When employees perceive that resizing attempts are being managed poorly, it can lead to management dis- trust, cynicism, and fear. Not only do these conditions cause im- mediate performance problems, they create a situation ripe for future lawsuits. It locks in new and better ways of getting the job accomplished, and it sends a message to employees that there is opportunity and hope in the post-resizing organization. Resizings have the potential to disrupt life outside the organization as well as within it. The sensitivity that organizations display toward cus- tomers and communities in planning and implementing resizing has the potential to minimize the loss of key customers and tighten the relationship with existing ones.
Some organizations are taking creative steps to manage resiz- ings in a manner that is consistent with their identities of what it is to be a responsible employer. One particularly innovative case is Endwave, a Silicon Valley company that designs components for broadband wireless systems. Hit hard by the softness that plagued the telecom industry, Endwave conducted a voluntary reduction in force as part of its program to consolidate and transfer manufac- turing operations from the Silicon Valley to a less expensive area in early More than just a rehearsal for delivering the news, the training program became an opportunity to educate Endwave managers on the psychology of adaptation and transition.
It became a forum for managers to express their concerns and to offer support for one another. We believe this company will come back and achieve the operating results and stock share price it is capable of. We want the people who helped start us on this path to share in our success when we achieve it. The stock op- tions are a way for former employees to participate in our renewal whether they come back to work for us in the future or not. The intent is clear. Charles Schwab wanted to ease the pain of the people who were leaving so when things turned around, those employees would feel favorable about returning.
References Bamberger, B. Closing: The life and death of an American factory. New York: Norton. Bardwick, J. Barling, J. Journal of Applied Psychology, 84, — Bastien, D. Corporate judo: Ex- ploiting the dark side of change when competitors merge, acquire, downsize, or restructure. Journal of Management Inquiry, 5, — Boroughs, D. Amputating assets. Reading, MA: Addison-Wesley. Brockner, J. The effects of work layoffs on survivors: Research, theory, and practice. Cummings Eds. Organiza- tional Behavior and Human Decision Processes, 63, 59— Buono, A.
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San Francisco: Jossey-Bass. Cascio, W. Gowing, J. Quick Eds. De Meuse, K. An investigation of the relational component of the psychological contract across time, generation, and employment status. Journal of Managerial Is- sues, 13, 87— Corpo- rate downsizing: Separating myth from fact. Journal of Management Inquiry, 6, — An exercise for managing change.
Training and Development Journal, 48 2 , 55— The tie that binds—Has be- come very, very frayed! Human Resource Planning, 13, — Human Resource Management, 33, — Economy creates more stress. Fortune, pp. Fisher, S. Downsizing in a learning organiza- tion: Are there hidden costs? Academy of Management Review, 25, — Gaines, H. Put high priority on job satisfaction. Execu- tive Excellence, pp.
Greenhalph, L. Maintaining organizational effectiveness during organizational retrenchment. Journal of Applied Behavioral Science, 19, — Holmes, T. The social readjustment rating scale. Journal of Psychosomatic Research, 2, — The cynical Americans. Kivimaki, M. Factors under- lying the effect of organizational downsizing on health of employ- ees: Longitudinal cohort study. British Medical Journal, , — On death and dying. New York: Macmillan. Larkin, T. Reaching and changing front-line employees. Harvard Business Review, pp. Leana, C. Coping with job loss: How individu- als, organizations, and communities respond to layoffs.
San Francisco: New Lexington Press. Lei, D. Journal of Management, 21, — Lesly, E. Business Week, pp. Levering, R. The best compa- nies to work for: The best in the worst of times. Lewin, K. Frontiers in group dynamics. Human Relations, 1, 5— Marks, M. Downsizing and restructuring. Mirvis Ed. New York: Wiley. From turmoil to triumph: New life after mergers, acquisi- tions, and downsizing. Charging back up the hill: Workplace recovery after merg- ers, acquisitions, and downsizings. Mirvis, P. Managing the merger: Making it work. Mische, M. Strategic renewal: Becoming a high-performance organi- zation.
Morris, J. Organizational Dynamics, pp. Noer, D. Healing the wounds: Overcoming the trauma of layoffs and revitalizing downsized organizations. Breaking free: A prescription for personal and organiza- tional change. Pfeffer, J. Boston: Harvard Business School Press. Reynolds, L. Management Review, pp. Schmitt, N. Siekman, P. The big myth about U. Strauss, G. Forget brass rings—execs grab for gold. USA Today, pp. A study of worker compensation costs in companies following downsizing.
