impact of downsizing

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ORGANIZATIONAL DEVELOPMENT 09-11 1

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Downsizing & Pink Slip Management

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Page 1: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 1

Page 2: Impact of downsizing

WHAT IS DOWNSIZING?

R e d u c i n g t h e o v e r a l l s i z e

R e d u c t i o n i n n u m b e r o f e m p l o y e e s

P i n k S l i p M a n a g e m e n t

ORGANIZATIONAL DEVELOPMENT 09-11 2

Page 3: Impact of downsizing

TYPES OF DOWNSIZING

R e d u c e d w o r k w e e k

T r a n s f e r s

F i r i n g

J o b S h a r i n g

ORGANIZATIONAL DEVELOPMENT 09-11 3

Page 4: Impact of downsizing

REASONS OF DOWNSIZING!!

Merging of two or

more firm

Acquisition

When company

goes at loss

Change in

management Economic crisis

Strategy changes

Outsourcing

ORGANIZATIONAL DEVELOPMENT 09-11 4

Page 5: Impact of downsizing

DOWNSIZING

& HR SYSTEM

E m p l o y e e R e l a t i o n s

P e r f o r m a n c e M a n a g e m e n t

R e w a r d S y s t e m E m p l o y m e n t

T r a i n i n g

M o r a l e o f S u r v i v o r s

P e r f o r m a n c e e v a l u a t i o n a s a l a y o f f c r i t e r i a

C o m p e n s a t i o n p a y & b e n e f i t s

R e p u t a t i o n e f f e c t s o n

r e c r u i t m e n t

L o s s o f T r a i n i n g i n v e s t m e n t f r o m

t u r n o v e r

ORGANIZATIONAL DEVELOPMENT 09-11 5

Page 6: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 6

Page 7: Impact of downsizing

RELIANCE MART

M u k e s h A m b a n i

H y p e r m a r k e t

T h i r d r e t a i l f o r m a t

1 6 5 0 0 0 s q . f e e t

R a n g e o v e r 9 5 0 0 0 p r o d u c t s

O v e r 4 0 0 h i g h l y s k i l l e d e m p l o y e e s

ORGANIZATIONAL DEVELOPMENT 09-11 7

Page 8: Impact of downsizing

What Happened @ Rel iance Mart

A l m o s t 5 0 % s t a f f r e m o v e d

2 f l o o r s c o m p l e t e s h u t d o w n

C u s t o m e r c a r e s e r v i c e – h o p e l e s s

P r o d u c t s a r e o f l o w q u a l i t y

C h a r m o f r e l i a n c e h a s g o n e

O n e t h e b e s t e . g o f d o w n s i z i n g i n A h m e d a b a d

ORGANIZATIONAL DEVELOPMENT 09-11 8

Page 9: Impact of downsizing

REASONS OF DOWNSIZING AT RELIANCE MART?

D e m a n d d e c r e a s e d

I n f l a t i o n

T o u g h c o m p e t i t i o n

R e c e s s i o n

E a r n m o r e a n d m o r e p r o f i t

P o o r q u a l i t y

S c h e m e s w e r e n o t v e r y e f f e c t i v e

ORGANIZATIONAL DEVELOPMENT 09-11 9

Page 10: Impact of downsizing

EFFECTS OF DOWNSIZING

F i r m ’ s R e p u t a t i o n s u f f e r s

R e t h i n k i n g o f e m p l o y m e n t s t r a t e g y

C h a n g e i n E m p l o y e e B e h a v i o r

V i o l a t i o n o f P s y c h o l o g i c a l C o n t r a c t

S u r v i v o r s E x p e r i e n c e

E a r l y R e t i r e m e n t s

B e s t E m p l o y e e s l e a v i n g o r g .

ORGANIZATIONAL DEVELOPMENT 09-11 10

Page 11: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 11

PINK SLIP MANAGEMENT

P i n k S l i p – r e f e r s t o b e i n g f i r e d o r l a i d o f f f r o m o n e ’ s j o b

C u t t i n g c o s t M a n t r a – a n y o n e ’ s h e a d c o u l d b e o n t h e b l o c k

C a u s e s d e f i a n c e , a n t a g o n i s m , t r a u m a , d i s a p p o i n t m e n t , f r u s t r a t i o n , e t c .

