need information to help themchart future directions. Providing the infor-mation needed by employees to assist them infinding new jobs proved to be a challenge forour benchmarking partners. These informa-

tion needs are great; moreover, they are almostalways time sensitive. Job openings usuallyhave a short window of opportunity duringwhich an employee must act. Similarly, theavailability of training courses must be knownfar enough in advance to plan for the requiredtime commitment. To be useful, such informa-tion must be provided in a structured manner.

PROVIDING THE INFORMATION

We found that the burden of providinginformation required during downsizing fellprimarily on human resource offices. In fact,the workload increase for these offices caughtmany of our partners by surprise. How theyhandled the added workload, and best prac-tices we found being used by our partnersrelated to external and internal informationprovision, are described below.

Develop a human resource informationsystem. Several of our partners are developinghuman resource information systems so thatstaffing actions can be taken electronically.Although most of these systems were in theplanning stages at the time of our study,planned capabilities include integratedpersonnel and payroll databases and on-linestaffing. Some of these systems will let mana-gers access databases containing employeeskills and training and personnel records andpolicies. Although useful at all times, theability to access human resource informationeasily and flexibly is especially critical duringdownsizing. Accurate and timely informationensures that actions taken are equitable andfairly administered.

Recognize and plan for the increased work-load for the human resource staff occasionedby downsizing. Our partners consistentlyspoke of the dramatically increased workloadsexperienced by their human resource staffsduring downsizing. In addition, we found thathuman resource offices need time to adjust tothe shift from their typical main task—hiring—to the work required by downsizing—the laying off of large numbers of people. One


23

Survey employees early in the downsizingprocess to assess their progress in obtainingnew jobs and to assess the utilization ofcareer transition services. Several of our part-ners used surveys to collect data fromemployees on the degree of utilization of careertransition services and to assess their progressin finding a new job. One of our partnersconducted a written survey well into a down-sizing but approximately six months prior tothe anticipated closure of an office. The surveyrevealed, surprisingly, that many employeeswere still “in denial” and were not making useof the career transition services available tothem. The survey probably should have beenconducted much earlier in the process somanagement would have had more time toassist the employees.

Use downsizing-related data to effect neededorganizational changes. Changing demandsfor services or improvements in workplacetechnologies can cause an imbalance ofemployees in different departments or officeswithin an organization. Some of our partnerssaw downsizing as an opportunity to effectchanges required by these and other factors.For example, using workload data to projectthe growth rate for various types of services,one partner found that demand for someservices would continue to grow while budgetrealities demanded a reduction in personnelcosts over the same period. The availability ofreliable data allowed the organization to avoidacross-the-board personnel reductions, targetand justify reductions in those areas wheredemand for services were decreasing, andreengineer work so that service levels could bemaintained in the future.

of our partners said that as one of their lessonslearned, the personnel within their humanresource office would be among the last to beaffected in any future layoffs. Another partneradvised that alternative sources of support—possibly from elsewhere in the organization—be identified to assist in employee careertransition activities in order to reduce thehuman resource staff ’s workload. A majority ofour partners at least considered outsourcingcareer transition activities.

Inventory current employee skills and assessemployees’ potential to acquire new skills. Aspart of its downsizing guidelines, one of ourpartners included an assessment of thoseemployees being displaced from their jobs todetermine skills, education, background, andabilities. These assessments were conducted bythe human resource and training offices. Thehuman resource office then tried to matchthese employees to available jobs elsewhere inthe organization. Any necessary training wasdetermined.

The downsizing literature containsnumerous recommendations to assessemployees’ potential to acquire new skills.Organizations use both formal and informalmethods to conduct such assessments. Formalmethods often require the services of anoutside contractor; informal methods—conducted by the employee and supervisors—are equally effective and less costly. These skillassessments are useful in placing employees inexisting positions, and are also helpful in iden-tifying which employees have the skills or apti-tudes that will be needed by the organizationin the future.

25


SECTION 5:

SETTING STRATEGICDIRECTION

The importance of planning for down-sizing, as discussed in section 3 ofthis report, was emphasized by ourpartners and in our review of the

literature. Our partners used their downsizingplans—developed in conjunction with theirorganization’s overall strategic plan—and exter-nal and internal information to set a strategicdirection for downsizing. That strategic direc-tion was the path toward which our partnersaligned activities and resources to accomplishtheir downsizing goals. What follows are the bestpractices they used to convert their downsizingplans to strategic direction.

Use innovative techniques to communicatethe downsizing plan to employees. It is vitalthat employees understand the downsizing planand have the opportunity to ask questionsabout it. In some large organizations, a letter ormemorandum from senior management may bethe only practical method for communicatingthe downsizing plan to employees. However,various innovative communication techniquesmight also be used to inform employees aboutfuture plans. For example, the plan could beintroduced to all employees at an off-sitelocation. Not only does this provide the advan-tage of getting the same information toeveryone at the same time, but it also empha-sizes the importance of the plan. Moreover, itallows for two-way communication.

One large organization mobilized itsinternal public relations capabilities tocommunicate the downsizing plan and keepemployees updated. It published a weeklyfaxed newspaper, ran an electronic bulletinboard, broadcast a weekly in-house TV show,and convened four meetings attended bynearly 2,000 employees. Another large organi-zation, which found itself in the position ofhaving to transform an entrenched corporateculture, developed a plan and then extractedfrom it short and simple vision and value state-ments. These statements were widely printedon everything from banners to coffee cups tocommunicate them to employees.

Require business plans from each depart-ment within the organization to show howthe downsizing plan will be implemented.Our partners emphasized the importance ofdeveloping business plans based on the down-sizing plan, as well as the importance ofholding departments responsible for meetingtargets established in these plans. Requiringeach department within an organization todevelop a business plan helps ensure that themanagers of those departments are involved inthe planning; it also builds support for theeffort. The partners also noted that depart-ments should be given the authority andfreedom to restructure based on their futuremissions.


26

Identify work processes that will not beneeded in the future organization so thatpositions associated with these processes canbe targeted for elimination. This activityworks best when decisions on the eliminationof positions are made by teams of managersand employees. Among our partner organiza-tions, such teams were made up of employeesfrom a cross-section of departments within therespective organization. The employeerepresentation on these teams gave the down-sizing plan as a whole additional credibilitywith all employees. Identification of workprocesses not needed in the future organizationalso protects those processes that are key to theorganization’s future from being affected bythe downsizing.

Several of our partners formed teams ofmanagers and employees to develop thebusiness plans. Their experience was thatinvolving employees improves morale, buildstrust between managers and employees, andmakes the entire team more knowledgeableabout the organization. One partner’s bestpractice in obtaining employee involvementwas the formation of two management-employee teams—one to revise theorganization of the department and one todevelop innovative ideas for how the work ofthe department should be done. Employeeswere invited to volunteer to serve on theseteams via a memo from the human resourceoffice; the memo also provided a mechanismfor employees to submit ideas in confidence.

27


SECTION 6:

IMPLEMENTATION:TRANSLATING STRATEGICDIRECTION INTO ACTION

How the actual downsizing process ismanaged will have more directimpact, and leave the longestlasting impression, on both the

employees being separated and the survivorsthan any other phase of the process. The easewith which the process is accomplished is deter-mined by the effectiveness of the strategic andworkforce advance planning and can be mea-sured—at least in part—by how little the orga-nization’s workflow is disrupted.