New York: William M. Bureau of Labor Statistics , February Hourly compensation costs in U. Department of Labor. Mass layoff events and initial claimants for unemployment insurance, January to February Vanderheiden, P. Human Resource Management, 38, — Wiley, J. A national survey of 2, households. As the story unfolded, the reader vicari- ously observed all four characters react to change differently for example, deny it, resent it, embrace it. How could we have imag- ined how soon the gentle parable was going to become hard real- ity in our own company? I was vice president of organization development and learning for Seagram and a member of the se- nior human resource team at that time.
I played an active role in planning and preparing the organization for the major transition it was facing. The views expressed in this chapter are entirely personal and are not intended in any way to represent the opinions of other Seagram Spirits and Wine Group em- ployees or management. Di- ageo already was the industry leader by far and was strengthening that position by taking Crown Royal and VO Canadian whiskies, as well as Captain Morgan rum.
From an earnings perspective, SSWG was leading the spir- its industry. People felt part of a highly streamlined and winning or- ganization with a growing performance discipline. The threat of unloading SSWG sent a shock wave through the or- ganization. The buying companies were predominantly interested in acquir- ing new brands, which they could easily integrate in their existing sales and distribution networks. It soon became apparent that only a small number of positions would survive. Managing this balance proved to be a daunting task for several reasons.
From this time, Bronfman had acquired entertainment assets, signaling that the transformation of Seagram was going to be more fundamental than simply reorganizing inspired by a drive for enhanced perfor- mance and effectiveness. A particular psychological aspect played an important role in this transformation.
A critical difference be- tween Seagram and Vivendi was that Vivendi was management dominated, whereas Seagram was largely a family company. The wealthy and powerful Bronfman family held about 28 percent of the shares of Seagram. The family business mentality had been par- ticularly prevalent in the spirits business, the origin of Seagram. For a long time, many SSWG em- ployees had felt that they were the masters of the universe in the Seagram empire.
However, by , they started to feel increasingly reduced to a position of a money maker, subsidizing the newly ac- quired entertainment assets some of which were loss making. Nevertheless, the workforce remained loyal to the Bronfmans for the next few years, because most employees were convinced that they would never sell the spirits and wine business. The Vivendi Universal deal was a major blow to many of the SSWG employees, who felt deeply let down by the Bronfmans, especially in North America, which accounted for 60 percent of the total business and where the strongest growth was being realized.
Following the announcement of the Vivendi Universal creation in June and the SSWG sale by the end of , there arose a hos- tility and resentment toward the new owners of the company, par- ticularly from the many long-serving employees. Many of the SSWG employees from the senior ranks downward were resentful and angry at what they perceived to be the selling out of the company on the part of Bronfmans.
Edgar Bronfman became a target of derision and frustration. Any communication from him about the business reason for the sale was perceived to be lacking in empathy and insensitive to employees. Pointed sarcastic remarks bounced back and forth on Seagram-related chat boards. At stake was the largest portfolio of drink brands ever to be put on sale, giving each of those compa- nies a unique chance to secure leading positions in key categories around the globe, particularly in North America.
To the other large group of stakeholders, the SSWG people, it seemed that Vivendi Universal, the investment bankers, and the dealmakers were giving very little consideration to their needs. All of them supported each other in overcoming the disappointment of not being able to carry out their management buy-out. They communicated to the or- ganization openly and with credibility about why they had aban- doned their buy-out effort and that they now would support the next best solution. The various regional presidents followed up their gen- eral communication by discussing the recent happenings face-to-face with their employees.
At the same time, the human resource func- tion took a lead role in preparing the organization for transition and made moves to mitigate the sense of impending personal loss. When the deal was announced in December , all parties involved were convinced that they would get regulatory approval in the United States, Canada, and Europe by the end of March In the hot merger and acquisitions summer of , General Electric saw its deal with Honeywell blocked by the European Union Commission in Brussels.
A transaction directly involving two major competitors head-on and a breakup of a large company is bound to be more complex than some of the other megamergers. Add to this mix the complicated split-up of brands and countries. Nevertheless, all the complexity from a systems and people per- spective that comes with such procedures was known in advance. As I am writing this chapter, it now is ten- tatively scheduled for the end of October with possible further de- lays.
We took many initiatives with long- and short-term effects to help the organization and the people get through this transition. In the case of SSWG, the positive impact of eight years of contin- ued performance-enhancing actions only now became apparent to its full extent. In addition, the subsequent overhaul of the employee development and management processes proved to be a solid foundation to deal with the breakdown in a more ma- ture way than otherwise would be possible.
This effort had put the organization back on track, had increased its executional excellence, and had instilled a strong discipline in approaching its business in the organization. During this time, the Seagram Values were formu- lated, cascaded, and integrated into the way we were doing busi- ness and managing our people.
Edgar Bronfman, Jr. The good news for SSWG was that its chief executive, Steve Kallagher, had been the reengineering leader at the onset and con- sistently and ardently sustained both initiatives in the company. Un- doubtedly, those efforts created the nurturing ground for the fundamental change of SSWG that proved to be the ideal founda- tion to build it into a high-performing company.
