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Downsizing: Layoffs/Closings
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|Introduction |
|Leadership Examples |
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|Business Importance |
|Sample Policies |
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|Recent Developments |
|Awards |
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|External Standards |
|Resources |
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|Implementation Steps |
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|Introduction |
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|Downsizing and layoffs, once phenomena associated mainly with individual company distress or larger economic downturns, |
|have become permanent features of the global business landscape. This entrenchment of job-shedding activity has been |
|driven by a number of factors. These factors include: more rapidly evolving technologies and business cycles, intensified|
|pressure to improve stock performance, and mergers and acquisitions. At the same time, a growing body of evidence has |
|shown that companies often fail to realize anticipated gains from downsizing, and nearly always suffer from substantial |
|hidden costs. Employers therefore have begun to understand that simply reducing headcount may not be a strategy for |
|long-term advantage. (For purposes of this overview, "downsizing" - defined as a net reduction in a company's workforce -|
|also includes "layoffs," which can take place in one part of a company concurrent with hiring in another part of the same|
|company.) |
|Leadership companies recognize the myriad implications of downsizing and take any of a variety of approaches to what has |
|become known as "responsible restructuring." Strategies can include adopting business practices that avoid the need for |
|layoffs, embracing training programs that redeploy "redundant" employees to different jobs within the company, and |
|employing other innovative means to avoid or reduce the need to downsize. When downsizing must occur, leadership |
|companies adopt practices that eliminate or reduce potential problems, including open communications, fair severance |
|benefits, transition services for those being downsized, and adequate attention to "survivors" - the employees left |
|behind to work inside a downsized company. |
|Business Importance |
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|Businesses are recognizing that there are hidden and often very significant costs associated with layoffs and downsizing.|
|This is particularly true when job cuts are poorly planned and implemented, a state of affairs common to companies |
|seeking short-term results from downsizing. At the same time, many companies are understanding that significant benefits |
|may be realized through strategies that avoid downsizing and layoffs altogether, or carry out these activities in more |
|strategic - and, ultimately, less-costly - ways. Among the business rationale for responsible downsizing: |
|Traditional downsizing doesn't achieve its goals. A wealth of evidence indicates that the benefits companies frequently |
|hope to realize from downsizing fail to materialize or, if they do, are limited and short-lived. For example: |
|Cost Savings: While downsizing is intended to reduce a company's overhead, the savings frequently are less than expected |
|or, in some cases, nonexistent. Research at the University of Wisconsin at Milwaukee showed that while nearly all Fortune|
|1000 companies downsized between 1985 and 1990, fewer than half met their cost-cutting goals. A 1995 study by Watson |
|Wyatt Worldwide found that only 46 percent of companies surveyed met their expense-reduction goals after downsizing, and |
|fewer than 33 percent met their profit objectives; only one in five enhanced shareholder return on investment. |
|Profits and Performance: These, too, are expected to rise following a downsizing, although this often isn't the case. The|
|American Management Association, in its 1998 Staffing and Structure Survey, concluded that firms that showed a workforce |
|decrease in the 1990s are far more likely to report long-term decline in worker quality, product quality, operating |
|profits, and shareholder value than they are to report a long-term improvement. Meanwhile, a 1997 study by business |
|school professors at the University of Colorado at Denver, which analyzed downsizing trends at Standard & Poor's 500 |
|firms over a 12-year period, found that companies that downsize are generally no more profitable than those that do not. |
|Share Price: Downsizing often doesn't pay off in shareholder value, according to several studies. For example, a 1997 |
|Wharton School of Business analysis of 52 studies involving several thousand companies found that corporate restructuring|
|had little if any positive impact on earnings or stock performance. The year Watson Wyatt study mentioned above found |
|that only one in five downsizing companies enhanced shareholder return on investment. |
|The "downstream" costs can be large. Several studies indicate that downsizing can have hidden and very significant costs |
|that emerge over time. Among them: |
|Reduced Productivity: The morale and reduced productivity of employees that survive downsizing - those that represent the|
|future of the company - are frequently a problem. They may be required to take on additional workloads and adapt quickly |
|to new work situations, often in an environment undermined by reduced trust and increased uncertainty. |
|Loss of Key Talent: In a downsizing environment, companies often find that their key employees and top performers depart |
|the company, stripping it of valuable human capital, critical skills, and institutional memory. In some cases, downsizing|
|disrupts or destroys the informal networks of employees that often contribute significantly to company productivity. For |
|example, the Economist magazine in April 1996 reported on an insurance company whose claim settlements rose sharply |
|following staff cuts in its claims department. Further investigation found that a few long-time employees who had lost |