In our study we looked for best practices inthe management of the downsizing process,especially those that would support the re-maining employees (survivors). We found thatthe organizations in which survivors felt well-treated were the same ones that treated theirseparated workers well. These organizationsrecognize that how survivors feel about theorganization is in large part based on how theysaw their former co-workers treated as theywere being separated. Moreover, these organi-zations understand that the downsizing tech-niques and tools they use require constantmonitoring, and sometimes frequent adjust-ment, if they are to be successful.

DOWNSIZING TECHNIQUES ANDSTRATEGIES

Many of the following techniques andstrategies were commonly used by our partners

as well as by other organizations undergoing adownsizing. We surveyed our partners on theiruse of these techniques and their evaluation ofthe effectiveness of each method. The resultsof this survey, and the best practices we foundassociated with these techniques, are presentedbelow and in the chart on the following page.

Attrition. Attrition is the normal reduction ofthe workforce caused by employees leaving theorganization for reasons of retirement, death,or resignation. A hiring freeze, either total orpartial, is a human resource managementstrategy used by nearly every downsizing orga-nization. This strategy may be sufficient initself if normal attrition is substantial, and thedownsizing required is modest and can takeplace over an extended period.

Our benchmarking partners described thismethod as being relatively painless and effec-tive. They remarked, however, that the proba-bility is high that workforce imbalances willdevelop if there is no plan to guide eitherinternal redistribution of employees or limitedhiring.

Early retirement and buyout incentives.While not all of our partners offered these incen-tives, among those that did, they were ratedamong the most effective downsizing techniquesused and were very popular with employees.

Early retirement incentives promoteadditional attrition by allowing employees to


28

retire with either full or reduced pension bene-fits at an earlier age than normal. These incen-tives work well for those organizations able tooffer it to their employees. For example, onepartner organization offered a program thateither reduced the required minimum retire-ment age by five years or added five years tolength of service; this program accounted forabout 49 percent of the organization’svoluntary separations. Similarly high rates ofemployee acceptance were found among otherpartners.

Buyout incentives consist of offering a lumpsum payment to encourage employees to leavevoluntarily; such incentives encourage attritionof those who are eligible/not eligible for eitherearly or regular retirement.

There is little doubt that buyouts are effec-tive incentives. In 1994 and 1995, almost halfof the federal government’s reduction of jobssince the passage of the Federal WorkforceRestructuring Act involved buyouts. Thebuyouts were also effective in preventing RIFs:only 6 percent of the total reduction during1994-95 involved involuntary separations.

Early retirement and buyout incentivesrequire funding. In general, this funding

comes from savings resulting from hiringfreezes. Our partners reported using othertechniques as well both to help fund theprograms and to prevent resource imbalances.One partner created a “job bank,” into whichall vacant positions across the organizationwere placed. Departments had to review theirneed for replacements and request them from acommittee whose task was to ensure that high-priority vacancies were filled, whilemaintaining the job bank at a designated level.With few exceptions, each vacancy could onlybe filled by another employee of the organiza-tion; this created another opportunity forreview and elimination of a position.

Management accountability was a keyfeature in the funding of incentive programsfor another partner. This partner established“payback” periods for both its buyout (oneyear of salary) and early retirement (two yearsof salary) programs. There is a central fund forboth programs, although each departmentwithin the organization is expected to absorb asmall percentage of the cost. Managers wereinformed that their investment in downsizingcosts for these incentive programs must allowfor the payback time frames and that these

Involuntary Separation

Attrition

Early Retirement

Buyout

0 1 2 3 4 5 6 7 8Number of Partners Rating Technique as Very Effective

3

5

6

8

EFFECTIVENESS OF DOWNSIZING TECHNIQUES


29

Another partner offers a program known as“Leave With Income Averaging” both toreduce its budget for employee salaries and tohelp employees better balance their work andpersonal lives—and, in some cases, to helpthem move toward new careers. Employees cantake leave without pay for between five weeksand three months within a year. Pay isaveraged out over the year to reflect thereduced time, but their pension and benefitpayments as well as insurance coveragecontinue at the old levels. An interesting varia-tion available to one partner’s employees is“Pre-retirement Transition Leave,” by whichemployees who are within two years of fullretirement eligibility can reduce their workweek by as much as 40 percent. Pay is reducedaccordingly, but their pension and benefitpayments and insurance coverage continue atprevious levels. The employee must agree toresign at the end of the leave period of up totwo years.

Another partner has a very flexible policyon employees’ use of leave without pay.Employees may take such leave one day a weekor just about any desired way with no effect ontheir seniority date.

The partners’ experience has been thatwhen employees understand all the facts aboutleave without pay, they will avail themselves ofit. Some employees, for example, will takesuch leave to finish their education. And, inone organization, several people voluntarilyreduced their hours so no jobs would be lost.

Other flexible work arrangements. Severalpartners offer a variety of flexible workingarrangements to their employees. They regardthese programs as important tools for theirmanagers, enabling them to maintain highlevels of service while meeting their workforceadjustment requirements and providingchoices to employees—and thereby empower-ing them to better balance their work andpersonal lives. The programs include telework;part-time employment; flexible work hours;variable work week; job sharing; and a varietyof leaves with and without pay includingeducation leave, maternity leave, paternity

time frames would be reviewed in futureaudits.

Involuntary separation. Also known aslayoffs or RIFs, involuntary separation was theleast favored technique available to ourpartners. Most organizations are forced bylaw—in the case of most public sectoremployees—or by bargaining agreements toemploy seniority-based criteria in decidingwhich employees are to be separated. Thedisruption accompanying the “bumping” ofpeople into lower graded and lower payingjobs can take years to overcome. Our partnersalso cited the practice’s negative impact onemployee diversity, since women and minori-ties tend to be disproportionately affected byseniority-based layoff policies. All of our part-ners provided career transition assistance toemployees, usually with job placement andtraining assistance, severance pay, and continu-ation of benefits such as health insurance for aperiod of time.

Leave without pay. Taking a leave of absencewithout pay with reduced benefits, but with aguarantee of being able to return to the job atthe end of a designated period, appeals tosome employees. It also appealed to some ofour partners whose reason for downsizing wasto cut costs rather than meet a mandatedreduction in the number of employees.

Two of our partners relied on leave withoutpay or temporary leave of absence as majorcomponents of their incentive programs forvoluntary separations. One partner’s programenabled an employee to take a minimum ofthree years’ to a maximum of five years’ leavewithout pay. The program includes the rightto return to employment, although not neces-sarily to the same position. While employeesare on leave they are eligible for educationalassistance, credit union participation, medicalinsurance under the Consolidated OmnibusBudget Reconciliation Act of 1986, continua-tion of most insurance under group rates,accrual of length-of-service for retirement plancalculations, and payment for accrued vacationat the time leave without pay starts.


30

leave, adoption leave, self-funded leave, leavefor care and nurturing of preschool children,leave for personal needs, and leave for reloca-tion of spouse. The advantages of theseprograms—for both employees andemployers—include:

• increased ability to recruit/retain top-quality staff;

• increased health, morale, andproductivity;

• decreased absenteeism and turnover;

• a strong and positive impact on the workenvironment;

• improved service to clients in differenttime zones;

• increased use of office equipment andspace;

• reduced stress, as the employee is able tocontrol, predict, and absorb changes inboth workforce and family settings; and

• increased opportunity for employees topursue educational advancement, profes-sional development, child care or healthmanagement responsibilities, hobbies, orpersonal goals.

Other techniques managers can consider inlieu of involuntary separation include overtimerestrictions, union contract changes, cuts inpay, furloughs, shortened work weeks, and jobsharing.

