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Ensuring Effective Downsizing

26.09.2016

Ensuring Effective Downsizing

Companies today are forced to consider restructuring more often than before. With business decisions driving this requirement, the likehood is high that the new organisation will have a different structure, different types of staff and fewer of the original workforce as well. Inevitably, this means a number of people will have to be 'let go', a supposedly kinder phrase than 'laid off' or 'made redundant'. The net effect is the same, though. Employees are going to lose their jobs.

"For the majority of business leaders, this will probably be the toughest business decision they will ever have to make, " says Shahryn Azmi, Chief Executive Officer of CDC Malaysia. " But, "he goes on to say, "if there is credible assurance that the downsize will be well-executed and that there will be humane and dignified support for those exiting, that definitely takes a lot of stress off the senior management."

That message seems to not have been lost on the Malaysian business community as CDC Malaysia – set up originally by Khazanah Nasional Malaysia Berhad to manage the transition of thousands of Malaysia Airlines personal – is now supporting quite a number of other companies that are either downsizing or planning to do so soon. "Because we were able to assist so many former Malaysia Airlines staff as effectively as we did nationwide, we have attracted a lot of enquiries for transition assistance, both within Malaysia and from companies overseas as well.

GETTING READY

CDC starts its involvement with an organisation as soon it thinks that a restructure might be required. The discussions that ensure allow all parties to explore strategic and tactical options. If there is is no choice and that organisation feels it has to downsize its workforce, CDC prepares the frameworks that ensures the entire process is effectively and humanely managed. According to Shahryn, while such frameworks are designed to be unique to that organisation, there are a number of action steps that are critical to any downsizing plan.

1. ESTABLISHING A COMPETENT TRANSITION TEAM

A cross-functional transition team is critical. They are needed to define the action plan and corresponding time line, engage everyone in the organisation to get their buy-in, and handle key issues and tasks. "While most organisations have a HR department in charge of staff," remarks Shahryn, "the people in that department are exiting staff really requires specialist intervention," To that end, Shahryn sees CDC as Malaysia's most experienced career transition specialist that can help organisations deal with the planning and roll-out of an aggressive downsizing.

2. ANALYSING THE STAFF'S CRITICAL SKILLS REQUIRED FOR THE NEWLY RESTRUCTURED ORGANISATION 

Critical skill analyses allow an organisation to identify the competencies that will be required as the company sets its future trajectory. This information is needed to help make the decision as to whether voluntary, involuntary or a combination of separation programmes is best. Throughout this phase, there will be a need to ensure that the remaining staff possess the needed competencies. 

3. DESIGNING THE APPROPRIATE SEVERANCE PLAN 

The best severance plan balances two organisational needs: reshaping the company's business within a realistic timeline and budget and, secondly, helping exiting staff with the loss of income during their career transition. A severance plan must also consider legal requirements, union agreements if there are any, separation clauses in employment contracts and the need to keep certain staff onboard long enough to complete critical projects. 

Shahryn is emphatic about the fact that organisations have an obligation to provide support beyond just a financial payout. He says that Malaysian companies would do well to consider dialling back on some of their discretionary spend and maintain a budget for transition support no matter the prevalent business or economic conditions. 

 

 

4.DEVELOPING AN EFECTIVE COMMUNICATIONS PLAN 

Maintaining staff confidence and commitment through downsizing requires regular, clear and respectful lines of communication. Management needs to tell staff about the challenges the organisation is facing and communicate to them the rationale behind the decision to rectructure. In addition, specific communication strategies, guidelines and coaching will be required for managers who interact with the media, key customers, as well as those charged with informing exiting staff and address retained staff's concerns. 

Shahryn reminds that "Restructuring as a business decision. Its effects cannot be hidden. I is. Therefore, best that an organisation be open and upfront about it." 

5. ACTIVATING STAFF RETENTION STRATEGIES 

Downsizing creates a lot of anxiety and stress for everyone within the organisation. There will be concerns among all the staff, whatever their level. Keeping the remaining staff informed and motivated will reassure them that they have a future within the restructured organisation. 

"Staff are going to see their friends leaving. The psychological and social impact of this should not be underestimated. The remaining staff need to see that friends are being treated with dignity and some form of corporate generosity." Shahryn explains that while transition support is the law in Australia, New Zealand and South Korea, it is, at the moment, only an 

optional benefit in Malaysia. Though , he adds, there is growing interest in transition support as a concept. "It is unavoidable that the remaining staff will wonder what might happen to them, should they be released as well. And that is why the offer of effective transition support by CDC can be reassuring for all." 

 

 

QUALITY TRANSITION SUPPORT 

For Shahryn, it is important to emphasise that CDC is not a training institute, or a counselling centre or an employment agency because those classifications will not able the correct type of services to be offered. He says, "We are transition specialists, helping people move from one phase of their professional lives to another. Understanding this to be our holistic role allows us to ensure we do all that we can to help exited staff land well." He adds that organisations that want to be like CDC have not achieved the same success precisely because they see the task at hand as being just training, counselling or re-employment. 

CDC works with individuals to assist them with career re-launching, the provision of financial advice to manage compensation packages effectively, profiling to aid in that effort, resume crafting, job interview rehearsal and coaching. All this is individually directed so that people who have the best chances of impressing a recruiter at the next opportunity. 

It all comes down to changing individual mindsets. "People exit organisations with a lot of negativity," Shahryn says. "It's unavoidable. If they stay fixed in that mental phase, however, they are not going to be able to move on with their lives. So, we look to support each person in his or her onward professional journey, individually." 

CDC refers to this approach as 'same but different' and likes their modus operandi with visits to the doctor. "The waiting room might be full, but the doctor never comes out and announces to everyone that they should take the same medicine and follow the same recovery regimen. That would be wrong. It would never work." 

Shahryn attributes that recent increase in interest in CDC's services to this personalised approach. "It definitely takes more time and is much more resource-intensive but you have to be prepared to go the extra mile if you truly want to help. 

MARKET SUPPORT 

"We really have experienced corporate Malaysia at its best," Shahryn says when he talks about the hundreds of companies that have offered their job vacancies to the unemployed individuals registered with CDC. Commonly, those vacancies are made available to CDC exclusively for a week to ten days before being released to the wider public via the press or online. 

"SMEs and multi-nationals nationwide have called us with offers of anything from one job vacancy to a hundred. They say they want to try and do their bit to help out. That's just awesome! This unexpected source of support has definitely helped CDC perform more effectively. 

"What we need now." Shahryn concludes, "it for more managers to move from thinking about helping because they see the commercial benefit to thinking about helping because there is a moral benefit." 

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