And though not intended as such, these interventions also created the enabling conditions to see the organization and its people through its ulti- mate breakup while being able to maintain focus and business momentum. The basic discipline of creating a quality process staffed by talented people and running it with a deep respect and integrity was certainly rooted in the initiatives of the mids. I consider all those change initiatives necessary to be part of any top management agenda on an ongoing basis.
It highlights that the best time to prepare for a combination with one or more companies starts a long time before it actually happens so that ad- equate conditions are created long in advance that will enable a more humane transition. Medium-Term Preparation: Anticipating the Deal From the time of the announcement of the intended sale of the company and during the time of the auction, we in the human re- source HR function embarked immediately on preparing to help the organization through the transition.
The senior HR team met and discussed the large number of issues involved in a combina- tion of companies with respect to the organization overall and the individuals. We opted to be proactive rather than wait until it was clear who were the buyers. We agreed on a course of action, start- ing with the preparation of the HR function. We all knew that fun- damentally mergers and acquisitions are a very negative experience for employees, their families, and the communities in which they live.
Therefore, in line with the Seagram Values, we were going to try to help our employees through this process with respect and integrity, regardless of who was going to be the new owner of our company. We also realized that our HR professionals had to learn more about combinations and the nature of HR advice and the work it entailed.
By doing this, SSWG employees would be able to keep themselves busy and gain a sense of achievement, thus somewhat offsetting the feeling of personal loss. We contin- ued to demonstrate that we were attending to the personal and emotional dimension of our employees, while at the same time fo- cusing on achieving the business objectives. One major condition allowed us to take a lead position.
The HR function in SSWG had become one of the strongest functions during the past three years as a consequence of two events: the re- design of the way in which HR management was being handled and the extensive upgrade of the caliber of the HR professionals we employed. A senior team of line managers and HR specialists had reengineered the human development and management processes and accountabilities. More important, line man- agement owned it. Performance management and talent detection and development were the cornerstones of Team Seagram.
The senior HR team decided to design and organize a large-scale three-day learning event for the entire function around the world before any buyer was announced. The event had the following aims: 1. Strengthen the global HR network. Prepare the organization, the HR function, and its individuals for the imminent task at hand.
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Develop, with the help of some board members and invest- ment bankers, the capability of the function by learning about the business context of the imminent acquisition and the busi- ness backgrounds of all possible future partners. Learn from authoritative consultants and other companies that had gone through similar experiences about the dynamics of combining companies and why they often fail. Put a global action plan together for the upcoming six months. The learning experience was highly interactive and participa- tive. We started by listening to individual concerns, hopes, and fears, as well as allowing them to surface collectively.
We stressed that although one may not be in charge, one can still build an inclusive scenario and offer to co-create a win-win proposition for the new venture in partnership with the buyer. We accomplished this goal through many sessions in which all participants were involved in building future successful scenarios in which they would like to contribute their capabilities.
We derived a set of HR principles for dealing with separation, selection, and integration, carefully de- scribing what success would look like. Everything was written in an HR blueprint document for integration, which was shared among the entire HR function. Subsequently, it was passed on to the HR professionals of the buying companies.
We started the conference with a basic discipline of extensive question-and-answer sessions for ourselves that later became the model for communication sessions with line managers. Such ses- sions were repeated regularly across the globe during the follow- ing months whenever management or employee meetings were taking place. All participants agreed to take the following collective actions: 1.
Gear up communications at the local levels as a partnership among the line manager, HR, and communications functions. Provide local teams with an overview of why mergers frequently fail and how to turn them into successful combinations. Answer as many of employee questions as possible in local meetings and road shows. Build or update local, regional, and global human resources databases. Identify their HR counterparts at the potential buyers and ini- tiate a telephone call the day after the preferred bidder was an- nounced.
Seventy telephone calls were placed worldwide one day after the announcement of the deal.
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Nine months later, this three-day conference has proven to be a major catalyst for the entire transition process. The consistent and persistent way in which this was handled within SSWG was a major achievement of the HR learning event. Immediately after the HR event, a long series of focused in- terventions for the individual employees were designed by the or- ganization development team and started to be implemented in December Most of those events were one-day or half-day sessions with either a practical or a psychological-emotional focus. The last session gave participants an insight into their deeply held career interests and anchors, preferences, and capabilities and how to put these together in a balanced and real- istic career perspective.
The objective of those work sessions was to work with their em- ployees in identifying and developing the necessary skills and techniques to navigate through the change effectively. It included completing self-assessment exercises and individual coaching follow-up. Many companies in a merger and acquisition situation tend to offer similar sessions. We continued to do so throughout the organization until the time of closure. The emphasis of the ac- tivities shifted over time in line with the evolving reality.
