The Real Impact of Downsizing

Been there, got the Tee Shirt and the Hat. And the drugs. Back in 2005 I was so stressed out I was having panic attacks. My Dr told me to get the F out of that job.

I did, and Life improved so much better. Gave up the drugs, gave back the Tee shirt and gave back the Hat. That job was only to help a friend out, 6 mons max, turned out to be 20+ years. Now I am back in my field.

Down sizing is nothing more than slave labor in the electrical industry, not so in State Workers. They can eliminate 40% of all State workers and they wold still not be over worked. Any other industry not so. When you have people doing the work of 3 to 5 people, it ay get done, but there is a huge cost for that employee to pay. Unless they put their foot down, and then it could be like wiring a 3 phase motor. 50% the right rotation or 50% the wrong rotation = out of a job, or Boss understands.

I worked for a chemical company in R&D for 20 years, and we got acquired. The first thing they did was cut 10% of the work force just to show they were in charge. They didn't realize it violated a condition for favorable tax status. They finally had a company-wide lay-off of 100 people. This was later described to me as a "house-cleaning" to get rid of dead wood and mis-fits. I tend to be opinionated and speak my mind, so I was a misfit. I was one of 10 let go from our facility. They figured I was unworthy of a non-compete clause, so they just turned me loose. I quickly found work as a consultant and contract worker with their competitors. I never violated any issues of confidentiality, but I helped several competitors take several million dollars worth of business. In one case, a competitor wanted to match a product of mine which had just come off patent. They had tried for over a year to match it without success. I merely told them "Read the patent. Do what it says". Several times former customers called me to ask how to use one of my former products because they said no one was there who knew anything about it. They also asked who else made something similar. They had more lay-offs after me and got rid of a lot of technical folks with no thought of what they knew or where they might go. I'd say they didn't handle it too well.

WC, went through that in the 80's. Company closed after 1 year of the hostile take over. I had first hand info from the plant manager who kept me well informed and told me to start looking for another job now ( 2 years before the take over) . I followed his advice. Pete was one of the few people I have had the pleasure to work with. Pete passed away 4 years ago.

He always pushed me to see what else I could do. Great guy.

I worked as Design Manager for 15 years for a small but buoyant company when the boss decided that he needed to cut down the (expensive) middle management to save money and so he brought in an "Operations Director" from a bigger business to do his dirty work. Along with myself, the Works Manager and all the departmental managers were made redundant, this move effectively taking out all the experienced (and the higher paid) staff.

Result? The company was in trouble after 6 months, (and at this time the Operations Director was himself sacked) and was taken over 18 months later. Five years after this the company went out of business.

Good move eh?

Downsizing reminds me of a cartoon I remember seeing:

The problem: A horse drawing an overloaded cart that is bogged down.

Engineering's Solution: Two horses pulling the cart.

Management's solution: Two managers on the cart cracking whips.

Hi Downsizer,

Wikipedia's definition is correct or realistic. Today's economic focus is shifted to marketing with product differentiation to meet the needs of the customer and the market. However, the executions are out off targets or disastrous. Like everything, it needs knowledge what and how to do everything, including downsizing. Originally, the company has financial difficulties or low profits. The major change is little bit on the products and services but mostly human activities must be changed. Everyone can understand that in all bureaucratic organizations with large infrastructure no one works really at full capacity.

If I am the owner of an organization in such situation, I close the accounting department and give for an outside group paid on performance. The reason: accounting runs most companies. However, accounting is costs and doesn't produce nothing as revenue. Also, eliminate the major part of management, innecessary in any organization and they are overpaid and produce little or they collaborate to reduce profits. Third, productivity, the money maker, must be checked and statistically demonstrated that improvement in productivity is possible such and such ways. Around 10 to 50% of productivity workers are not producing the way should produce. Equipment must be relocated, changed or eliminated to minimize and eradicate wastes of time, motion or transportation... Start to review operations and reteach working people what and how to do (written standard operation procedures) without any deviations. Eliminate other wastes and defects. Standardize buying process and reducing raw materials to the minimum. Complete review of existing product line and define the future, which help inventories, warehousing, and deliveries.

Today's business succeed by focusing to move in a particular direction and following a specific way or better, creating a market. Businesses must follow the principle of focus on: Marketing, Distribution, and Production. In other words: Sell, Build, and Produce, and only in that order! Without sales to customers there is no revenue. Create and supply only what customers want to buy, never want to sell your toys! Produce only what customers want to buy by the most efficient ways. Profits come.

Downsizing demonstrate that succesful small businesses are doing the right things. They build up a healthy organizational infrastructure by selling, creating what to sell, and produce what customers want to buy. Existing and big companies they have to return to smaller size, do the revers of small businesses. It's tuff and hurting!

Have a happy holiday, Gil.

My department that worked directly with customers got downsized....all 70 of us.

The customers were angry and the company lost some sales. The sales dept was angry because we supported them.

I was hired as a consultant at 5X my salary to keep my customers happy. As a result they purchased several million dollars more in equipment. Some sales organizations hired other "companies" to do the particular consulting at again very high rates.

