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January 21, 2002 01:00 AM

If you must downsize, do it right

Mary Miles
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    Editor's note: Mary Miles has 22 years of experience as a human resource professional, including 16 years at Tire Centers L.L.C. If you have personnel questions you'd like her to address in future columns, you can contact her by e-mailing [email protected] or using this issue's ``Speak up!'' card.

    The economy continues to remain in a slump, forcing management to look at operating costs and make creative and decisive reductions in variable expenses. The problem is that for much of the tire industry the only significant way to move the expense needle is to downsize the organization.

    Now let's face it, no one likes to tell someone he/she has lost his/her job because of a decline in the business. Many employees in the tire industry have worked together for years and reducing staff becomes an emotional issue.

    Often when we are emotional about a topic, we tend to make easily avoidable mistakes like saying, ``I'm going to let good old Dave go, because after all he's old enough to retire and Pete is just starting off and has a young family to support'' (this could be construed as age discrimination).

    Before beginning a downsizing, management needs to answer the following questions so the reduction-in-force presentation to the organization is well planned and consistent:

    * What is the timeframe for the reductions to be completed?

    It's important to have a beginning and an end to this process. Otherwise, employees will continually be waiting for, and discussing, the next or latest reduction. Countless hours will be wasted ``waiting for the last shoe to drop.''

    * Will the company offer a severance program to employees? Will the severance program extend employees' benefits, be paid in a lump sum or over time? Will it include outplacement?

    Displaced employees will be upset with the company with or without a severance program. Thus a company should extend a severance program because it believes in it philosophically.

    Additionally, pragmatically speaking, in today's economy, displaced employees may find it difficult to replace their positions.

    Payment of severance in a lump sum or over time may affect an employee's eligibility for unemployment. Check with your unemployment office to make a determination as to which option is best for your employees.

    Outplacement is a luxury many companies feel they cannot afford. However, individual outplacement works well for an upper management employee who may need some job search guidance or for someone who needs a bit of ``charm school'' before trying to sell him or herself to the outside world.

    Otherwise, group outplacement is very beneficial and cost effective.

    * Who will talk with each employee? Does the presenter have the appropriate benefits information to give the employee at the time of the discussion?

    The employee's direct supervisor or a key management person should meet with each displaced employee. This meeting needs to be conducted by a person who communicates well, and can explain the reduction benefits.

    Many wrongful termination lawsuits could have been avoided if the termination process had been conducted in a more caring and professional manner.

    Over the last 20 years many attorneys have regaled me with stories of how they were representing clients whose boss told them how they were being terminated: in the parking lot, by fax, when their key didn't work in the front gate etc.

    Conduct this discussion professionally and you won't be grist for the attorney mill.

    * Will an expert be available to discuss retirement options with those employees who may be displaced and are eligible for a pension?

    Ideally, pension paperwork should be available to give to the terminated employee at the time of termination.

    A pension professional should be available for discussion to answer any questions immediately or in the near future.

    * Should a discussion be held with the remaining employees regarding the necessity for these job eliminations?

    Yes. A key member of management, who also is a good communicator, should have a meeting with the remaining employees to explain the actions, answer questions and allay fears about future downsizing.

    Once management has answered these questions and developed an overall plan, they should conduct an organizational downsizing analysis.

    Here is a step-by-step guide to this analysis.

    Step 1: Functional elimination of a position.

    Review your organization and list every position/function within your tire dealership, manufacturing facility or department. Group your organizational list by position. List every employee within one position before completing the list for the next position.

    Now you are ready to begin the downsizing analysis. As you examine your organizational list, seeking to eliminate a position/function, here are examples of questions to help with your analysis:

    Is there a position that can be eliminated because it has become outdated and is no longer needed?

    For example, if the company's business is off in a particular channel of trade, the elimination of one of the tire technicians who supports the commercial or retail end of the business may be in order.

    Is there a position that can be eliminated because it has become outdated and is no longer needed?

    Often, layers of management are carried over from past regimes. Studies have shown that flat organizations are the most effective and efficient. Thinking outside the present box when analyzing organizational structures may assist in the expense control and streamlining process.

    Is there a job that can be combined with another position or absorbed by another multi-talented employee? In the case of a tire dealership, your assistant manager may be able to assume the administrative duties of your operations employee.

    Upon completion of the analysis, if the chosen position has only one employee in the job, this is considered a functional elimination and the incumbent employee is displaced. This is the most clear-cut defensible reduction.

    If there is more than one employee in the position targeted for elimination, continue your analysis with step two.

    Step 2: Performance measurement employee reduction.

    When more than one employee exists in a position that is chosen for reduction, management must review any ``on-file'' performance appraisals.

    Ah yes, the performance appraisal. Hopefully your organization has completed them in a forthright manner because now decisions will be based on them.

    Based on the documented performance, and the supporting salary or wage data, the employee with the lesser performance should be displaced.

    In the event that your organization does not complete written performance appraisals, the tire industry has many inherent forms of quantitative measurement that can be used and are difficult to dispute.

    For example, monthly sales, units produced, facility profit/loss are quantitative performance measurements which should be compared to determine performance.

    The employee with the least performance in the position should be displaced.

    If you let the numbers do the talking, and the organization does not have written performance appraisals that dispute the numbers, your decisions should be understandable and easy to defend. In the event that the performance of each employee is the same, proceed to step three.

    Step 3: Company service employee reduction.

    If each employee under consideration for displacement has essentially the same performance, the person with the least service should be displaced. If the facility is covered by a union contract, the contract language takes precedent at all times.

    Downsizing is a serious measure that requires planning and precision. The obvious pitfalls of displacing only those employees in protected classes should be easily avoidable if this three-step process is honestly followed.

    However, once the overall reduction analysis is complete, management should double check to ensure that a disproportionate number of employees in protected categories have not been chosen.

    Sometimes downsizing is a necessary and nasty part of doing business. However, if the time is spent in the planning and the analysis, reductions can be done in a humane, fair and professional manner.

    Letter
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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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