|their jobs had created an informal but effective way to screen claims, which disappeared after the downsizing. |
|Decreased Risk-Taking and Entrepreneurism: A 1995 study by McGill University and the Wharton School of Economics found |
|that "Downsizing seems to interfere with the web of informal relationships that innovators use to win support and |
|resources for new products, and which helps mesh innovative activities with those of the firm as a whole." |
|Potential legal and administrative costs: Many companies find that the price of downsizing can be high in the costs of |
|legal challenges, disability claims, and other unanticipated costs. For example, a 1997 survey of 300 midsized and large |
|companies by the American Management Association and CIGNA Corp. found that eliminating jobs can lead to an increase in |
|disability claims, both occupational and non-occupational, particularly stress-related claims. The study also found that |
|claims last an average of 25 percent longer than in companies that haven't downsized. A top executive at a large |
|facilities-services firm quoted in Personnel Journal said that 90 percent of the 600 claims, charges, and cases the |
|company had open were filed following a termination. |
|The benefits of responsible restructuring can be substantial. A large body of studies and company experiences provide |
|compelling reasons for companies to seek alternative, more responsible means of managing workforce size and allocation. |
|Among the benefits: |
|A more flexible, performance-oriented workforce. A number of successful companies attribute much of their success to |
|having created a culture in which employees feel valued and empowered. A common element to these companies' cultures is |
|an implicit or explicit company commitment to long-term employment. For example, motorcycle manufacturer Harley Davidson |
|has made it clear to employees that they needn't worry about unemployment if they come up with an efficiency measure that|
|reduces labor costs. |
|Adapt to changing conditions. Many companies that downsized have found themselves at a competitive disadvantage when |
|market conditions required additional employees. By contrast, companies that engaged in responsible restructuring |
|practices have found it easier to bring back former employees and hire new ones during business upturns. For example, the|
|goodwill created by a generous severance package offered by Aetna Inc. when it closed a facility in Kansas City allowed |
|the company to bring back former employees when it encountered problems recruiting staff in other cities. Similarly, |
|Lancaster, Pa.-based High Steel Structures went to great lengths to preserve jobs at one plant. When the market rebounded|
|after six months, the company's commitment to its employees paid off, enabling the company to maintain morale and job |
|skills (as reported in the Sloan Management Review). |
|Preserve good relations with stakeholders. Some companies have suffered public relations problems as the result of |
|employee cutbacks, or have found themselves bitterly unpopular with their local communities when downsizing is handled |
|badly. But companies that have downsized responsibly often are rewarded by positive media support and the cooperation of |
|unions and community groups. Another interested party may be investors. Since 1996, CalPERS, a large institutional |
|investor, has stepped up efforts to persuade companies it invests in to reduce layoffs and improve employee |
|relationships. |
|Maintain diversity. Downsizing, particularly if not well-planned, can hit individual demographic, gender, or racial |
|groups hard, undermining years of a company's efforts to improve its diversity. |
|Recent Developments |
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|Downsizing has become an entrenched feature of the global business landscape, even in strong and growing economies. At |
|the same time, companies are achieving a better understanding of the links between how they implement downsizing and |
|their ability to achieve sustained commercial success. Among the significant developments: |
|Downsizing Goes Global. The combination of industry restructuring, regional economic fluctuations, the spread of free |
|enterprise, and shifting market demand has led to downsizing and layoffs in all parts of the globe. Former Soviet bloc |
|countries are grappling with downsizing issues as they privatize industries and shrink bureaucracies. China, as it moves |
|to revitalize its centrally planned economy, is expected to conduct one of the largest downsizing exercises in history as|
|state enterprises privatize. Mergers and acquisitions in the U.S. have continued at a steady pace in recent years, |
|leading to downsizing and restructuring. The next wave of mergers will be in Europe, say experts, as globalization trends|
|continue. The Asian economic crisis has led U.S.-based companies operating there to use outplacement services at a |
|growing rate to deal with massive layoffs. Such trends have further challenged multinational companies' efforts to adopt |
|fair restructuring policies and practices at the same time that they have received increased pressure to do so from |
|external stakeholders, including the media, investors, customers, regulators, and citizen groups. |
|Changing Company Approaches. In recent years, companies have significantly changed their approaches to downsizing and |
|layoffs. For example, a growing number of companies of all sizes and sectors are seeking alternatives to reduce layoffs |
|or mitigate their impacts. In its 1998 Staffing and Structure Survey, the American Management Association reported that |
|41 percent of companies now offer voluntary separation plans, compared to 17 percent in 1989. At the same time, mandatory|
|cutbacks -such as demotions, downgrades, transfers, and shortened work days - have decreased dramatically. The benefits |
|offered to those laid off also are changing. A 1998 study by the New York based consulting firm Manchester found that |
|while U.S. companies are providing less-generous cash payments to laid-off workers, they are offering a broader array of |