All in all the company saved some money because they no longer had the overhead to deal with...but they lost a lot in the eyes of many very large (fortune 500 type) companies.

Glad I'm out of the business...threw all the tee shirts, caps, mugs and drugs out the window when I left!

Hi Tom,

I cannot understand when we have Shewhart, Deming, Juran, Crosby and others that demonstrated to Japanese companies what and how do production and being profitable. We, new MBAs and CEOs, are trying to invent new production improvements, profitable downsizing processes, and other new and sensational things than statistical process control, 20/80 rule, wastes elimination, and other well known intellectual activities to obtain good results.

How come, people do invest in such companies their money? No one smart CEO follows ITW (Illinois Tool Works) or SouthWest methods. They are successful, and growing, and making profits, double digit profits. CEOs follow bad organizations technics (competition who declare some profits) for business improvement but forget or they don't have knowledge about good companies and their good methods?

What's happening in today's business? Who has knowledge? Who is able to create something profitable for everyone in the company? What's MBA? What's the value of a diploma, and what's behind the stamp? Also, don't follow the crooks! Let them in banks and governments will pay their salaries!

By reading a few old books you can improve and downsize any company and make it profitable. Why simplicity is not used for success? Complications fail and ruin businesses.

Wait for answers.

Wish you a HAPPY NEW YEAR, Gil.

Downsizing is probably the most short sighted action invoked by people who have not the faintest concept of who actually does what. I call it Ivory Tower syndrome.

The people with the greatest knowledge, skills and abilities by their time in, are usually the highest paid. Some of these people were poached from other companies with lure of higher income and benefits.

Then the twits are released and allowed to do their work.

My back ground is in the HVAC industry. The start of this joke, is when a manager is hired to make the, company more efficient. I seen many a senior mechanic with very skilled, exclusive knowledge and experience tossed out the door, as he is the most expensive. With the statement that they can be replaced in a heart beat. Twenty plus years with a firm means nothing to the "Bean Counter"! Others walk as they know the end results.

I ran as fast as I could after one too many talks with that person, who did not even know the basics of what the company did. I tried to talk to the owner. To late, as he had all ready drank the Cool Aid of saving big bucks.

Most of the time these hired guns, are so busy tossing people under the bus, that they did not notice the lack of a competition clause when they started, or for some reason they just could not beat it out of the trash of the day.

The mechanics go, and take all those important accounts that they took care of for the last unknown number of years. If a mechanic is worth his salt, than all the customer wants to see is him.

HVAC companies have been gutted as a result.

The hired gun gets tossed as the damage piles up, and the owner start to beg for forgiveness from those who were tossed.

The longer that some one was in a firm, was proportional to the bitterness of the response.

I've been "fortunate" in not being laid off at 3 different companies during downsizing. The first time I naively felt lucky to still have a job. Within a couple of weeks, though, I realized that the added hours, load and expectations on me were causing potentially catastrophic stress. I went on a job hunt and got the hell out when I realized what was going on.

On the second and third incidents, I just went job hunting immediately while I continued my job as normally as possible. I strongly resisted taking on additional work and responsibilities. Unfortunately on one of those incidents I was the company's IT manager and they had already forced me to lay off my three employees. The work load virtually quadrupled on me in one day!

In all three cases many of my fellow employees also quit sometime after the downsizing, and, again in all three cases, all the companies folded within a year. Fortunately, the country was not at high unemployment at these times and jobs were readily available.

The end result is that I no longer take on extra work, hours or responsibility gratis. I insist that there must be some "tit for tat". The downside of that is that I'm often accused of not being a "team player". Well, golly gee, that's just too bad. My notice to potential employers now is that if you agree to hire me for a 40 hour week at X amount of money for my expertise, that's what you're gonna get. If you have a problem with that don't make me an offer. The current attitude that 60-80 hours comprises a standard work week just doesn't fly with me anymore.

Hooker

Been there - done that as well. I remember that morning so well. New plant manager - fairly new VP and his newer bootlicker. About five (5) minutes after I entered the building I was able to attend a very short meeting; receive a package full of legal documents; and be escorted through the door and to my vehicle as one would do with a criminal. There were four (4) more right behind me that morning - I was first since I arrived a bit early. There were other senior people fired in other locations on that same day, and our departure was called a "layoff".

I (and my co-workers) was offered a nice package to keep quiet while my job title was altered slightly and a young IE was placed in my position. Can't make it look like age discrimination, now can we? He did not last long (frustrated and overworked) and neither did his replacement. I took a nice, long (seven months) paid vacation and improved my residence and property. Good thing too - the housing bust occurred but a few months after I sold my house.

I moved to another state and started another job - not a job that I wanted forever but one that would do. I then took a corporate-level engineering position and it was during that time I received that magic email; asking me if I would come back. To that I replied 'thank you, but once bitten twice shy'. The former employer (of twenty-six years, mind you) lost a major account that employed a lot of people. They were trying to manage it with the "Six Sigma way" rather than applying a bit of elbow grease. Two of the ones involved with my firing were soon fired - and I laughed hysterically.

