Downsizing could start with you

By Anderea Morara

Paradigms, like fashions, come and go. They also have their merits and demerits.

Those who are proactive and strategic in their thinking and operations often take advantage of the paradigm shifts and thus stay ahead of the pack.

However, jumping into the bandwagon without forethought or strategy is bound to land your organisation in an unanticipated mess.

During the early 1990s when the business world was still preoccupied with ‘downsizing’ and ‘rightsizing’, Alloys MK was appointed Human Resource Manager, in a consumer products multinational company, based in Nairobi.

He had just returned from the US where he had worked for slightly over a year in a warehousing company where automation had led to a 50 per cent reduction in the labour force, with corresponding increases in productivity and profitability.

Concept paper

He was in haste to show his new employer that hiring him "could be the best thing that ever happened to the company".

His idea of doing this was, of course, through restructuring and downsizing.

He quickly wrote a concept paper on the need for restructuring, citing examples, including his former employer, on how this strategy had helped companies cut costs and greatly improve the bottom line.

His Managing Director, a British national, who had lived in Kenya for 30 years was not as enthusiastic about the course of action his new manager was proposing.

He, however, asked him to proceed, but first by doing an inventory of all the employees – detailing what they do, their formal education and other skills, years worked and respective emoluments.

Step two: Study the current organisational structure, analyse its weaknesses (especially excesses) and then develop a new structure that would shed off staff – and lead to substantial savings on wages – without compromising on production and quality.

New structure

Alloys went to work straight away. In five days, after quick consultations with some of the managers, he was ready with the new structure.

He made a presentation to the Managing Director and the senior managers – using the then novel PowerPoint tool, which left everyone impressed but not necessarily convinced.

The annual savings on staff costs was a staggering Sh370 million. Though the gross severance package was about Sh600 million, it would be recouped in less than two years, if Alloys was right.

The questions that were constantly being asked, even during the presentation, were: Why downsize if the company is still doing well? Are we downsizing for the sake of it?

As the managers walked out of the presentation, almost everyone was wearing a face of grim. Alloy’s downsizing proposal earned him instant enemies across the organisation.

Over the years, the managers had been given leeway to hire the people under them as the Personnel Manager’s role was previously primarily on preparing appointment letters, organising new employee inductions and maintaining staff records.

Lose friends

Now it meant, that if the downsizing proposal went through, the managers would lose friends and relatives and associated income streams from those who would be retrenched.

Besides, the way Alloys had presented the downsizing strategy, especially by highlighting such matters as "sunset" and "re-trainable" cases, made it apparent that some of the managers would be on the exit line.

An anti-Alloys mood set in rapidly and he could feel it. Soon people started gathering in small groups and no manager was willing to talk to Alloys on the subject.

It was, therefore, not possible to determine who was a good performer or had certain critical roles and was therefore worth retaining and who could be dispensed with. He was seen by his colleagues as having being hired by the expatriate MD so that he could get rid of locals and have them replaced with expatriates, especially at this time when the Government had relaxed its policy of indigenising jobs.

A week later, the staff union was threatening industrial action if the move on retrenchment was not rescinded.

The Managing Director was forced to write a letter to the union assuring them that no retrenchment was planned.

Alloys had to eat humble pie, as he was advised to "focus on other areas of productivity improvement for the time being".

No one told Alloys to go, but in three months, he had moved to one of the major banks that was already downsizing by closing its far-flung branches to facilitate easier networked banking services.

As you plan to redesign your organisational structure, do not be oblivious of the fact that you are dealing with people – not just little boxes on the organogram. Little boxes do not protest when you push them round.

People may. It is much easier to sell downsizing ideas when an organisation is in trouble and besides, you must be fully conversant with the organisational culture before you proceed.

Otherwise, you could end up downsizing yourself.

The writer is the Executive Director of Capacity Development Africa Ltd.