|non-cash benefits, such as retraining, résumé assistance, job-finding assistance, and extended health benefits. The study|
|attributed this trend to company cost-cutting measures and to a tighter U.S. labor market, which gave employers |
|confidence their former workers would quickly find new jobs. |
|A Growing Emphasis on Training. While the traditional notion of lifetime employment - in which employees stay with a |
|single employer throughout their careers - has all but disappeared, an increasing number of companies are placing an |
|emphasis on lifetime employability by stepping up training programs. By enhancing their job skills, companies not only |
|make their employees more valuable, but also make them less vulnerable to the impacts of being laid off. Fortune |
|magazine, in its 1998 article on the best companies to work for in America, noted that "extensive training and |
|development" is growing in importance "because it offers valuable benefits to both employer and worker." It reported that|
|"the 100 Best are making major investment in employee education at multimillion-dollar facilities and through generous |
|tuition-reimbursement programs." On average, the "100 Best" offered 43 hours of training for each employee during 1998. |
|But Fortune further noted that "Education is a sensible investment for employers only if they can hold on to the minds |
|they have expensively trained. A partial but obvious remedy is a policy, or at least a strong bias, against layoffs." |
|A New Definition of Loyalty. In addition to increasing training, companies are showing other signs of loyalty to |
|employees, emphasizing long-term, if not lifetime, employment. A growing number are helping employees establish greater |
|financial security that may be portable when they change jobs; helping employees achieve work-life balance; encouraging |
|employee ownership; and providing incentives to employees to engage in "lifetime learning." For example, Intel Corp. has |
|made all employees, not just top managers, eligible for its stock-option plan and spends 6 percent to 7 percent of it |
|annual payroll on training, four times the industry average. In doing so, the company has been able to redeploy employees|
|from declining business units to areas of high growth, helping Intel avoid layoffs. |
|Growing Labor-Management Partnerships. There are signs that employers and unions are finding mutual value in working in |
|partnerships to avoid or mitigate the impacts of downsizing and layoffs. "Rather than protest [layoffs], unions are more |
|likely to help laid-off workers make the transition to new jobs, often working in tandem with the very manager who did |
|the laying off," reported the New York Times in 1998. For example, Maytag Corp. announced a 1996 layoff at its |
|Indianapolis facility nine months in advance and sweetened the severance package beyond what was required in its contract|
|with the Sheet Metal Workers Union. Among other things, the company participated in a worker-management committee that |
|supervised retraining and counseling and added overtime in its final months to help workers reduce debts and increase |
|savings. Maytag's approach was contrasted with that of another company that had laid off 1,000 workers on short notice |
|and suffered adverse publicity for its actions. |
|External Standards |
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|There are few clear-cut external standards in the area of downsizing. In the absence of such standards, most companies |
|have sought guidance by benchmarking peer companies or other leadership companies, and by seeking ways to avoid or |
|mitigate the harm of layoffs and downsizing. Companies must also refer to the sometimes complex set of legal and |
|government policies in effect in their countries of operation and origin. |
|International Standards |
|The International Labour Organization, as part of its Tripartite Declaration of Principles concerning Multinational |
|Enterprises and Social Policy, has a number of Conventions and Recommendations that address downsizing. Chief among these|
|is Convention 158, concerning Termination of Employment at the Initiative of the Employer, which makes provisions for |
|reasonable notice of termination, appeal of termination, and severance benefits. The three recommendations, while not |
|legally binding, are the best known and most frequently cited international standards regarding terminations. They state |
|that multinationals, particularly when operating in developing countries, should "strive to assume a leading role in |
|promoting security of employment, and provide reasonable notice of operational changes such as mergers, takeovers, or |
|transfers of production to appropriate government authorities and employee group representatives so that the implications|
|may be examined jointly in order to mitigate adverse affects to the greatest possible extent. This is particularly |
|important in the case of a closure of an entity involving collective layoffs or dismissals." Employers also are urged to |
|take such measures as offering reduced hours, voluntary early retirement, internal transfers, and retraining in lieu of |
|downsizing. Finally, if layoffs prove necessary, employers are urged to assist affected workers with retraining and a |
|search for alternative employment. |
|Legal Standards |
|Companies around the world must comply with a wide variety of laws related to workplace practices. In addition to |
|observing the appropriate laws for the countries in which they are operating, global corporations must refer both to |
|their home countries' laws as well as to international standards. In most European countries, for example, companies must|
|comply with a relatively strict body of legislation that specifically addresses downsizing. In the U.S., very little |
|legislation specifically addresses downsizing, though a large body of federal law protects employees from discriminatory |
|practices and a range of legal standards may come into play when an employee is terminated. Additionally, class-action |
|suits may be filed on behalf of a group alleging discriminatory termination. |
|Among the relevant U.S. laws: |
