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downsizing

2010/12/02

* Initially this post was started because of Sun’s layoffs (18%). Now Sun is no more, and so seems work for a large percentage of the Greek workforce.

Downsizing is to be expected in great numbers. At the scale that this seems it is going to happen, these will not really be informed layoffs, the criteria being simple: You have a high salary (for some definition of high) and your choices may include: retirement, layoff, substantial pay-cut (equals to morale / motivation downsizing) and/or transfer to another organization (in a take it or bye-bye offer).

The short term result of such a massive violent move will of course be proof of elimination of the so called “cost centers”. The mid and long term results will be far more different: The information flow within the organizations will be severely disrupted. There exists the organizational structure and then there exists the informal structure that gets built over time. The departure of a key person can be dealt with by an “unconscious” team auto-configuration. But what about more than one? While small teams communicate more effectively, small teams cannot be made smaller. Time is a limited resource and there is not enough to perform the required analysis before downsizing.

That is the price to be paid for not trying to be lean when you had the chance. And new “cost centers” will emerge.

Appendix: Chalk one up for math (or How even retirement disrupts information flow)

Steinmetz‘ most gratifying moment may have occurred after his retirement. An emergency brought him back to GE’s Schenectady plant to troubleshoot a malfunctioning generator. For days, the hobbled genius pored over drawings with paper and pencil in hand. Finally, he placed a chalk mark on the side of the generator, instructing the repairmen to cut through the casing and remove a number of turns from the stator. It worked.

When asked to submit an invoice, Steinmetz delivered a slip of paper with nothing on it but the surprisingly large figure of $10,000. The accountants, in shock, said they couldn’t process the paperwork without a more detailed breakdown. Steinmetz then forwarded another note on which was typed:

One chalk mark $1. Knowing where to put it $9,999.

A short time later, Steinmetz received his pay in full.

To those that believe that this was not because of disrupted information flow, but because of Steinmetz’ genius, I can only say that I know of cases where retired for decades engineers were called back for consulting due to lack of documentation. And today’s knowledge workers are not better at keeping it either.

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4 Responses to “downsizing”

  1. Georgios Says:

    Wonder if you should “try to be lean when you had the chance”. Right now we see cases where organizations that had already become “lean” suffer further personnel cuts, just to reach certain quotas.

    Instead (starting in good times), how about having a complete plan of your organization and know who does what, how effective they are, who can “go” and who can replace them etc. That would also help “find lost assets” (people) and make them productive. Sounds like management abc but does anybody do that in the Greek public sector?


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