The leadership initiative LEAP Leader- ship Enhancement and Acceleration Process for employees with high potential was continued but refocused to help people un- derstand their leadership skills in the context of leading change. In parallel, functional training sessions were continued where they had been going on before the announcement occurred. We com- municated openly with employees that the prime purpose of all training efforts was now shifting toward furthering their personal capabilities.
Communication At the learning event, the HR and communications functions had agreed to make a substantial investment in the communication Y area. This proposal found immediate response from the leaders FL whose style had become more open over the past three years. In addition to the regular face-to-face meetings organized by line man- agers and their HR representative, the number of management AM meetings increased, including numerous question-and-answer ses- sions in line with the needs of the regions or local organizations.
Frequent e-mail messages were distributed. The quarterly company TE magazine, Premier, was discontinued and replaced by Premier in Brief, a more regular written update on the sale of SSWG and important developments. As the waiting for the closure dragged on, we introduced Radio Seagram—regular telephone broadcasts by the CEO in which all employees could dial in to hear the latest updates. We thereby in- creased the speed of the messages and found ways to revert to dif- ferent means of communication.
Most leader- ship groups seem to vanish during a transition like this. In our case, the underlying driver was the strong pride and attachment that the top team continued to hold for their company and what it stood for among its competitors. Retention While addressing personal needs and showing respect and under- standing to the individual remained important, we believe that money remains one of the best short-term means to secure reten- tion.
Many se- nior managers feared a massive walkout as soon as the deal was an- nounced. This never materialized; the retention levels stayed remarkably high throughout the period. Almost one year after the announcement of the intended sale, SSWG had only out of its 8, employees 6 percent voluntarily leave. Furthermore, the resignations have been lowest in North America, where we had the largest number of long-serving employees.
Senior management and HR allocated retention funds widely across a broad management population of about people. The SSWG Focus and Motivation Reward entitled recipients to a full-year bonus after a six-month period; it could be adjusted up- ward based on strong individual performance. Surprisingly, few resignations occurred after the receipt of this bonus. A comple- mentary special retention scheme also was made available to re- ward key employees deeper in the organization with lump sums of an average 50 percent of their salary.
Within this program, non-bonus-eligible employees were nominated by their country managers and functional heads for being critical to the successful running of the business on a daily basis or essential to closing the sale transaction. In addition to the retention funds, the senior HR team worked hard on behalf of all SSWG employees to maintain all the normal compensation practices such as performance bonuses and salary reviews.
Understandably, this objective was not always met with great enthusiasm on behalf of the buying companies. They contributed greatly to the record business performance results SSWG delivered at the end of June If we had been more courageous, we probably should have tried to tailor the retention efforts to individual needs even more. We acted on a very inclusive and generous basis in combination with the many other interventions people could choose.
In doing that, strong HR practices that we had built during the past three to four years were leveraged immediately. Our talent and high- potential review process, communication process, and above all the sense of urgency that had become an integral part of our cul- ture all were intact. A series of suggestions regarding resourcing principles and processes was submitted to the buying companies. Based on the robustness of the un- derlying performance and talent processes, they took the data at face value. Consequently, it became the primary source for their decisions about whom they were going to employ.
Throughout the pre-close period, the senior HR team stayed close to what was hap- pening across the company with respect to the decisions about peo- ple. Do not assume an attempt to acquire or merge with your company will not happen. Furthermore, do not think that because you have been acquired, all control is lost. Once a deal has been announced, do not simply sit back and wait for things to happen. A new reality will unfold sooner or later.
As the acquirer, it is easy to fall into the superiority trap. It requires great integrity and sensitivity throughout your organi- zation to prevent likely power plays from occurring. In our case, the six to seven years of investment in cultural change and leadership development paid off. This should be a constant agenda item for se- nior management. Once it does become reality, both short- and long-term actions will be swiftly required. Mergers, acquisitions, and resizing always will be with us. The way in which you structure your processes and build your culture is critical for the relative smoothness of something that is not smooth at all.
There are two elements to this point. Second, the talent pool deeper in the organization often occupies roles that are critical to the ongoing success of the business. It is necessary to secure their continued employment and commitment to help the new business reach high performance levels fast. Unfortunately, the human psyche is such that it tends to hear or read all the negative implications in any piece of communication. Morale and motivation can drop quickly if peo- ple are left to form their own conclusions.
In order to correct po- tential misconceptions early on, management needs to be available for follow-up dialogue. You are bound to have to re- peat the same message over and over again. As annoying as this may be, you have to do it. Never create illusions. The most honest communication is usually frank. The emotions around loss or change traditionally have been categorized as some of the strongest stressors. The neu- rosensory research around emotional intelligence suggests that strong emotional responses from the brain have priority over the more rational side of the brain.