|The Worker Adjustment and Retraining Notification Act (WARN) requires employers with more than 100 employees to give 60 |
|days or more notice in advance of plant closings and mass layoffs. |
|The U.S. Equal Employment Opportunity Commission (EEOC) has the authority to investigate complaints, to make a finding as|
|to whether unlawful discrimination has occurred, and to seek remedy in court. The EEOC also is empowered to issue |
|regulations and guidelines interpreting the law. These interpretations are not binding on either employers or courts, but|
|usually are given considerable weight by both. |
|Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, religion, gender, or |
|national origin. |
|The Age Discrimination in Employment Act of 1967 protects workers who are at least 40 years old. |
|The Americans with Disabilities Act of 1990 outlaws discrimination against people who are disabled. |
|The Civil Rights Act of 1991 provides for financial damages in employment discrimination cases. This act has fueled a |
|wave of wrongful-termination lawsuits, because it allows plaintiffs to be awarded not only reinstatement, back pay, and |
|attorney's costs, but also compensatory and punitive damages, thus creating a strong incentive for both plaintiffs and |
|their attorneys. |
|Implementation Steps |
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|Company approaches to downsizing are many and varied and there are few templates to follow. Following are some key issues|
|to consider: |
|Consider downsizing's full costs. Before implementing any layoffs or downsizing, it is important to carefully consider |
|all of the costs involved - the direct costs as well as the indirect costs. Any decision to layoff employees should make |
|a compelling case for how the job cuts will help achieve long-term company goals. Consider such costs as the potentially |
|reduced productivity of "surviving" employees, the loss of institutional memory, the potential legal challenges, and the |
|potential negative public relations that may result. Consider also the costs associated with several short- and mid-term |
|business scenarios, including the potential need to hire and train staff several months or a year later when conditions |
|improve. |
|Examine alternative strategies. A variety of alternatives to downsizing may provide the same or additional benefits at a |
|lower cost. These include: |
|deploying surplus workers to growth areas of the company, utilizing retraining and internal placement assistance when |
|necessary; |
|making managers responsible for finding new positions within the company for downsized employees; |
|identifying temporary internal work arrangements at employees' standard salaries, even if the arrangements are for jobs |
|that traditionally pay less; |
|establishing job-sharing or work-sharing arrangements among employees; |
|restricting overtime, enabling more employees to share the available workload; |
|establishing "employee exchanges," through which employees are "loaned" to customers, suppliers, or other local companies|
|for temporary periods; |
|assigning employees to voluntary community activities that fit with the company's philanthropic goals; |
|encouraging voluntary time off and leaves of absence, during which employees continue to receive benefits and retain |
|seniority; |
|implementing wage freezes or pay cuts that apply to all employees, including managers; and |
|implementing voluntary separation and early-retirement programs. |
|Communicate fully and continually with employees. Research shows that employees with a full understanding of their |
|industry and their company's situation feel less stress and more control, even if that knowledge suggests that layoffs |
|may be inevitable. Make sure communication is clear, candid, and that employees are given the chance to ask questions and|
|express their views. For example, ask employees about their ideas and suggestions for avoiding layoffs. Encourage them to|
|participate in cost-cutting and efficiency measures, and to offer strategies for growth and the development of new |
|markets that may alleviate the need for downsizing. In addition, make sure employees are the first to know about the |
|downsizing by maintaining confidentiality about any layoff plans. Rumors and paranoia flourish - and productivity and |
|risk-taking plummet - in an atmosphere of leaks and partial information. Avoid having employees learn about their own |
|layoffs from news reports. |
|Provide long-term notice: If layoffs are deemed necessary, give employees as much notice as possible. Many employers now |
|give notice a full year in advance, or even longer. When the rationale for layoffs is clearly communicated, and the |
|package of severance benefits makes it clear that management values employee input, companies find that workers will |
|remain productive and quality-conscious up until the end. More than half of the 531 U.S. companies that responded to a |
|1993 study on best practices in corporate restructuring conducted by outplacement firm Wyatt Company reported that early |
|communications helped companies achieve profitability goals (59 percent) and expense-reduction goals (54 percent). |
|Respect diversity. Keep the company's diversity in mind before, during, and after the layoff process. Before deciding who|
|to downsize, analyze the make-up of your workforce - by gender, race, and age - with statistics broken down by |
|department, job groups and salary grades. Then, before laying off employees, analyze similar data on potentially affected|
|employees to be sure no particular group is disproportionately affected. Similarly, form a diverse, cross-functional team|
|to plan and manage layoffs. At a minimum, such a team should include representatives from human resources, labor |
|relations, operations, finance, public relations, community relations, government affairs, and legal affairs. Diverse, |
|cross-functional teams have proven to be effective at addressing the needs of employees and external stakeholders, and |
|presenting clear messages about why and how the company is downsizing. |
|Stay on schedule: Announce a specific timeline for implementation of downsizing activities and transition services, and |