These types of work changes are mostsuccessful when employees have been exten-sively involved in the decisions behind theirimplementation. Employees may prefer a“shared pain” approach to downsizing ratherthan see their co-workers laid off. The organi-zation benefits because morale remains high.Some workers considering career changesbenefit because they have more time to pursueother employment.

IMPLEMENTING MULTIPLESTRATEGIES

Our partners found that not all downsizingstrategies worked exactly as planned—somedid not work well at all; others exceededbeyond expectations. The concurrent use ofmultiple strategies therefore helps ensure thesuccess of the downsizing process. All of ourpartners used multiple strategies simultan-eously. Some partners not only combinedmultiple workforce reduction strategies, suchas buyouts and attrition, but also combinedthem with multiple process reengineeringstrategies. For example, one of our partnersused eight strategies simultaneously to achieveits downsizing objectives. These included:

• a hiring freeze in conjunction with areview process to evaluate vacatedpositions for elimination;

• a retirement incentive program;

• guidelines for reducing managementlayers;

• an assessment of services across the orga-nization;

• establishment of teams made up ofemployees from across the organizationto reengineer processes;

• establishment of training as a strategicresource, exemplified by (1) creating atraining office separate from the humanresource department, (2) retrainingemployees transferred into new positions,and (3) offering all employees training instress and change management, customerservice, and working in teams;

• investments in technology—such asphone mail equipment, local and widearea networks, and electronic bulletinboards—to achieve greater productivity;and

• establishment of a customer servicecenter to improve service to the public.


31

TRAINING MANAGERS FORTHEIR ROLES IN DOWNSIZING

One of our partners provides the followingguidance in its career transition program hand-book: “Train supervisors of affected employees.In an involuntary downsizing, supervisors whowill be delivering RIF notices should betrained on HOW to best give support toRIFed employees. Supervisors should be ableto explain what services are available andencourage the use of these services.” The focusof this guidance is to get employees to use thecareer transition services available to them assoon as possible, but the implicit importanceof training managers is an obvious downsizingbest practice.

We surveyed our partners as to the types ofdownsizing-related training they provide theirmanagers. Almost all of them provide formalclassroom training on issues managers wouldbe dealing with during downsizing. Most ofour partners also provide written guidance,generally in a handbook, to which managerscan refer after formal training. One-third ofour partners provide training to managers onhow to deal with violence in the workplace.Appendix B of this report provides a list ofdownsizing-related training available to federalmanagers.

CAREER TRANSITIONASSISTANCE AND SURVIVORSUPPORT

Organizations that have successfully down-sized all provide career transition assistance toboth separated and surviving employees. Wesurveyed our partners regarding theirtransition services; their responses are recordedin the chart on the next page, and their bestpractices are described below.

Provide career counseling to employees tohelp them identify skills and abilities anddetermine training required for possiblefuture career paths. One of our partners hasfour professional career counselors on staff at

its career transition center. They offeremployees confidential sessions to identifytheir interests, skills, values, and preferredwork style as well as to explore their careeroptions and develop career goals. The coun-selors also administer and interpret careerassessment instruments that provide samples ofoccupations matching employees’ interests,skills, values, and personality. Some of theinstruments used are the Myers-Briggs TypeIndicator, the Self-Directed Search, and theStrong Interest Inventory.

Provide personal counseling to employees tohelp them vent their feelings, rebuild theirself-esteem, and deal with stress. Some of thetechniques used in partner organizations forpersonal counseling include one-on-one coun-seling with a trained professional, peer coun-seling, and group counseling. These latter twoare most typical among our partners; profes-sional one-on-one counseling is rarely offereddue to the associated cost.

Our partners usually provide personal coun-seling in conjunction with career counseling.One partner primarily used individual peer-based counseling as it downsized. For this, itused employee facilitators, who were trainedinternally and assigned to employees with RIFnotices on a 1:10 ratio. The peer facilitatorsserved as employee advocates and coaches onissues ranging from benefits and rights tohelping employees develop their resumes andmarket themselves. Over 90 percent of theaffected employees realized successful tran-sitions (defined in employees’ own terms)within six months of their separation dates.

Many of the employees and some of thepeer facilitators also participated in the secondtype of counseling offered by theorganization—facilitated peer groups. Thesegroups, which came to be known as “jobclubs,” brought peer counselors’ clientstogether to share problems and information,thus making it possible for employees tosupport each other and attain more energy andcreativity than they might have accomplishedindividually.


32

The organization also offered, on a limitedbasis, a third type of counseling—seminar-based counseling. The goal of this counselingwas the same as in individual peer-based coun-seling, but was delivered in a seminar format.Trainers delivering the seminars were alsoavailable for limited individual consultationson an appointment basis.

Provide career transition training toemployees to prepare them for what to expectduring the downsizing process, to help themobtain jobs in other organizations, or toenhance their skills for employment withinor outside the organization. Most of ourpartners established a series of workshops orseminars for employees that were designed toenhance or take the place of career andpersonal counseling. A cross-section of thetitles of these training opportunities illustratesthe wide range of issues considered by our

partners: Dealing With Change, StressManagement, Starting Your Own Business,Creating Your Resume, Discovering Your RealCareer, Cut Your Job Search Time in Half—Networking, Using the Holland Self-DirectedSearch, Job Search on the Internet,Mediation/Conflict Management, InternalConsulting Skills, Teamwork, and Retirementand Financial Planning.

We surveyed our partners regarding thetypes of training assistance they provided theiremployees to enhance their job skills; we alsoasked if they had made use of Job TrainingPartnership Act (JTPA) funding to help payfor employee retraining. Their responses areprovided on the chart on the next page.

One of our partners has a program thatallows employees affected by downsizing toapply, and be given priority, for entry-leveljobs in another area of the organization. Thesecrossovers between areas would normally not

Child Care Assistance

Services Available to Spouses

Access to Internet Job Sites

Financial Counseling

Time Off to Seek Jobs

Job Fairs

Career Transition Training

Relocation Assistance

Resume-Writing Assistance

Personal Counseling

Career Transition Center

Access to Office Equipment

Outplacement Assistance

Career Counseling

0 1 2 3 4 5 6 7 8 9 10 11 12Number of Partners Providing Assistance

1

4

5

6

8

9

10

10

11

11

11

12

12

12

CAREER TRANSITION ASSISTANCE PROVIDED BY PARTNERS


33

occur due to differing qualifications for jobs inthe respective areas. Under this program, theemployee remains at his or her previous salarylevel for two years.

Another partner provided a training andeducation allowance for employees acceptingits version of a buyout. The allowance providesup to $7,000 over a three-year period and maybe used for a variety of learning activities.

Provide relocation assistance to employees sothey can take advantage of employmentopportunities within the organization atother geographic locations. A substantialnumber of our partners provide this assistance.While such assistance might seem costly, thepartners noted that compared to the costs ofother options—such as training a newemployee—this is a very cost-effective alterntive.

Establish a career transition center as a baseof services and resources for employees. Themajority of our partners have established a“one-stop shop” for reemployment services.Such career transition centers can be estab-lished with limited resources. For example, oneof our partners established its center with abudget of $250,000 per year and just twopermanent employees. All other staffing

needs—including counselors, workshopinstructors, and staffing for a satellite locationtransition center—are handled through coop-erative agreements with community colleges.

This organization has also developedpartnerships with commercial copy centers as acost-effective way to provide services thatwould normally be available only in a staffedcareer transition center. These satellite facilitiesin commercial copy centers provide employeesaffected by downsizing with computers,copiers, and other office equipment. Consul-ting services at these facilities are provided bycommunity colleges or, for financial coun-seling, by the organization’s financial institu-tion. Since June 1993, this organization’scareer transition center has provided services toover 3,000 clients at an average cost of $258per client.