Managing such a situation requires sensitivity and ongoing care.
The best help you can give employees with long-lasting effect is to help them assess their job strengths and weaknesses accurately. Money simply is a plaster on the wound; it does not help heal the wound. Always have employees consider redeployment. Even when the new owner has a job to offer, advise your employees to seek other op- tions as well.
Support the managers delivering the message. Most of them, regardless of their seniority, are not trained to give bad news and need special support around the process. In business, most man- agers resist speaking the plain truth because they think it is going to upset people. They forget that trust can be built only on truth and sincerity.
A positive workplace requires unvarnished honesty. I recommend that HR professionals try to customize retention programs to the individual employees whom the organization seeks to keep. In addition, the employees you want to retain most often are the more talented ones who frequently have more options in the labor market. Con- sequently, try to demonstrate that you are paying attention to what really matters to them and to what needs they value.
All pro- jected time lines will be incorrect and always will be delayed. Be mentally ready for twice the delay than the one announced at the onset. Also, prepare yourself for an environment of political games- manship, self-preservation tactics, and empire building. Organiza- tional change creates uncertainty and ambiguity. Such times bring out the best, but also the worst, in people. Insist that senior management roles be dealt with the soonest, so that they can be announced before or, at the latest, at the time of the close of the deal.
This approach will provide clarity and di- rection for the remaining employees. If you do it quickly, the pain is sharp but brief. As much notice should be given as is reasonably possible before a re- duction in force takes place. Employees should be permitted to continue to perform their normal job duties in their regular facil- ities, with full access to systems and people, enabling them to say good-bye and depart with dignity. Such an attitude can create a positive image of an employer of choice.
As a re- sult of four years of ongoing development in our HR function, we now can pride ourselves that it is deeply involved in the business as a true partner to the line. During such a massive resizing effort, the role of HR is not always clear. Typically, HR is seen as a non-revenue- producing role and is likely to be high on the list of to-be-cut jobs.
Moreover, there is an increased workload in the function to process all the personnel changes, often with increasingly fewer people to do the work. At the same time, HR personnel usually are being sought out for emotional support. In addition, we found ways to educate senior executives and line man- agers about the potential pitfalls of mergers and acquisitions. We designed and implemented responsive and adequate interventions to allow the organization to deliver its strategic objectives while at the same time preparing it for its future destiny.
Any HR professional who is faced with resizing issues should respond proactively. Resizing efforts build character, professional- ism, competence, and an opportunity for superior performance. These are qualities that are at the top of the list when companies seek to recruit their future strategic HR people. An Internet start-up is a fast-paced and ever-changing environment that forces you to hit the ground running. You learn aspects of your job that you would not have experienced if you were working in a more established or traditional company.
The philosophy is that time is money, and growth is the key to success. In this environment, the main re- sponsibility of an HR professional is to hire, hire, and hire. Fill that bubble with talent, and help create an organization that will attract candidates from all over the world. The Internet bubble has burst. The company I work for was a spin-off of a large media company.
Within a year, my company grew from twenty employees to over four hundred. Every department was growing, with three employees seated in one cubicle, facilitating new employee orientations every other day. The bubble was about to burst. Less than a year after topping off at over employees, we now are a company with approximately employees. The road getting to employees, like the road to getting to employ- ees, was not an easy one. Nevertheless, it is a road that every HR professional can learn from and may have to go down at some point in his or her career.
One of the challenges that a HR professional has to balance is the desires of the executive staff and board of directors with the needs and rights of employees. It is the HR job to make sure that any staff reduction is done legally, fairly, and humanely.
It is also the part of the job that is not very pleasant. Concern for people is what made most of us choose HR as a career. We help employees every day in a way that not only affects their work life but their home life as well. Starting a new job is a big milestone. Losing a job can be devastating. It has gone through four lay- offs since its height. These reductions were due to shutting down of some on-line networks.
The employees who were let go during this layoff worked directly on those networks. The second layoff, in October , was primarily a reduction in overall workforce, and cuts were made across the board. About three months later, in January , we im- plemented an even larger layoff—another across-the-board reduc- tion in force. All of these job reductions were implemented on an involuntary basis. On the morning of the layoff, employees were informed by their respec- tive manager or the director of their division that their job had been eliminated. On average, they were allotted about three hours to pack up their belongings and leave the building.
For months, we experienced a lot of turnover within our company. The job market was hot, and people could go anywhere they wanted.
Now, people do not have the same options. Employees are hold- ing on to their jobs, happy to receive a paycheck every two weeks. Consequently, conducting a layoff during these times is even more painful for everyone. Everyone from the executives making the re- duction decisions to those employees remaining who have just lost their coworkers and friends feels the pain. The Layoff Prior to our most recent layoff, we had employees. We had conducted a few layoffs and had seen reductions in staff through resignations and performance issues.