|stick to it. Sticking to schedules and keeping promises helps preserve credibility and trust, both among affected |
|employees and survivors. |
|Share the pain: Senior managers should demonstrate that they are sharing the burden of downsizing. They should not |
|announce management bonuses or salary increases during a period of downsizing. In addition to destroying trust among |
|laid-off employees and survivors alike, this invites criticism from external stakeholders such as investors and community|
|groups. |
|Craft a fair package: Develop a fair benefits package that fits the needs of affected employees. In addition to |
|severance, these benefits may include outplacement assistance; personal, financial, and career counseling; an allowance |
|for job retraining, education costs, or small business startup; and assistance with medical and dental insurance |
|coverage. Prepare employees for the tax implications of their severance packages, and consider compensating them for |
|sizable one-time liabilities. In addition, help affected employees integrate benefits available in the public sector with|
|those offered by the company. Private Investment Councils (PICs), State Worker Dislocation Units, local organizations, |
|and federal programs such as the Job Training and Partnership Act can provide funds for and assist with job development, |
|training, and placement. Consider also outside experts, who often prove to be extremely useful in assisting with |
|transition services. Nonprofit organizations such as the Council for Adult and Experiential Learning as well as a variety|
|of for-profit companies can provide expert assistance, particularly in areas such as job placement and counseling. |
|Consider external impacts: Anticipate and prepare for consequences outside the workplace. Layoffs frequently trigger |
|sharp increases in child, spousal, and substance abuse. Companies often find they can assist most effectively in these |
|areas by providing confidential access to counseling services, and by working with and providing extra support to social |
|service organizations that in these areas. |
|Redesign jobs: Accompany downsizing with thoughtful restructuring of the organization and changes in work design. The |
|negative effects of downsizing are most pronounced when survivors are simply asked to shoulder the load of those who are |
|laid off, without accompanying changes in job descriptions and duties. Involve employees in this process. Employees are |
|more likely to feel valued and empowered within the changed environment when management invests in them through training.|
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|Avoid "survivor guilt": Anticipate morale problems and "survivor guilt" among employees who have not been laid off, and |
|take positive steps to help employees to recommit and reengage. Articulate a clear vision for the company and the place |
|within it that remaining employees will have, including opportunities that will be available to them. In addition, |
|prepare managers for what is sometimes described as "terminator guilt," morale problems they may face after implementing |
|a downsizing. |
|Document the process: Document the planning and implementation of all layoff-related activities. Careful documentation of|
|a well-designed process, particularly when it demonstrates fairness to workers and good faith efforts to assist them with|
|their transitions, goes a long way toward protecting companies from litigation. |
|Leadership Examples |
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|These "leadership" practices have been chosen as illustrative examples in the area of corporate social responsibility |
|addressed by this White Paper. They are intended to represent innovation, higher than average commitment, unusual |
|industry practice or a comprehensive approach to this issue. Periodically, the examples listed may be changed. If you |
|wish to share information about your company's leadership practices or policies, please contact editor@bsr.org with the |
|relevant information. (Many of the company examples and policies cited in this report have been verified and approved. |
|Final approvals for others are pending and information will be modified if necessary.) |
|These companies have demonstrated leadership in responsible restructuring. In some cases this means they have pursued |
|business strategies that have allowed them to avoid layoffs. In other cases, they have implemented layoffs in a "best |
|practice" manner that has allowed them to limit damage to their organizations, preserve integrity in the relationships |
|with both laid off and retained workers, and avoid damage to their reputations with outside stakeholders. |
|First Tennessee Bank has long demonstrated a strong commitment to its employees in a dynamic industry experiencing a wave|
|of mergers, acquisitions, and downsizing. One company innovation was to provide "golden parachutes" to all 6,600 |
|employees to protect them from a change in control (defined in several ways, such as a two-thirds change in the make-up |
|of the board of directors). Under such a scenario, all employees would receive up to one year's salary, depending upon |
|the length of service - an average of roughly three times the severance pay typical for this industry. First Tennessee's |
|board views this benefit not only as a way to formalize their commitment to employees, but also as a "poison pill" that |
|might deter potential suitors and enable the company to remain independent in a consolidating industry. The company does |
|not have a formal no-layoff policy, but works hard to place employees in other positions within the company if their jobs|
|disappear. In one recent year, the company laid off a total of only three employees. The company believes strongly that |
|its commitment to its employees has been a key factor in its success - for example, that employee retention translates |
|directly into customer satisfaction and retention. The bank has been highly praised and honored in the business press, |
|and its stock and profitability have remained high. In 1997, First Tennessee was ranked by Forbes as the most profitable |