Provide outplacement assistance to helpseparated employees locate new employment.All of our partners provide outplacement assis-tance to separated employees. This assistancetakes many forms, from help in locatinglistings of vacant jobs to central pools ofdisplaced workers for whom the employerattempts to find positions. Many of the bestpractices in this area involve large

Obtained JTPA Funding

Paid, Non-Specific Training (GED,etc.)

For Jobs in Other Organizations

For Jobs in Same Organizations

0 1 2 3 4 5 6 7 8Number of Partners Providing Training Assistance

3

4

6

8

TRAINING ASSISTANCE PROVIDED BY PARTNERS


34

organizations helping employees find employ-ment elsewhere in the organization throughcentral processing points at which displacedemployees and vacant positions are broughttogether.

For example, one partner created a “RIFTransition Pool” to provide additionalexposure for displaced employees who want toremain, or regain employment, with the orga-nization. Names of employees in the pool arereferred when jobs become available. Interestedoffices must review the list of qualified candi-dates from the pool after considering anyexisting RIF register and the organization’sown internal promotion candidates. Thisprogram has placed over 500 employees sinceit began in April 1993.

Similarly, another partner attempts to findnew jobs for RIFed employees through itsPriority Placement Program, an automatedreferral program that assists its employeesworldwide. The program has been in opera-tion since 1965 and has placed over 140,000employees. The skills of employees being sepa-rated or downgraded are matched with vacantpositions in locations where the employee hasindicated a willingness to work and is eligibleto register. Normally, registrants whose qualifi-cations match job requirements must beoffered the job.

Provide resume-writing assistance toseparating employees. We found several inno-vations among our partners in providing thisform of assistance to their employees. Most ofour partners include resume-writing assistanceas a component of the services provided by theircareer transition centers. Almost all use com-mercially available off-the-shelf software to helpemployees create their resumes. Several partnershave offered seminars and workshops that havespecifically dealt with resumes. Our partnerscited one-on-one advice on, and critique of,employees’ resumes by career counselors as avery important part of counseling services.

Conduct job fairs to bring interestedemployers together with separatingemployees. A majority of our partners use thistechnique to help their displaced employees

find new jobs. One organization conducted atwo-day job fair with 200 private sectoremployers that had immediate or future hiringneeds. While the impact was positive for bothemployees and employers, our partner notedthat one of the key benefits was the increasedpositive perception of public sector skills onthe part of participating employers.

Provide access to office equipment toemployees seeking new employment. All ofour partners provide this service to theiremployees, usually at career transition centers.Typically, they provide access to computers,printers, copiers, fax machines, and typewritersas well as provide long distance telephone callsand faxes. For employees in sites where there isno career transition center, the exampledescribed above—where a partner teamed withcommercial copy centers—is an innovativebest practice.

Many of our partners noted that providingthis equipment in an office-like setting atcareer transition centers gave separatedemployees a place to go every day, if theywished, and it made the transition periodbetween their old and new jobs less traumatic.

Provide paid time off for employees to seeknew employment. The majority of ourpartners allow employees who have been noti-fied that their jobs are to be eliminated to taketime off with pay to go on interviews or other-wise pursue job leads. They recognize thatarranging interviews and preparing for themare stressful enough without the added burdenof arranging time off and expending leavetime—time that, in organizations that pay theemployee for unused leave, the employee maybe trying to save. Providing paid time off alsoimproves morale for the entire workforce,including the survivors, by demonstratingconcern for employees being separated.

Provide child care assistance to employeeswhile they search for new employment. Ourstudy revealed that this service is rarelyprovided to separating employees. Only one ofour partners provides this service. However,child care assistance removes a large barrier to


35

a parent seeking new employment. A represen-tative of one of our partners said that itsemployees formed informal groups to providemutual assistance in this area.

Offer career transition services to employeespouses. This too is a fairly unusual practice,although four of our partners indicated thattheir career transition services were available toemployee spouses. These services are especiallyimportant in cases where an employee is beingrelocated and the spouse is employed—a situa-tion that is certainly not unusual in today’stwo-career families. In some cases, the spousemay have the skills needed for available jobsand can better take advantage of the outplace-ment services than can the employee. Thisrequires viewing job loss as a loss to the wholefamily, not just to the employee.

Offer financial counseling to all employeesduring downsizing, not just to those beingseparated. Half of our partners offer financialcounseling to employees as part of their careertransition services. Some restrict this serviceonly to those employees who have beennotified that they are being separated.However, we found that organizations thatprovide financial planning and lifestyle coun-seling have higher acceptance rates for earlyretirement offers than those firms that provideno workshops. Providing financial counselingto all employees can encourage the acceptanceof voluntary separation incentives, thushelping organizations—and employees—avoidinvoluntary separations.

Provide access to Internet job placementsites. Most of our partners have, to somedegree, automated the job search process fortheir employees affected by downsizing. Wesaw an impressive array of creative approachesincluding electronic inventories of availablejobs both within and outside of theorganization. These inventories, availablethrough the Internet, are accessible fromcomputers at employee workstations or in akiosk setting. Some of our partners havesystems that allow users to search for jobopportunities by specific criteria, such as job

group, grade level, and geographic location.Some of these systems also let users input theirresumes so that information on the individualemployee is available to selection officials.Most of our partners have either developedthese systems themselves or in conjunctionwith an outside contractor; all use off-the-shelfsoftware.

A Web site on the Internet called “PlanningYour Future—A Federal Employee’s SurvivalGuide” has been developed by employees fromseveral agencies. This site contains numerousjob availability databases as well as informationfrom OPM’s Workforce Restructuring Office,including employee guides to RIFs andbuyouts. The Web site address is: www.safetynet.doleta.gov.

One partner provided a demonstration ofan electronic jobs inventory known as “Peopleand Jobs.” It was developed to help employeesmatch their skills and career interests withavailable job opportunities both within andoutside the organization, and includes thefollowing features:

• The system was developed with the helpof an outside contractor using off-the-shelf software.

• The system is accessible through theInternet, which allows employees toaccess it from their desks.

• Job opportunities can be searched byspecific criteria such as geographic loca-tion.

• Job opportunities within theorganization are input by managers;human resource personnel input jobopportunities outside the organization.

• Employees may submit a resume on-line.They may also keep their identity confi-dential; the system can assign a uniqueidentifier code so that the humanresource office can contact them ifsomeone is interested in their resume.

There is every reason to expect that thenumber of job sites on the Internet will growsubstantially in the near future. Providing a


36

emotional commitment to the organiza-tion, management also assured survivorsof continued employment.

• Senior managers attended group sessionsto help them understand the nature andextent of the downsizing.

• Survivors were provided with personalcareer counseling to help them evaluatethe impact of upcoming changes onfuture career options.

• Survivors were individually counseled onthe types of assistance available to them.

• Survivors were informed of the supportservices provided to their laid-offcolleagues.

• Immediately after the layoffs wereannounced, survivors met in groups withsenior management. They had theopportunity to discuss their feelingsabout the layoffs and the future of theorganization. Issues raised became thefocus of follow-up sessions.

• Managers increased their informalcontacts with survivors.

• Human resource managers increasedtheir counseling of survivors.

• Employee assistance programs outsidethe organization were made available tosurvivors who needed them on an anony-mous basis.

Two months after the downsizing, a follow-up meeting was held to address unresolvedissues and assess progress. The organizationlost only two survivors to other jobs, andproductivity levels were maintained.

way for employees to access this information isrelatively simple and inexpensive, and helpsempower employees to take charge of theirsearch for employment. Appendix A of thisreport contains the Internet addresses of someof our partners’ systems and other Web sitesour partners have found useful.