During the past six months, our vice president of HR resigned. We had to let our recruiter go, and my HR generalist resigned to move out of state. Thus, the chaos within the company had reached the HR de- partment as well. I knew that another layoff was around the cor- ner, because we had a bad quarter and executives were stalling on hiring a replacement for the HR generalist. The executive team would like the layoff to occur six business days later, on the following Tuesday. Tuesday was selected because we needed the six business days to decide where the cuts in staff would take place and have time to get everything organized.
At this point, our attorney okayed our reduction numbers. There was a sense within the company that it was just a matter of time before another layoff would be announced. It was not a great working environment. I made a point of sitting down with the employees to listen to their appre- hensions and fears. I told them that there was no layoff planned at Y the moment, but that every one of us was working in an uncertain FL environment and that we all should be saving money and carefully planning for the future. Employees know when a company is in trouble.
AM How a layoff should be conducted always is up for debate. Do you tell people in advance? What day of the week do you let them go? What time during the day? Who should do it? How much time TE do you give them to pack up their belongings?
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Do you need secu- rity in case someone gets violent? Overall, there is no perfect way of implementing a layoff. The whole process is dismal. Laying peo- ple off is something that you never want to get good at doing. The most important thing to remember is that the decisions being made are affecting people and their families. I have found that many ex- ecutives are afraid of the whole process of downsizing. Often, they make the decisions to lay off staff, but on the day of the layoff, they are nowhere to be seen.
They leave the dirty work for middle manage- ment and HR professionals to do. I think it is extremely important that top executives are visible and available for every employee dur- ing a layoff. It sends a powerful message to employees being let go, as well as employees remaining in the company, that their leader- ship is not afraid to face their decisions and those individuals affected by them. We decided that it made more sense for managers to talk to their employees individually and inform them about the reduction on Thursday morning, three business days before the layoff.
This approach would give time to employees who were being let go to give their work to those remaining and give them a few extra days to get their bearings. In addition, managers could check in with employees remaining and make sure they were will- ing to take on additional tasks. Another major reason we decided to tell people early was that it is nearly impossible to keep an up- coming layoff of such magnitude a secret.
It is imperative to be organized and thorough when putting packages together. If all of the paperwork is in order, the day of the layoff will run much more smoothly and you can focus on what is really important: the people. Putting packages together takes time and can be tedious. Here is the process that I followed to make sure I had everything covered.
Typi- cally, the only employees who should be given access to the names are the executives, the hiring manager, the HR manager, and the payroll manager. Payroll also can provide the dollar amounts of money owed, so that the amount is available for the separation agreement. You can mail-merge data into letters when you are ready. Finally, it important to determine what company property the employees have been issued such as cell phones, credit cards, and laptop computers. This information is usually available from the information technology, accounting, or facilities department.
Putting the Packets Together Buy enough letter-size manila envelopes one per employee for paperwork. Purchase address labels to go with each of the en- velopes. Change of address form. Put this right at the front of the paperwork. Separation procedures. People who are being let go may be in shock or confusion.
This document should guide them through the paper- work and answer their questions. Two copies of their separation agreement. The separation agreement is a legal document that outlines their termination of employment. It should be on company letterhead and needs to be reviewed by an attorney. Once the employee reviews it and agrees to the terms, he or she signs it and returns it to HR. Final paycheck. A reminder of any documents that they have signed, for ex- ample, a signed proprietary agreement.
Ex- plain the cost, how to sign up, and other pertinent information. Employees have the right to sign up and pay for their health in- surance for a maximum of eighteen months after their termina- tion date. Stock option summary. If the company provides stock op- tions, all employees should receive a statement showing what options they have been granted and their vesting schedule, as well as when they can exercise it. Make sure em- ployees receive them, so they can roll over any k money they have in their plan.
Unemployment brochures and information. You can get this information off the Internet for each state. Employee assistance program brochures. Provide infor- mation and telephone numbers for employees who want to talk to a mental health professional about their layoff. Most employee assistance programs provide counseling and referral services.
Once you have all of the documents assembled, customize them by using mail-merge from the information on your Excel spreadsheet. The more customized and professional you can make the documents, the better. The less in- formation you have to get from the employee, the easier the pro- cess will go for both of you. Once the mail-merges are complete, print the documents and assemble the packets. This approach makes it easy for employees to know what they need to turn in to the company and informs them they can do so by just putting it in the envelope.
Coaching the Managers Every employee responds differently to a layoff. Some are cool and understanding. Some make light of it. Some sob all day. Others get mad and frustrated. Some become vocal, and some shut down. This diversity of responses also is true for the leadership. They work with these people every day, and in many cases they are like a family. As an HR professional, it is my job to check in with those managers and help them through this process. I coach each manager on how to talk with the employees who are being let go. I then tell them exactly what I would say to the em- ployee.