|U.S. financial services company, based on return on capital. (Large, Financial, United States) |
|Southwest Airlines, considered one of the most successful airlines in the U.S., has grown consistently for 27 years, |
|roughly doubling every five years, and has never had to grapple with downsizing. While the company does not have a formal|
|no-layoff policy, it is nonetheless understood that this is a key commitment of Southwest CEO Herb Kelleher, who has |
|focused company strategy on doing everything possible to avoid a situation in which layoffs might be necessary. As part |
|of that commitment, the company has empowered employees to continually reduce waste and contain costs, and has encouraged|
|high productivity through a generous benefits package and a corporate culture that promotes fun and shuns bureaucracies. |
|Southwest's no-layoff commitment was tested in 1994 when the company acquired Morris Air. It guaranteed every Morris Air |
|employee an interview and hired three-fourths of them; many of the others were part-timers unwilling to work full-time. |
|Fortune magazine ranked Southwest Airlines fourth on its list of the 100 "most admired companies," noting that "employees|
|love Southwest, not excluding the 85 percent who are unionized workers." (Large, Transportation, United States) |
|Siemans Nixdorf Informatica, the Italian computer manufacturing subsidiary of the German conglomerate Siemans AG, |
|proposed spinning off its 18-person Information and Documentation Department into an independent company in 1993. The |
|move was largely a cost-cutting effort by the company to streamline and concentrate on its core activities. One option |
|was to eliminate the department altogether - its services could be readily outsourced - but the company decided not to |
|reduce personnel or disperse what it considered a valuable pool of knowledge workers. The other option, which the company|
|opted to pursue, was to retain the professional and entrepreneurial potential of the employees, but spin-off the activity|
|in a mutually advantageous way. All 18 employees were involved in the planning; the parent company provided support |
|during the start-up phase, but had no financial participation. Since 1994, the new company, ID & CM, has grown to 29 |
|employees, added new services and customers, and created an offshoot - ID & CM Consulting, devoted to marketing and |
|commercial information systems, Internet applications, and electronic creation, management, distribution of documents. |
|(Large, Communications, Italy) |
|Reflexite, a small U.S. manufacturer of reflective materials for a variety of uses, has a "Business Decline Contingency |
|Plan" (BDCP), designed to take the uncertainty out of the situation when faced with a downturn or flat sales. The BDCP |
|outlines four levels of severity, the symptoms of each situation, the actions to be taken at each level, and the expected|
|results of that action. So, for example, at Stage I, with "sales below budgeted sales but ahead of the same period in |
|prior year," the plans dictates that the company "defer some budgeted hires," "defer some budgeted activities," "heighten|
|awareness of current situation," "discuss at staff meetings," and "monitor overall economic conditions." In the middle |
|stages, the plan calls for, among other things, soliciting ideas to cut costs and improve productivity and efficiency; |
|cutting overtime; accelerating new product introductions; voluntary leaves and furloughs; deferring lower-priority |
|capital items; deferring raises; and reducing hours. At Stage IV, the most severe condition, where Reflexite "generates |
|losses for a period of two quarters or more," the plan calls for "salary deferments or reductions for balance of exempt |
|employees," "trim benefits," "early retirements," "voluntary resignation offering," and - finally - layoffs. |
|(Small/Midsize, Manufacturing, United States) |
|Sample Policies |
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|Federal Express is one of a handful of companies that has an explicit no-layoff philosophy. As described by the company: |
|"Federal Express is dedicated to the principle that its people are its most important asset, as evidenced by its 'People,|
|Service, Profit' corporate philosophy. People are placed first deliberately, because putting people first makes good |
|business sense." [This is demonstrated by Federal Express'] "commitment not to lay off employees except under the most |
|extreme circumstances as determined by the chief executive officer." (Large, Communications, United States) |
|Awards |
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|BSR is not aware of any award and recognition programs related to downsizing, although some of the "best places to work" |
|winners have been cited for their philosophies and programs related to downsizing. We welcome submissions of other award |
|programs on this topic; please contact editor@bsr.org. |
|Resources |
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|The following list is not comprehensive. It is an illustrative group of the many nonprofit, public sector and/or academic|
|resources working with the private sector in the area of corporate social responsibility addressed by this White Paper. |
|The resources identified below have been included because they provide information or support that is relevant to |
|companies, and they are national or international in scope. Periodically, the examples listed may be changed. At this |
|time, the list does not include for-profit resources. If you would like to provide information about additional helping |
|resources that meet our criteria, please contact editor@bsr.org. |
|American Management Association |
|http://www.amanet.org |
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|Organizational Overview: The American Management Association (AMA) is a nonprofit membership organization that assists |
|companies in developing organizational effectiveness. AMA conducts its activities in North and South America, the Pacific|
|Rim, and East Asia, and in Europe and the Middle East through its Management Centre Europe. It identifies best management|