I started to call both of these jerks at home and razz them a bit, but discovered that even I am not that black-hearted. I knew how it felt, in a way. Time went by, and I landed the position I now have that pays considerably more and is not much more than forty hours/week. And I am no one's boss these days - just an exempt staff engineer.

Downsizing, shortsizing, or "rightsizing" as the "professional" management consultants like to call it is a very short-term solution to problems usually caused elsewhere. Older staff members a bit sluggish? Stir them up a bit if necessary. Production management a bit disengaged? Engage them with similar means. Production people a bit disengaged? Give them the tools (teambuilding, knowledge, equipment, etc.) to do their jobs well and then hold them 100% accountable.

I agree that so much stateside business is managed by a continually-freshened group of young to middle-aged MBA's and their frat brothers. They can usually provide the best short-term solution for cost reduction, but the long-term result is usually devastating. I know many of these guys just hop from job to job as their decisions often damage businesses beyond repair. My former employer never captured that contract again, and their business dropped about 20% or more during the past four (4) years. That is devastating in a shrinking and mature market.

Upper management does not need to be clueless and aloof about the core business. That behaviour may appear to be "cool" to their upper echelon friends in a country club setting, but it will eventually be devastating to the bottom line. Upper, middle, and shop floor management must MANAGE the business and LEAD the people. That remains the most simplistic way to get the job done.

Best Regards,

Ing. Robert Forbus

Hi Bob,

Be happy, you are out of a stupid organization. Better to find another work and be happy. Forget them and clear your mind for the future.

Wish you a HAPPY NEW YEAR, Gil.

Gil,

Thank you very much for the kind words and well wishes and my very best to you and all of the CR4 posters and commentators for a successful 2011! Your writing demonstrates a thoughtful analysis of the business world, and I'm giving a you a GA for that one.

You know; it was not too long ago that I sincerely knew that my firing (layoff..."snicker") was perhaps the best career decision anyone ever made FOR me. I have no regrets of the adventures I enjoyed through my quarter-century of employment at that firm; even though the last two (2) years were pure hell. I can only imagine what it is like these days, and I won't do that.

I do miss many of the people I knew, and of course most of them are gone as well. As far as I know; most of us who were severed quickly got over our disappointment and moved forward to something we really enjoy doing. It is a different venue when one no longer has the pension plan driving them to put up with a lot of grief each day. True freedom!

I may be highly-skilled with reasonable intelligence and serious drive; yet I know that I am also a very lucky man - there is no other explanation. So many have been much less fortunate. I do not understand exactly what (sic) is being taught in business courses now and during these past several years and do not think I ever will. Short-term gains; then Sturm und Drang. I occasionally meet a business "professional" who makes a point to mention with how many different firms with that they have been employed during the last ten (10) years or so - their version of a "balanced scorecard" I guess.

Again, I am lucky so none of my opinions matter at all - the short- and long-term financial price paid by workers as well as mid- and upper-level management folks is what matters, and that price is a heartbreaker for everyone.

Again; all my best wishes to everyone and their families for 2011, and my very best regards.

Ing. Robert Forbus

I know one too many people who were let go, that were initially devastated when they were dumped.

Almost all of them in the end, were happier at there new place. They were glad that they got the boot, as it forced them to find something better.

No offence to those people, they just could not see the writing on the wall, until it hit them in the face. They were a lot more loyal to their firm than the firm was to them.

Maybe the problem is that we use the same philosophy in training our business folks that we use to train our teachers: strong emphasis on 'form' and little or no emphasis on 'content'. The MBA's total emphasis is on next quarter's bottom line, and they are willing to sacrifice just about anything in service of that number. Older workers with lifetimes of valuable real world experience are cut loose (they cost more) to make room for younger workers who may actually work faster, but due to lack of experience also make mistakes faster. The institutional memory is lost.

I think a big part of the problem is the institutionalization of hiring in the HR department. Decisions about who to hire are based on 'box top collections' (having all the 'right' pieces of paper), because the good folks in HR have no actual knowledge of the actual skills and knowledge the job opening requires. But then I speak with considerable ignorance on this subject - I have done everything I could to avoid 'corporate culture'. From my perspective they make good customers but I certainly wouldn't want to work for them.

A very good history lesson that management should learn.

I have too often heard the term, "the likes of you are a dime a dozen". Those who say that, and support this concept claim to be educated. For all their MB-A's, etc. They do not know what a dime or a dozen is, or what it costs.

I have spent the last eighteen years at a major university taking care of the environmental chambers, autoclaves, incubators, etc. I have been informed that my services are no longer required. This is not because of cost, but it was easier for the secretary to administer the maintenance program; as the all inclusive program, meant one check per year.

The actual cost was over three times the amount that was needed for the previous service. The personnel who made this decision, ware not able to either locate or identify the equipment in question. They actually had the nerve to ask me; the one that was being canned to provide all the locations and records.

Yes, they were that stupid!