Firms that restructure through downsizing are not more profitable than those that don't, and often end up hurting themselves in the long run. Responsible Restructuring draws on the results of an eighteen-year study of S&P 500 firms to prove that it makes good business sense to restructure responsibly-to avoid downsizing and instead regard employees as assets to be developed rather than costs to be cut.
Wayne Cascio explodes thirteen common myths about downsizing, detailing its negative impact on profitability, productivity, quality, and on the morale, commitment, and even health of survivors. He uses real-life examples to illustrate successful approaches to responsible restructuring used by companies such as Charles Schwab, Compaq, Cisco, Motorola, Reflexite, and Southwest Airlines. And he offers specific, step-by-step advice on what to do-and what not to do-when developing and implementing a restructuring strategy that, unlike layoffs, leaves the organization stronger and better able to face the challenges ahead.
Table of Contents
List of Exhibits
1: Restructuring in Perspective
THE ECONOMIC LOGIC THAT DRIVES EMPLOYMENT DOWNSIZING
DIRECT AND INDIRECT COSTS OF LAYOFFS
IS RESTRUCTURING A BAD THING TO DO?
RESPONSIBLE RESTRUCTURING— WHAT IS IT?
EMPLOYMENT DOWNSIZING— THE JUGGERNAUT CONTINUES
THE HUMAN AND FINANCIAL TOLL
THE EFFECT OF POOR LABOR RELATIONS ON PRODUCT QUALITY
THE PAYOFF FROM TREATING EMPLOYEES AS ASSETS
2: The Financial Consequences of Alternative Restructuring Strategies
RESULTS OF THE 1982-1994 STUDY
EXTENSION AND UPDATE FROM 1995 TO 2000
EMPLOYMENT DOWNSIZING AND FLEXIBILITY
3: A Baker’s Dozen Myths versus Facts about Downsizing
MYTH #1 ∎ Jobs are secure at firms that are doing well financially.
MYTH #2 ∎ Companies that are laying off workers are not hiring new ones.
MYTH #3 ∎ Downsizing employees boosts profits.
MYTH #4 ∎ Downsizing employees boosts productivity.
MYTH #5 ∎ Downsizing employees has no effect on the quality of products or services.
MYTH #6 ∎ Downsizing employees is a one-time event for most companies.
MYTH #7 ∎ Since companies are just “cutting fat” by downsizing employees, there are no adverse effects on those who remain.
MYTH #8 ∎ Most employees are surprised to learn they’ve been laid off. They ask, “Why me?”
MYTH #9 ∎ At outplacement centers, laid-off employees tend to keep to themselves as they pursue jobs.
MYTH #10 ∎ The number of employees let go, including their associated costs, is the total cost of downsizing.
MYTH #11 ∎ Violence, sabotage, or other vengeful acts from laid-off employees are remote possibilities.
MYTH #12 ∎ Training survivors during and following layoffs is not necessary.
MYTH #13 ∎ Stress-related medical disorders are more likely for those laid off than for those who remain.
4: The Case for Responsible Restructuring
ALTERNATIVE APPROACHES TO THE EMPLOYMENT RELATIONSHIP
WHICH APPROACHES PRODUCE BETTER OUTCOMES?
THE CAUSAL EFFECT OF MANAGEMENT PRACTICES ON PERFORMANCE
THE FINANCIAL IMPACT OF EMPLOYEE ATTITUDES ON FIRM PERFORMANCE
POLICIES AND PRACTICES THAT LEAD TO HIGH PERFORMANCE
BUSINESS CONCEPT INNOVATION
WHAT BUSINESS CONCEPT INNOVATION IS NOT
5: Responsible Restructuring— Alternative Strategies
CHARLES SCHWAB & COMPANY
CISCO SYSTEMS, ACCENTURE, AND MOTOROLA
STATE OF CONNECTICUT, DEPARTMENT OF LABOR, AND REFLEXITE CORPORATION
INTEL, CHEVRONTEXACO, AND MINNESOTA MINING AND MANUFACTURING COMPANY (3M)
SAGE SOFTWARE, INC.
PHILIPS ELECTRONICS SINGAPORE
PROCTER & GAMBLE COMPANY
6: The Virtues of Stability
LINCOLN ELECTRIC HOLDINGS, INC.
BEST EMPLOYERS IN ASIA
THE COSTS OF DOWNSIZING VERSUS THE NO-LAYOFF PAYOFF
7: Responsible Restructuring: What to Do and What Not to Do
WHY ADDRESS ORGANIZATIONAL JUSTICE?
COMPONENTS OF PROCEDURAL JUSTICE
THE IMPORTANCE OF COMMUNICATION
DEVELOPING A SYSTEMATIC COMMUNICATIONS STRATEGY
IMPLEMENTING A CORPORATE COMMUNICATION EFFORT
10 MISTAKES TO AVOID WHEN RESTRUCTURING
RESTRUCTURING RESPONSIBLY: WHAT TO DO
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