Should We Downsize?
By Dr. Ben S. Graham, Jr.
President
The Ben Graham Corporation
© Copyright 1996, The Ben Graham Corporation. All rights reserved.
Links may be established to this paper.
Downsizing has become so widespread that it is being
looked upon as a national malaise. With so many large organizations doing it, it has
become an "in thing". Is it a "good thing"? Is it the "right
thing" to do? When we weigh the benefits of downsizing against the damage
that it does to employee relations the net effect is depressing.
People as an Expense
- Downsizing is one of the terms recently
used for cost reduction with the focus on employees' payroll, payroll that
contains more professionals than anything else. It treats employees as an
expense to be gotten rid of rather than as the organization's most valuable
resource, which raises anxieties and destroys corporate loyalty. Across the
United States and Canada today, people are looking over their shoulders,
distrusting their organizations. And, this distrust is epidemic.
Excuses
- Why are so many organizations doing this to their people? Is
it because business is so bad that they simply can't afford to keep them?
Hardly! Many of these organizations are experiencing record profits. Then is it
because they simply have no work for these people because of the marvelous
efficiencies brought on by computers? If that is the case, why are the employees
who have remained in these companies so stretched out?
Computers
- Actually, it appears that finance-focused managers have
become convinced that computers will enable them to get rid of a large number of
employees and when they do, profits will soar and the people authorizing the
downsizing will get very, very rich. But the computers are not doing this, and
will not do it. They simply do not replace the judgment and ingenuity of
employees and, of course, the computers don't buy the company's products either.
But, the allure of massive profits seems to be blinding.
Apologies
- It is apparent that the managers who are carrying out
these downsizing activities are not proud of what they are doing. Time and again
they have attempted to publicly justify their behavior on grounds such as,
"We had to do this because everyone else was doing it...If we didn't we
would be left behind...Global competition...Etc...etc." How sad they look
as they announce the cuts, insisting that they had absolutely no choice.
Executives, who call the shots in their organizations pleading no choice! They
simply haven't shown the stamina and conviction that their choice requires. And,
isn't it interesting how their excuses continually point the finger at the other
guy. Can you imagine how impressed one of these executives would be if he found
his teenager on drugs and the youngster told him, "I had to do it Dad!
Everyone was doing it!" It wouldn't take two seconds for the executive to
counter that flimsy argument.
Enthusiasm and Pride
- We simply do not have to do things
because other people are doing them. We can do things because they are right and
we can be proud of ourselves. In his research on Excellent Companies in the
early eighties, Tom Peters found that excellent companies were distinguished
from the rest by their people, who were enthusiastic and took pride in their
work. Real leaders have not only understood this, they have considered it too
important to compromise, come what may. Today, our professional society needs
leaders with the statesmanship to put trust back into the world of work.