Use employees at risk of losing their jobs ascontingent workers to make up a labor poolfor the organization. We discovered a particu-larly creative approach to avoiding layoffs atone large corporation. Its workers remain onthe payroll to perform work that was pre-viously done by contractors. The employeescontinue working with their same salary andbenefits in temporary assignments. The corpo-ration benefits by retaining talented, high-performing employees, by avoiding severancepay for these employees, and by reducedrequirements for expensive outside contractors.Corporate users get the benefit of employeeswho are knowledgeable about the corporationand gain the ability to expand operations in anuncertain market with decreased risk. Theemployees benefit by being able to retain jobsin the same company. They also have increasedvisibility and career development and net-working opportunities not previously availableto them.

MANAGING THE SURVIVORS

One organization used a particularly innov-ative program for handling survivors. Thisprogram featured the following elements:

• Management stressed clear communica-tion of the reason for the downsizing tosurvivors. In attempting to rebuild the

37


SECTION 7:

PERFORMANCEEVALUATION ANDREPORTING

Our literature search found that theresults of downsizing are often notwhat was anticipated or desired.For example, a leading human

resource consulting company survey of 531large corporations that had recently undergonedownsizing was published in 1993. Thatsurvey revealed that relatively few companiesachieved the goals they had determined to becentral to their downsizing efforts. Most had asa goal the reduction of costs/expenses, yet only61 percent of the surveyed organizationsachieved this goal. And that proportion wasthe largest than for any of the other 10 goalslisted. Less than half of the corporationsachieved their goals of increasing profitability,competitive advantage, customer service,shareholder return on investment, produc-tivity, and customer satisfaction. Only 21percent reduced waste and inefficiency, andless than half improved decisionmaking orcash flow. Also, 57 percent of the companiesreplaced some of the workers they had laid offwithin one year of the downsizing. The studyreport pointed out that the replacement ofdownsized employees does not go unnoticedby surviving employees, calling into questionthe credibility of management regarding theneed for downsizing since it works against thegoal of reducing expenses.

In a 1985 assessment of federal governmentdownsizing, the General Accounting Office

examined eight RIFs that took place at variousorganizations in 1982. The investigators deter-mined that it was important to cost out theneed for a RIF as compared to other alterna-tives—such as furloughs, early retirements andattrition—to determine whether a RIF is themost cost-effective method to reduce theworkforce. While cost savings from wages,benefits, and overhead were usually deter-mined, some costs attached to RIFs were notcalculated, such as payments in lieu of notice,severance pay, unemployment compensation,costs for transfers to other locations, andcontract costs for job search assistance. Othercosts of a RIF that are not always consideredinclude costs associated with the time andresources required to process and administerthe RIF, to resolve appeals and grievances, andto hire and train employees to fill jobs unin-tentionally left vacant by the RIF.

MONITORING RESULTS

Downsizing, like any other businessprocedure, requires careful management. Moni-toring progress through periodic in-processreviews is a chief component of successfuldownsizing. Those organizations that take thetime to periodically review their procedures,learn from their mistakes as well as theirsuccesses, and incorporate what is learned fromthese periodic assessments into their downsizing


38

procedures have found that they couldminimize adverse impact in ongoingdownsizing processes and complete futuredownsizings in a more streamlined fashion.Below are some best practice case studiesfound in our literature search and among ourpartners.

Representatives of one of our partners citedthe tracking of their workforce adjustmentactivities and the subsequent sharing of thisinformation across the departments as a keypractice in the success of their downsizingactions. They review the progress of their down-sizing quarterly and publish a widely distributedreport to enable managers to monitorreductions by the following categories:

• by department;

• by reason (early retirement, buyout, leavewithout pay, etc.);

• by occupational group (clerical and regu-latory, data processing, program adminis-tration, general services, secretarial ,stenographic and typing, general laborand trades, and executive);

• by region; and

• by employment equity group (women,minorities, people with disabilities).

Another partner reviews progress quarterly.Senior leaders are given statistics on keyindicators for their departments, such as theeffects the downsizing is having on thediversity of their organizations.

A representative of another partner advisedthat once the downsizing plan was introduced,the response of the departments within theorganization varied widely. Some departmentsresponded very favorably, immediatelybeginning to develop their internal businessplans and establishing teams to meet theirdownsizing objectives. Some departmentsmoved at a slower pace, avoiding radical change.Some departments did nothing and waited tosee if the downsizing would really happen. Thispartner advised that close tracking of theprogress and achievements of each departmentis essential and that the organization should not

count on one strategy working the same way forevery department within an organization.

In our research, we discovered a study on anorganization that had used attrition to reduceits workforce by 23 percent from 1982 to1986. Because the effort was not managed ormonitored effectively, in the same period inwhich 6,000 total positions were reduced,8,000 people were hired. Worse yet, theresulting organization was older, less diverse,had a higher ratio of supervisors to employees,and was left with an imbalance of skills. Theorganization revamped its workforce planningefforts and was subsequently cited as a modelorganization. Attrition is now managed andmonitored by identifying human resourceneeds according to mission requirements andby making workforce planning part of thebudget planning process. This organizationalso uses turnover statistics; demographic andhiring data; and information collected fromemployee exit surveys, climate assessments,and customer surveys to predict and monitorattrition.

MEASURING CUSTOMERSATISFACTION

Regardless of whom a particular organiza-tion’s customers are, the techniques used tomonitor and measure the results of downsizingactions on these customers are transferable toany downsizing situation. Our partners gener-ally rely on surveys—surveys both of custo-mers of their organization’s products orservices and of their employees going throughthe downsizing. One partner’s human resourceoffice surveys employees and customers twice ayear to determine the effectiveness of serviceprovision and the attitudes of workersconcerning the downsizing effort. This partneralso surveyed a combined group ofmanagement/employees and citizens to assessall services provided. The results obtaineddetermined the relative importance and effec-tiveness of each service.

Another partner surveyed its employees sixmonths prior to closing an office to determine


39

their concerns and the information and resour-ces they would need in the final six months ofthe office’s existence. The questions specificallyasked were as follows:

• Where were the employees during thetransition process? Were theirexpectations on the likelihood ofsurviving the transition in line with theprobable outcome?

• What issues and information needs couldbe expected in the final six months?

• How could career transition services bebetter targeted to match the location andsectors in which staff were seekingemployment?

• How effective was the priority placementpool which attempted to match vacantstate jobs to displaced workers?

Another partner used a private sectormanagement company to review downsizingactivities in a number of its offices to determinethe best practices associated with organizationalstrategy, human resource management, and/orprocess reengineering. The objective of thereview was to maximize the lessons learned sothat they might be transferred to future down-sizing and renewal initiatives. The reviewmethodology included one-on-one interviewswith at least five participants from each officeand a survey of all individuals affected by thedownsizing; focus groups were also used insome cases.

MEASURES OF DOWNSIZINGEFFECTIVENESS

Our partners stressed that one of the mostimportant tools in helping them achieve theirdownsizing goals is monitoring and measuringthe effectiveness of downsizing techniques andstrategies. Not only does this help when justi-fying the expense of some of the techniques,but also when the fairness of the process ischallenged. We found that monitoringturnover or attrition rates overall, as well as by

grade and occupation, is also critical; in thisway, an organization can assess whether theright people and enough people are leaving.