I remind them to explain to the employee that this termination is not performance related; it is purely a business de- cision. We review some of the questions that the employee might ask during the meeting. I also inform the manager that some- times we have to let employees vent or simply respect the fact that they may want to say nothing at all. All we can do at this time is tell the employee in the best way that we can, providing as much sup- port going forward as possible.
During a large layoff, middle man- agers often feel as if they have no control. Walking managers through the paperwork that their employees will be receiving not only helps the employee but also gives some control back to the manager. I outline everything the manager needs to review with the employee and then provide this information to them in writ- ing so they have it as a handy checklist. By Tuesday morning, the packets are together and ready to be picked up by the managers.
We have decided that the managers will hold their meetings with their employees starting at A. Because I am the only HR professional, I can sit in on only a few of the meetings. The more experienced managers do not need me in their meetings. However, they know where I am if they want me.
I have requested a counselor from our employee assistance plan to be on-site. We informed employees that we were paying them through the end of the day, but they could pack their belongings as soon as they wanted and go home. A companywide meet- ing was scheduled at starting time the next morning. We signed the necessary documents, and I gave them their severance check. You cannot predict how people are going to react. Even in the Internet environment where layoffs have become commonplace, the pain is still very real.
I was amazed at how many laid-off employees came by to see how I was doing. Many came to thank me for orchestrating a process that can be cold and calculated, and making it one of respect and professionalism. My job now is to be available for our terminated employees when they call with questions about their COBRA or k , as well as to ensure that existing employees are able to keep moving for- ward and motivated to come to work.
We have begun holding employee lunches once a week hosted by our CEO, president, or CFO and allow open discussion to take place between them and every employee attending the lunch. Just as we have a responsibility to ensure our employees have a rewarding experi- ence while on the job, we also have a responsibility to make sure each employee exits the job in the most positive way possible.
It is something they will remember for the rest of their lives. That is why I work in HR. I am fortunate to work with people from all parts of an organization and assist them in ways that they will remember forever. Raymond G. This is the case for many companies, particularly those competing in volatile and rapidly changing industries, such as the dot-coms and other Internet, telecom, and electronic-based organizations.
Some of the principles and methods described in this chapter may be extensions or adaptations of what is actually being practiced at Gore today and are offered as suggestions for right-sizing purposes in general. This chapter presents a model for accomplishing this task that is based on individual employee contributions aligned with business needs.
This system is based on associates knowing what their cowork- ers are working on their commitments , how important this work is to the success of the business impact of commitments , and what results are being achieved effectiveness at completing com- mitments.
All associates are ranked by their teammates and leaders at least once a year, and the resulting lists place everyone in rank order based on contribution, from highest to lowest. The ultimate goal of the contribution as- sessment process is to develop a contribution-based rank-order list that is accurate and fair to all parties. The process was relatively simple in the early days when the company was small and everyone knew what everyone else was doing. The contribution assessment process gets more complicated as teams and workplace size grow. This is one of the reasons that Gore has kept its teams relatively small, generally fewer than two hundred associates in total.
The primary use of this ranking information is for pay-setting purposes. People are not paid based on seniority or job title at Gore. Rather, pay is based on the contributions the employee is making to the success of the company. Leaders in the organization use the results of the ranking process to ensure that higher con- tributors are paid more than lower contributors. Higher contributors have the opportunity to make more money than lower contributors. This philosophy helps avoid salary compression and ensures that associates who are doing great things for the organization are properly rewarded.
During the hiring process, Gore recruits associates who have the best chance of helping the organization meet its overall business goals and ob- jectives. The health of the organization will be maintained and improved as associates with high contribution potential are added and individuals with unacceptably low contribution are removed.
This process is best practiced on an ongoing basis to ensure overall organizational health and improvement; it may accelerate in times of major business growth or decline. Deal- ing with low contributors and addressing these situations on a con- sistent basis is a far healthier situation for all associates.
Layoffs may be inevitable when business downturns are large and sudden. A company following this philosophy is constantly seeking individuals who have the skill and talents necessary to be successful within the organization. Ensuring that the company is populated with people capable of making high contributions is critical to the long-term success of the organization. Consequently, the recruiting effort must seek people who are capable of being high contributors within the organization and the business model and requirements it has developed.
In addition, the organization needs a process to assess employee contribution for compensation and other reward and feedback purposes. It is crucial that low contributors be given prompt and direct feedback. This is not al- ways easy and can result in some uncomfortable conversations.