|practices worldwide to provide assessment, design, development, self-development, and instruction services through a |
|variety of print and electronic media and learning methodologies, all designed to enhance the growth of individuals and |
|organizations. AMA offers a publications database with information on layoffs and downsizing as it relates to the |
|downsized worker, the company, and those workers who stay on. |
|Products & Services: The AMA offers reports on pertinent topics such as job growth and creation, which can be downloaded |
|from AMA's website. Books about downsizing, layoffs, and job growth can be ordered directly from the web. Related |
|articles also are available and can be read directly from AMA's website. |
|Annual Conference: AMA sponsors several conferences and seminars throughout the year relating to human resources and |
|personnel issues. |
|Website: AMA's website is a valuable tool for searching for publications, information about other sites around the world,|
|or finding out about conferences, seminars, and workshops. |
|Awards: N/A |
|Contact Information: |
|1601 Broadway, 8th Fl. |
|New York, NY 10019-7420 |
|Phone: 212.586.8100 |
|Fax: 212.903.8168 |
|Email: cust_serv@amanet.org |
|The Conference Board |
|http://www.conference-board.org |
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|Organizational Overview: The Conference Board is a global business membership and research group linking executives from |
|different companies, industries, and countries in its twofold mission to improve the business enterprise systems and |
|enhance the contribution of business to society. A not-for profit, non-advocacy organization, it has more than 2,900 |
|member companies and other organizations in 65 countries, 102 Councils of executive peer networks, and holds more than |
|100 conferences annually. Its economics research and analyses includes the Leading Economic Indicators of the United |
|States. Within its six main areas of expertise, the Human Resources and Organizational Effectiveness Branch of The |
|Conference Board operates several useful programs dealing with issues such as downsizing and layoffs. |
|Products & Services: The Conference Board has dedicated much research and energy to the study of dealing with |
|employee-employer relationships. In addition to conferences and research reports, the organization sponsors more than 20 |
|councils to discuss human resources issues; several deal with downsizing and layoffs issues, such as a council for senior|
|executives to discuss the unique challenges they face in dealing with sensitive employee issues. |
|Website: The Conference Board website features a calendar of news and conference events, program and product and services|
|descriptions, recent economic developments, a list of research publications, sample articles from its magazine, and |
|organization history and contacts. |
|Awards: Administers the Ron Brown Award for Corporate Leadership, "honoring achievement in employee and community |
|relations," and the Best in Class Award to recognize corporate involvement in improving primary and secondary education. |
|Contact Information: |
|845 Third Ave. |
|New York, NY 10022 |
|Phone: 212.759.0900 |
|Fax: 212.980.7014 |
|Email: info@conference-board.org |
|Council for Adult and Experiential Learning |
|http://www.cael.org |
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|Organizational Overview: The Council for Adult and Experiential Learning is a national organization dedicated to |
|expanding lifelong learning opportunities for adults. CAEL helps businesses design and administer learning programs for |
|active employees as well as transition/learning programs for employees affected by downsizing. For CAEL, the key to |
|success for both groups is access to learning and good advice along the way. CAEL also acts as a broker, or intermediary,|
|among businesses, adult learners, government training programs and the education community. |
|Products & Services: |
|Consulting on learning system design and implementation |
|Administrating tuition benefits |
|Learning services for outplacement/downsizing situations, helping both employers and employees deal with downsizing |
|through individual planning, education and development |
|Brokering relationships with government agencies and partnerships with community colleges and universities |
|Coordinating a network of career and education advisors |
|Group and organizational needs assessments |
|Individual skill assessments/profiles |
|Annual Conference: CAEL has an international conference each year to discuss adult education innovations, prior learning |
|assessment, and workforce development issues. The 1999 conference in Seattle celebrates CAEL's 25th anniversary; the |
|theme for the conference is "Building the Future Through Learning." (http://www.cael/org/confwork/default.htm) |
|Website: CAEL's website provides an in-depth description of services available, as well as an information request form |
|for those interested in finding out more. (http://www.cael.org) |
|Awards: N/A |
|Contact Information: |
|55 East Monroe, Suite 1930 |
|Chicago, IL 60603 |
|Phone: 312.499.2600 |
|Fax: 312.499.2601 |
|Email: chris@cael.org |
|Federation of European Employers (FEE) |
|http://www.euen.co.uk |
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|Organizational Overview: Federation of European Employers is an independent, nonprofit membership organization open to |
|employers with at least 250 staff in at least two European countries. The Federation serves as clearinghouse of |
|information for many work-related issues in the European community. |
|Products & Services: FEE provides an annual European Employers Handbook with details about requirements on the national |
|level. FEE also disseminates information about employee rights, such as the rights of employees whose companies have been|
|merged or acquired. |
|Website: FEE's website features the complete directive on the acquired rights of employees, as well as ordering |
|information for the European Employers Handbook. |
|Awards: N/A |
|Contact Information: |
|30 Cooper Rd. |
|Guildford, Surrey GU1 3LY |
|United Kingdom |
|Phone: +44.1483.450.890 |
|Fax: +44.1483.450.0894 |