I n d i a – l a y o f f s n o t c o m m o n , l e a d s t o p s y c h o l o g i c a l t e n s i o n

R e t r e n c h e d e m p l o y e e s – w o r r i e d a b o u t E M I s

Page 12: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 12

N A M E O F T H E S E C T O R J O B L O S S E S E x p o r t S e c t o r 3 0 , 0 0 , 0 0 0

E n g i n e e r i n g S e c t o r 1 , 0 0 , 0 0 0

N A M E O F T H E C O M P A N Y J O B L O S S E S A i r I n d i a 1 5 , 0 0 0 ( o f f e r t o n o n - o p e r a t i o n a l

s t a f f ) J e t A i r w a y s 1 9 0 0 ( r e i n s t a t e d b y t h e c o m p a n y )

S a t y a m 1 5 0 0

W i p r o 1 0 0 0

T C S 5 0 0

P a t n i C o m p u t e r s 4 0 0

K i n g f i s h e r 3 0 0

V i r t u s a 2 0 0

Source: Business World, November 3, 2008

Page 13: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 13

P A R T I C U L A R S P L C P A R T I C U L A R S E L C

I N T R O D U C T I O N • Heavy Operational cost

• Lot of promotional

activities

I N D U C T I O N • Period of slow performance

• Lots of developmental &

supporting activities

G R O W T H • Product fully accepted

• Profit enhancement

realized.

• Sales high & improve

revenues

• Less amount of

promotional activities

D E V E L O P M E N T • High performance &

productivity

• Aiming @ improve

knowledge, sharpen skills

& mould attitude

• More Managerial Level

M A T U R I T Y • Sales growth decline

• Product realized –

prospective buyer

• Promotional activities

withdrawn

P R O M O T I O N • Reward & recognition

• Job Enrichment & higher

responsibilities

• Look for higher tasks

• Training play minor role

Page 14: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 14

R e c e s s i o n t i m e s – p r e p a r e m e n t a l l y & p h y s i c a l l y f o r l a y o f f s

P A R T I C U L A R S P L C P A R T I C U L A R S E L C

D E C L I N E

R E T I R E /

R E T R E N C H M E N T

• Gives up work

• Sometimes earlier, early

retirement incentive

plans

• Employee can’t predict

when his life will be end

Page 15: Impact of downsizing

ALTERNATIVES OF DOWNSIZING

ORGANIZATIONAL DEVELOPMENT 09-11 15

S y s t e m a t i c c h a n g e

C h a n g e w o r k w e e k

C u t b a c k o n e m p l o y e e b e n e f i t s

O f f e r J o b S h a r i n g

Page 16: Impact of downsizing

CONTD…

E M P L O Y M E N T P O L I C I E S

C H A N G E S I N J O B D E S I G N

P A Y / B E N E F I T S P O L I C I E S

T R A I N I N G

A t t r i t i o n Tr a n s f e r s P a y f r e e z e R e t r a i n i n g

H i r i n g f r e e z e R e l o c a t i o n C u t o v e r t i m e p a y

C u t i n t e r n s J o b s h a r i n g U s e v a c a t i o n & l e a v e d a y s

V o l u n t a r y t i m e o f f s - P a y c u t s

R e d u c e d w o r k h o u r s - P r o f i t s h a r i n g

o r v a r i a b l e p a y

ORGANIZATIONAL DEVELOPMENT 09-11 16

Page 17: Impact of downsizing

A s s o c i a t e l i n e m a n a g e r s – r e t r e n c h m e n t & r e t e n t i o n

s t r a t e g i e s

B e v o i c e f o r e m p l o y e e s – f i n d e f f e c t i v e s o l u t i o n s

E n h a n c e r e t a i n e d e m p l o y e e s

C o m p e n s a t e e m p l o y e e s – q u a l i t y o u t p u t

ORGANIZATIONAL DEVELOPMENT 09-11 17

Page 18: Impact of downsizing

K n o w l e d g e E r a – k e e p u p d a t e d , h a v e l e a r n i n g a t t i t u d e

F i n a n c i a l E x p e r t s – k e e p a d e q u a t e b a n k b a l a n c e

B - S c h o o l s T o d a y – i n t r o d u c e s p e c i a l i z a t i o n l i k e l a y – o f f

m a n a g e m e n t o r p i n k s l i p m a n a g e m e n t

D o n ’ t t h i n k w h y “ m e ” , g o f o r o t h e r o p t i o n s , s e a r c h j o b s i t e s

o f y o u r s e c t o r

C o n s i d e r i t a s a n o p p o r t u n i t y

ORGANIZATIONAL DEVELOPMENT 09-11 18

Page 19: Impact of downsizing

ORGANIZATIONAL DEVELOPMENT 09-11 19