However, good leadership will ensure that this feedback is obtained and delivered in a professional and timely manner. Employees who do not make the necessary improvements eventually will need to leave the company. Determine tasks needed to achieve goals and objectives. Associates make commitments to complete these tasks. People who have the capability, desire, and team and leadership sup- port make these commitments.
Associates attempt to complete commitments. A contribution is a function of how effectively commitments are completed and the relative importance or impact of the TE commitments toward achieving the goal or objective. Determining what tasks and com- mitments must be made in order to achieve critical goals and ob- jectives is a vital initial step in this process.
The rest of the process involves getting the right people committed to performing these tasks by ensuring that the individual contribu- tors have the skills, talents, motivation, and necessary resources to complete their commitments successfully in a timely manner. At Gore, for example, people make their own commitments; they are not assigned work. They choose their commitments based on a combination of factors, such as what needs to get accomplished, what skills are needed to do the work, and their own skill level and interests.
Associates work with leaders and other associates to help them choose commitments that are right for them and the busi- ness overall.
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Once these commitments are agreed to, an informal contract is made between the associate and the rest of the enter- prise. How critical this work is to the success of the business and how well it is completed ultimately determine what the level of con- tribution the associate makes to the business.
High contributors need to be recognized and rewarded for their efforts. Because they are making the biggest impact to the success of the business, they must be kept happy and challenged. These are the people the organization must do its best to retain, no matter what it takes.
Rosen, and Kimberly A. Sessa, Christopher Pingor, and Jennifer Bragger. Krauss and Lori Anderson Snyder. Silverman and Wendy M. ForewordPerformance management is one of the cornerstones of Human Resource practice in organizations. No matter where you work, how big or small your organization or how simple or complex the business model, effective performance management is a key requirement if you have any number of employees. It all begins with performance management. Specifi cally, what are the jobs we need our employees to do, how do we measure their perfor-mance in these jobs, and how do we design and implement sys-tems to reinforce performance standards that have been set?
Industrial and organizational psychology
So, before an organization can even begin to think about the more lofty practice areas like individual assessment, talent man-agement, or succession planning it must be able to nail the basics of measuring day-to-day performance. Organizations who set their sights on hiring the best and the brightest and building a diverse work force must fi rst have a crystal clear understanding of what they are hiring people to do and how the will be deemed successful or not.
Companies desiring Published on Dec View Download Performance management shifts the focus to an ongoing process that includes setting and aligning goals, coaching and developing employees, providing informal feedback, formally evaluating performance, and linking performance to recognition and rewards. Performance Managementa volume in the SIOP Professional Practice Seriesoffers a compendium of the most current thinking, strategies, and best practices in performance management written by leading academics, practitioners, consultants, and researchers in the fi eld.
The books seventeen chapters include an introduction of the concepts and issues, a review of theory and research, evidence-based best practices, dozens of illustrative examples as well as information on future directions, opportunities, and challenges. Written for human resource managers, consultants, and line managers, this important resource contains a wealth of information for implementing an effective performance management system. The book includes information on the: 14 features that help defi ne a successful performance management system 7 drivers of alignment including the relationship between alignment and fi nancial performance 5 factors that affect the impact of goal setting 11 steps to maximize the value of external coaches CEO and board performance management process The Editors James W.
Smither, Ph. Manuel London, Ph. He also has 12 years of corporate HR experience. In this comprehensive and timely volume, Smither and London assemble an exceptional collection of chapters on topics spanning the entire performance management process. Written by leading researchers and practitioners in the fi eld, these chapters draw on years of research and offer a blueprint for implementing effective performance management systems in organizations.
This volume is a must-read for all those interested in performance management. John W. Fleenor, Ph. Sandy Lionetti, Ph. The information is presented in a way that an HR practitioner, like myself, can readily apply. Gale H. Praise for Performance Management A new volume in the SIOP Professional Practice Series, Performance Management provides a comprehensive resource of the most current thinking, strategies, and best practices in performance management. Continued from front flap Cover images iStock Continued on back flap ffirs. The volumes in the Professional Practice Series are guided by fi ve tenets designed to enhance future organizational practice: 1.
Translate organizational science into practice by generating guide- lines, principles, and lessons learned that can shape and guide practice 3. Showcase the application of industrial and organizational psychol-ogy to solve problems 4. Document and demonstrate best industrial and organizational-based practices 5. Stimulate research needed to guide future organizational practice The volumes seek to inform those interested in practice with guidance, insights, and advice on how to apply the concepts, fi ndings, methods, and tools derived from industrial and organizational psychology to solve human-related organizational problems.
Gueutal, Dianna L.
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Hedge, Elaine D. Kehoe, Editor ffirs. Kraut, Abraham K. Bray and Associates ffirs. Smither and Manuel London, Editors ffirs. All rights reserved.
ChurchPepsiCo Inc. CascioUniversity of Colorado Kenneth P.