|Email: enetwk@globalnet.co.uk |
|International Labor Organization (ILO) |
|http://www.ilo.org |
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|Organizational Overview: The International Labor Organization (ILO) is a United Nations-affiliated agency that promotes |
|social justice through the establishment of labor rights standards. A tripartite agency (workers, employers and |
|governments participate as equal partners), the ILO formulates conventions on basic labor rights, including child labor, |
|freedom of association, forced labor, equality of opportunity and treatment, and other standards regulating working |
|conditions. As one of the largest labor organizations in the world, the ILO is able to provide information about |
|downsizing and layoffs to a worldwide audience. |
|Products & Services: |
|Data Clearinghouse: The ILO serves as a clearinghouse for worldwide labor information. It operates many databases that |
|contain information about employment trends, layoffs, downsizing, and similar issues in the form of reports, press |
|releases, and articles. The information covers regional issues, as well as more specific country-related issues. |
|Annual Conference: Holds a conference each year in Geneva to discuss labor issues. |
|Website: The ILO's website offers many searchable databases, along with conference and meeting information. |
|Awards: N/A |
|Contact Information: |
|4 Route des Morillons |
|CH-1211 Geneva 22 |
|Switzerland |
|Phone: +41.22.799.6525 |
|Fax: +41.22.799.8570 |
|Email: webinfo@ilo.org |
|Society for Human Resource Management |
|http://www.shrm.org |
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|Organizational Overview: SHRM is an international professional human resources organization with more than 115,000 |
|members worldwide. SHRM provides members with education and information services, conferences and seminars, government |
|and media representation, publications, and on-line services. SHRM serves as a clearinghouse for information regarding a |
|broad range of workplace issues, including downsizing and layoffs. |
|Products & Services: All products and services are available to members; many also are available to non-members: |
|Reports: SHRM regularly produces reports on downsizing and layoffs and how they affect employers, employees, and the |
|morale of the company. |
|Annual Conferences: Sponsors several conferences each year to discuss workplace/workforce issues. |
|Website: The SHRM website offers several searchable databases, as well as information about job openings, conferences, |
|and publications. |
|Awards: SHRM each year gives the Award for Professional Excellence to the human resource professional who has creatively |
|and consistently benefited his/her company. SHRM also offers numerous awards for excellence in the profession. |
|Contact Information: |
|1800 Duke St. |
|Alexandria, VA 22314 |
|Phone: 703.548.3440 |
|Fax: 703.836.0367 |
|Email: shrm@shrm.org |
|US Department of Labor |
|http://www.dol.gov |
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|Organizational Overview: The U.S. Department of Labor is the federal governmental agency that deals with issues related |
|to workplace concerns. The legislative mandates and regulations produced to deal with employers and employees cover a |
|wide variety of workplace activities for nearly 10 million employers and well over 100 million workers, including |
|protecting workers' wages, health and safety, employment and pension rights; promoting equal employment opportunity; |
|administering job training, unemployment insurance and workers' compensation programs; strengthening free collective |
|bargaining and collecting, analyzing and publishing labor and economic statistics. Among the DOL's responsibilities is |
|dealing with employer/employee relations before, during, and after downsizing. |
|Products & Services: The Department of Labor offers several helpful resources for employers and employees dealing with a |
|downsizing/layoff situation. DOL maintains an extensive library of laws, regulations, and advisory manuals for those |
|looking for either legal statutes or literature about downsizing. |
|Website: The DOL's website offers an extensive searchable database and manuals can be downloaded directly. |
|Awards: N/A |
|Contact Information: |
|200 Constitution Ave. NW |
|Washington, DC 20210 |
|Phone: 202.219.6666 |
|Fax: 202.693.1453 |
|US Equal Employment Opportunity Commission (EEOC) |
|http://www.eeoc.gov |
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|Organizational Overview: EEOC is the federal governmental agency charged with promoting equal opportunity in employment |
|through administrative and judicial enforcement of the federal civil rights laws and through education and technical |
|assistance. For those looking for downsizing information as it relates to job discrimination, the EEOC can be a helpful |
|resource. |
|Products & Services: EEOC offers information about federal regulations, law enforcement, and how to file a charge against|
|an employer. Also, the EEOC operates a technical assistance program, which assists companies in complying with federal |
|law. |
|Website: The EEOC's website provides information about the technical assistance programs, federal regulations, and an |
|area specifically for small businesses. |
|Awards: N/A |
|Contact Information: |
|1801 L Street, N.W. |
|Washington, D.C. 20507 |
|Phone: 202.663.4900 |
|Fax: 202.663.4912 |
|This White Paper contains information from a variety of public sources such as newspapers, books, on-line services, and |
|reports from various NGOs and academic studies, as well as information shared directly by companies. Where appropriate, |
|we have made reference to the source of information and sought approvals for its use. If you are aware of any information|
|in this White Paper that is inaccurate or not properly attributed, or if you have additional information that could be |
|helpful to us as we update this report, please contact editor@bsr.org with the relevant information. Thank you. |
|Click here for a description of Issues and related White Papers that BSR addresses. |
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