We asked our partners what they monitoredand measured to determine the effectiveness oftheir downsizing actions. Their responsesincluded:

• employee reductions;

• reductions in the number of high-gradepositions;

• increase in the ratio of supervisors toemployees;

• decrease in headquarters positions;

• personnel loss due to attrition versuspersonnel loss due to incentive programs;

• demographics of buyout recipients;

• use of buyouts in front-line versus over-head employees;

• decrease in personnel, budget,acquisition, and auditor positions;

• impact on diversity goals;

• ability to meet budgetary limits;

• ability to continue to accomplish legaland regulatory mandated programs;

• percentage of employees finding newpositions;

• financial indicators, such as the paybackperiod on incentive programs;

• reduction in total cost of wages andsalaries;

• meeting authorized budget and FTElevels;

• number of appeals filed;

• number of voluntary participants inincentive and career transition programs;and

• customer service ratings.

Our partners told us that sometimes theselection of an indicator was all that was


40

We have also heard from our partners thatsurvivors need senior leadership to show themthat the organization has a future and explainwhat their role will be in that future. One ofour partners devoted much of its communica-tion effort during the downsizing to emphasizethe purpose of the downsizing; the aim was tocreate a healthier company in which thesurviving employees could look forward tolong and rewarding careers. This partner devel-oped stock option and profit-sharing programsnot previously available to emphasize thesurvivors’ stake in the new organization.

Our partners realize that their bestemployees, on whom they depend to get theirorganizations past the effects of downsizing,can often easily find employment elsewhere.They also recognize that demoralizedemployees are resistant to the types of organi-zational change needed after a downsizing.

To summarize, we found that successfuldownsizing resulted when survivorsexperienced frequent communication frommanagement, had a clear understanding ofwhere they fit in the revised organization, andwere provided with assistance in the guidanceof their future careers with the organization.

needed to ensure that progress would be madein that area. Their experience shows that “whatgets monitored gets managed.”

THE PRIMARY “CUSTOMERS”OF DOWNSIZING—THESURVIVORS

The success or failure of a downsized orga-nization depends on the workforce remainingafter the downsizing—that is, on the survivors.We found that a well-planned downsizing thatalleviates survivors’ concerns must include:

• senior leadership being clearly seen byemployees as involved from the onset inthe process and continuing active partici-pation throughout;

• employees receiving constant andcredible communication;

• separated employees treated with dignityand respect; and

• resources being devoted to support sepa-rating employees in their search for newemployment.




APPENDICES

43


ABSTRACTS

Downsizing—The Meridian InternationalInstitutewww.clearlake.ibm.com/Alliance/clusters/rs/biblio5b.html

Downsizing Plan for the Commonwealth ofMassachusettswww.magnet.state.ma.us/gov/downsize.htm

ARTICLES

Downsizingheisenberg.osat.hq.nasa.gov/codex/News/downsizing/downsize.shtmlA National Aeronautics and Space AdministrationWeb site that contains information aboutdownsizing, career transition assistance, and reduc-tion in force. It also has information from theFederal Employee Survival Guide along with jobinformation and contact lists.

Downsizing Dilemmawww.govexec.com/features/0896s3.htmDiscusses the dilemma that federal managerscurrently face—finding the balance betweenhelping displaced workers with outplacementservices and getting the agency’s work done.

The Downsizing of Americawww.nytimes.com/specials/downsize/A seven-part series from the New York Times aboutdownsizing in America. Registration is required toaccess the New York Times Web site.

HR Magazine—Damaged, Downsized Soulswww.shrm.org/hrmagazine/0596cov.htmAn article in HR Magazine discussing how to revi-talize the workplace after downsizing. It also haslinks to other companies’ downsizing and restruc-turing strategies.

Navran Associates: Downsizing Articleswww.navran.com/Articles/index.htmlNavran Associates is a full-service management,training, and consulting firm. This site containsarticles about downsizing and how to deal with itssurvivors.

A Review of History and Results of Downsizingwww.brigadoon.com/~iopsych/downsize.htmlA research paper documenting the history of down-sizing and its presence in today’s business society. Italso talks about common outcomes and strategiesfor effective downsizing.

The Wages of Downsizingwww.mojones.com/mother_jones/JA96/downs.htmlAn article discussing the myths of downsizing. Ithas links to related sites.

DOWNSIZING CASE STUDIES ANDGUIDES

Alliance for Redesigning Governmentwww.clearlake.ibm.com/Alliance/home.htmlThis National Academy of Public AdministrationWeb site contains case studies and abstracts



APPENDIX A:

DOWNSIZING RESOURCESTHE INTERNET


44

Restructuring and Downsizingwww.gov.ab.ca/~pao/downsizeThis Canadian government Web site containsinformation about downsizing and workforcereduction strategies performed by the Canadiangovernment.

Workforce Reductions: Downsizing StrategiesUsed in Selected Organizationswww.ilr.cornell.edu/lib/bookshelf/HotTopics/Downsizing/GAO_downsizing.htmlA General Accounting Office case study of how 17private companies, 5 states, and 3 foreign govern-ments planned and carried out downsizings. Itfocuses on successful strategies and approaches thatmay help federal agencies implement employmentreductions mandated by the Federal WorkforceRestructuring Act.

JOB AND CAREER LISTINGS

Capitol Online Webonweb.com/cow/job.htmlA job listing site that contains employment oppor-tunities inside and outside the D.C. metropolitanarea. The site has links to job banks across thecountry. In addition, it lets users add resumes orjob listings to the site.

Career Buildercareerbuilder.comA job search Web site that provides personalized,confidential, and immediate access to the bestemployment opportunities on the World WideWeb.

Career Martwww.careermart.com/main.htmlThis site contains job listings along with companyprofiles and job fair information.

Career Mosaicwww.careermosaic.comA job search engine that contains job listings, bothdomestic and international, and company profiles.The site also provides on-line employmentcounseling and allows users to add resumes to thesite.

Career Pathwww.careerpath.comJob listings and help wanted ads from across thecountry.

regarding downsizing practices and strategies infederal and state governments.

Effective Downsizing: A Compendium ofLessons Learned for Government Organizationswww.clearlake.ibm.com/Alliance/clusters/rs/downsize.htmThis National Academy of Public AdministrationWeb site shares information from public andprivate companies that have undergone downsizingeffectively.

Government Downsizing: Pitfalls and How toAvoid Themquasar.sba.dal.ca:2000/profs/jduffy/article1.html

This Canadian government Web site shares infor-mation about downsizing pitfalls and strategies foravoiding them.

Heartland Policy Study: Thoughts From theBusiness World on Downsizing Governmentwww.heartland.org/rumsfeld.htmTestimony from Donald Rumfeld before asubcommittee of the House Committee onGovernment Reform and Oversight aboutcorporate downsizing strategies that could beapplied to the federal government.

Lessons Learned From Nine Corporationswww.ilr.cornell.edu/library/e_archive/glassceilig/6/6front.htmlThis Web site shares a report that discusses theimpact of corporate restructurings and downsizingson the managerial careers of minorities andwomen.

OPM Brochure CE-57 (RIF Benefits Guide)www.rdc.noaa.gov/rif/rifben.htm/The site contains the Reduction in Force BenefitsGuide, which summarizes benefits provided foremployees targeted for reduction-in-force action.

OPM RIF Guidancefreeway.osat.hq.nasa.gov/codex/News/downsizin/opmrif.shtmlThe Employee Guide to Reduction in Force (RIF)from the Workforce Restructuring Office, Office ofPersonnel Management.


45

Planning Your Future—A Federal Employee’sSurvival Guidewww.safetynet.doleta.govThis site shares information about career transition,federal and nonfederal employment, retirement,buyouts, reductions in force, benefits, andtransitional tools.

The Virtual Press—Job Information (U.S.Federal Government and State Jobs)tvp.com/jfedgov.htmlThis site contains job listings for federal and stategovernments.

Virtual Resumewww.virtualresume.comVisitors to this site can add resumes for employersto search and review for employment. The site alsofeatures tools and resources to assist in writingresumes and cover letters.

Washington State Job Searchwww.wa.gov/dop/mapforsuccess/mapintro.htmlThis site, maintained by the Washington StateDepartment of Personnel, provides careertransition assistance covering financialmanagement, resume skills, interview techniques,etc.

CAREER TRANSITION COMPANIESIntelliMatchwww.intellimatch.com/iseek/IntelliMatch connects job-seekers and employers.The site also contains employer profiles and careermanagement and resume-writing tools. Transition Management Group/OutplacementInternationalwww.meer.net/users/tmg/A transition management group that providesconsultant services to help companies andemployees maintain productivity, morale, andcareer growth in times of change.

CareerCity Job Databasewww.adamsonline.comA job listing site for professional, technical, andmanagerial positions.

Execunetwww.clickit.com/touch/execunet/execunet.htmA career management information service andcareer advancement networking organization exclu-sively for executives and senior professionals.

Federal Job Listingswww.usajobs.opm.govThis Office of Personnel Management Web sitecontains job and employment information for thefederal government.

Federal Job Opportunities BoardUse modem to dial (912-757-3100)A bulletin board of job opportunities in federalagencies.

FRS: Federal Jobs Centralwww.fedjobs.com

A federal job listing site which also contains toolsfor resume writing and other how-to resources.

Global Commerce and Information, Inc.www.global-com-info.com/openings.htmlThis site contains job listings for California,Delaware, the District of Columbia, Hawaii,Maryland, Michigan, North Carolina, Ohio andVirginia.

Heart/Career Connectionswww.career.com/HCC/hcc.htmlThis site provides job listings from across thecountry. It also connects job-seekers and employersvia virtual job fairs where they can carry on real-time private conversations from their home, office,or school.

Jobs and Careers Onlinejobscareers.com/jobsThis site contains job listings by job category.

OPM MainstreetUse modem to dial (202-606-4800)A bulletin board of federal job information.

47


The training opportunities listed here are availableat:

U.S. Department of Agriculture Graduate School600 Maryland Avenue, SW, Room 122Washington, DC 20024Phone: 202-690-4280Internet: www.grad.usda.gov

For more information on training opportunities,contact:

• Your training office and your career resourcescenter

• The Metropolitan Area Reemployment Center800 North Capitol Street, NW, Suite 660Washington, DC 20002Phone: 202-565-6672

• Office of Personnel ManagementWorkforce Restructuring Office1900 E Street, NWWashington, DC 20415Phone: 202-606-0960Internet: www.opm.govMainstreet dial-in modem: 202-606-4800

Also, many business schools and private companiesoffer relevant courses.

Alternative Dispute ResolutionThis seminar introduces alternative methods ofdispute resolution in the federal sector. It providesan overview of the legal and proceduralrequirements under various laws, including

Executive Order 12871 which mandates alternativedispute resolution.Audience Management and union officials who

may be involved with some form ofdispute resolution

Cost: Approximately $275Length: 2 days

Coping With StressStress-related anxiety and ailments not only cansabotage the best efforts to be productive, but canlead to early burnout. Participants will learn how toimprove their quality of life by learning how torecognize stress signals early and to develop strate-gies for coping with, reducing, or eliminating theeffects of the stress signals.Audience: All employees, especially supervisors and

managersCost: Approximately $400Length: 3 days

Delegation SkillsThis workshop focuses on the how to’s ofdelegating work assignments, the nuts and bolts ofdelegation, and how to handle the fear in decidingwhat to delegate and to whom.Audience: All supervisory and managerial

personnelCost: Approximately $350Length: 2 days



APPENDIX B:

TRAINING AVAILABLE TOFEDERAL MANAGERS


48

yet workloads are expanding. Leading employeesand work teams through these complicated timesrequires an indepth understanding of the dynamicsof change and employee empowerment.Participants will learn to deal with these changes.Audience: Experienced supervisors and team leaders

who have an understanding of funda-mental supervisory concepts and skills


Leadership in a Changing Government/MilitaryEnvironmentThis seminar prepares participants to meet today’schallenges and beyond. It presents concepts andprinciples required to successfully lead today’sdiverse workforce while helping improve their lead-ership style to obtain maximum performance andsupport.Audience: Managers, supervisors, and team leaders

with overall accountability and responsi-bility for successfully achieving a unit’sor department’s goals and objectivesduring times of decreased funding andpersonnel


Organizational Study and DesignParticipants will learn practical concepts, principles,and techniques for planning and designing organi-zations; and how to design new organizations andstreamline existing ones. Audience: Program and management analysts,

personnel specialists, supervisory programand management analysts, managementauditors, and others who study anddesign organizational structures


Reengineering in the Public SectorThe National Performance Review challengesfederal agencies to make quantum leaps in theirperformance through four ambitious goals: cuttingred tape, putting customers first, empoweringemployees to get results, and cutting back to basics.This course provides the skills and knowledge toapply reengineering tools in participants’agencies/organizations.

Effective Leadership SeminarThe role of a manager is expanding and becomingincreasingly important in dealing with the complexchallenges facing organizations today. To besuccessful, one must rely on leadership skills. Thisseminar examines concepts, techniques, and skillsof leadership with an emphasis on the practicalapplications of leadership on the job. Participantswill learn how to develop alternatives for the mostdifficult management problems. Audience: Supervisors and managers through grade

GS-15 and those with high potential forsuch positions


Interpersonal CommunicationIt is a recognized fact that to truly succeed onemust be able to work with others. This course willhelp participants analyze how they relate to othersand how others relate to them; how they regardthemselves and how to encourage and buildpositive self-esteem; how they respond to varioussituations; and how to promote a harmonious workenvironment.Audience: Employees who want to increase self-

awareness and effectiveness in interper-sonal relationships


Introduction to SupervisionThis skill-building course enables employees tomake the transition from worker to supervisor withconfidence and competence. Emphasis will be onmanagement competencies most needed by govern-ment supervisors. Participants will learn the funda-mentals of leadership, team building, and conflictmanagement.Audience: New supervisors and work leaders or

persons about to assume supervisory orlead positions


Leadership: Change, Challenge, andEmpowermentRarely have experienced government supervisorsand team leaders faced so many challenges.Organizations are downsizing, reorganizing, delay-ering, and reengineering. Resources are shrinking,


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operations in the future. Participants will learnspecific techniques to integrate qualityimprovement and strategic planning to ensurecreative and balanced responses to rapidly changingeconomic, social, and political environments.Prerequisite: Current Quality Issues and ConceptsAudience: Senior managers and managers who are

responsible for complying with theGovernment Performance and ResultsAct


Strategic Planning: GPRA- and NPR-BasedStrategic planning helps put organizations back onthe mission achievement track. With the opportu-nity to step back and analyze their situations andneeds, managers and executives will discuss formu-lation and implementation of goals for their organi-zations.Audience: Managers and others concerned with

organizational planningCost: Approximately $395Length: 2 days

Time ManagementManaging one’s time is critical to professional andpersonal success. This course will providetechniquesfor analyzing time usage, establishing priorities, anddeveloping plans for improvement, therebyenablingthe accomplishment of more real work each day.Audience: Employees who want to plan their time

more effectivelyCost: Approximately $300Length: 2 days

Audience: Supervisors, managers, and key personnelinvolved in reengineering


Situational Management: Contingency Modelsand ApplicationsThis seminar offers a comparison of contemporarymodels of management styles. Participants will beinvolved in the determination of their own styles—primary and secondary—and the effective use oftheir styles given particular situations. In this timeof complex organizational issues, it is importantthat all supervisors, managers, and executives opti-mize their management skills directed at achievingagency goals and objectives.Audience: All pre-supervisors, supervisors,

managers, executives, and professionals Cost: Approximately $395Length: 3 days

Strategic PlanningThis course provides a knowledge of the strategicplanning process consistent with the guidance setout in the Government Performance and ResultsAct and the goals of the National PerformanceReview.Audience: Supervisors, managers, analytic staffCost: Approximately $350Length: 2 days

Strategic Planning for a Customer-FocusedGovernmentThis workshop enables senior managers toanticipate forces—downsizing, deregulation, decen-tralized decisionmaking, budget reductions—thatare likely to influence their missions, resources, and

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This appendix lists useful federal publications andother resources on downsizing and related topicsfor organizations seeking to improve theirdownsizing processes.

PUBLICATIONS

Adjusting to the Drawdown. Department ofDefense, Defense Conversion Commission,Technical Report, 1992.

Career Transition: A Resource Guide. Office ofPersonnel Management.

Career Transition Handbook for the Washington,DC, Area. Office of Personnel Management.

Closing Your Base. Department of the Air Force,Air War College, 1993.

Costs/Savings Models of Selected DownsizingTools. Office of Personnel Management.

The Daily Buyout: Current Developments inFederal Downsizing. Office of PersonnelManagement.

The Downsizing of an Army Organization: AnInvestigation of Downsizing Strategies, Processes,and Outcomes. Department of the Army ResearchInstitute for the Behavioral and Social Sciences, 1994.

Early Retirement Under the Civil ServiceRetirement System. Office of PersonnelManagement.

The Employee’s Guide to Buyouts. Office ofPersonnel Management.

The Employee’s Guide to Career Transition.Office of Personnel Management, WorkforceRestructuring Office, 1996.

The Employee’s Guide to Reduction in ForceProcedures. Office of Personnel Management.

The Employee’s Guide to RIF SeparationBenefits. Office of Personnel Management.

Federal Downsizing—Better Workforce andStrategic Planning Could Have Made BuyoutsMore Effective. General Accounting Office,GAO/GGD-96-62, 1996.

Guide to Responsible Restructuring. Departmentof Labor, Office of the American Workplace, 1995.

Interagency Placement Program. Office ofPersonnel Management.

Interagency Placement Program: RegistrationInstructions and Forms. Office of PersonnelManagement.

A Meta-Analytic Study of Downsizing: Behaviorsand Attitudes Prevalent Among Survivors (Thesis).Department of the Air Force Air University, Air ForceInstitute of Technology, 1994.

New Directions: Improving Transition Assistancefor Federal Employees Affected by Downsizing.Office of Personnel Management.

Organizational Downsizing: Individual andOrganizational Implications and Recommenda-tions for Action. Department of the ArmyResearch Institute for the Behavioral and SocialSciences, 1991.



APPENDIX C:

GOVERNMENTRESOURCES


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Reduction in Force Planning: A Practical Guideand Checklist. Office of Personnel Management.

Restructuring Information Handbook. Office ofPersonnel Management.

RIF Avoidance Strategies and Tools. Office ofPersonnel Management.

Voluntary Early Retirement Guidelines (FY 96).Office of Personnel Management.

Workforce Reductions—Downsizing StrategiesUsed in Selected Organizations. GeneralAccounting Office, GAO/GGD-95-54, 1995.

OTHER RESOURCES

Interagency Career Transition Assistance Plan.Under the Interagency Career Transition AssistancePlan implemented February 1996, federal agenciesare required to select a well-qualified displacedemployee from another agency who applies for avacant position in the commuting area beforeselecting any other candidate from outside theagency. This program allows for activeparticipation by employees because they targetspecific positions for which they are qualified andin which they are interested and then apply directlyto the appropriate agency.

Metro Area Reemployment Center. Recentlyopened in the District of Columbia, the MetroArea Reemployment Center is intended as a modelfor providing career transition services to federalemployees nationwide. The goal of the center—a

joint venture of the governments of Maryland,Virginia, Washington, D.C., and the InteragencyAdvisory Group of Federal Personnel Directors—isto ensure that federal employees in the area receivethe same level of career transition services, regard-less of their employing agency. Funding wasprovided by the Department of Labor through theJob Training Partnership Act. Services providedinclude:

• resume and job application preparation,

• on-line job search and software services,

• transition counseling,

• retirement and financial planning,

• career transition library,

• self-assessment tools, and

• workshops and seminars.

Center clients are federal employees with aCertificate of Expected Separation or a Reductionin Force notice and federal contract employees withequivalent notices. The Center augments—butdoes not replace—services provided by individualagencies through their career transition centers.

Reemployment Priority Lists. Within the federalgovernment, agencies maintain ReemploymentPriority Lists which provide priority considerationfor hiring “RIFed” employees over other outsideapplicants for open positions. This program ismaintained locally on a commuting area basis.

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APPENDIX D:

AGENCY CONTACTS ANDOTHER SOURCES

Many individuals and organizations can providevaluable assistance as you and your organizationmove forward in improving your downsizingprocess. Listed below are phone numbers,addresses, and e-mail locators (where available) forthe organizations represented in this study andsome other helpful points of contact.

BENCHMARKING STUDY TEAM

Department of CommerceLoren CasementPhone: 202-482-1580E-mail: [email protected]

Department of DefenseOffice of the Undersecretary of Defense(Comptroller)Ron MassengillPhone: 703-697-1196E-mail: [email protected]

Department of DefenseCivilian Assistance and Re-Employment (CARE)DivisionPhilip DemaraisPhone: 703-696-1799E-mail: [email protected]

Department of DefenseOffice of Economic AdjustmentRobert WarrenPhone: 703-604-2400E-mail: [email protected]

Department of DefenseOffice of Assistant Secretary of Defense (ForceManagement Policy) Community Support PolicyJames EllisPhone: 703-614-3260E-mail: [email protected]

Department of EducationDavid MurrayPhone: 202-401-8545E-mail: [email protected]

Department of EnergyGirtha BurksPhone: 202-586-5284E-mail: [email protected]

Department of EnergyOffice of Worker TransitionLewis WatersPhone: 202-586-4010E-mail: [email protected]

Department of LaborLinda NivensPhone: 202-219-7357E-mail: [email protected]

Internal Revenue ServiceSusan LehotskyPhone: 202-874-6411E-mail: [email protected]

National Aeronautics and Space AdministrationCraig Conlin


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Department of Veterans AffairsRobert PagePhone: 202-273-5137E-mail: [email protected]

OTHER SOURCES

National Performance ReviewWilett BuntonPhone: 202-632-0150Internet: www.npr.gov

Inter-Agency Benchmarking and Best PracticesCouncilInternet: www.va.gov/fedsbest/index.htm

Office of Human Resources and EducationPhone: 202-358-1180E-mail: [email protected]

Social Security AdministrationMaynard MalabeyPhone: 410-965-1452E-mail: [email protected]

Social Security AdministrationLette WeinrichPhone: 410-966-8235E-mail: [email protected]

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Serving the American Public - University of North Texas€¦ · Serving the American Public: Best Practices in Downsizing SEPTEMBER 1997 Benchmarking Study Report. ... public—organizations