How to Consolidate Operations When Downsizing
It is estimated that 85% of Fortune 500 firms downsized between 1989 and 1994, and all of these companies had plans to further reduce their workforces through the year 2004. Particularly in tough economic times, organizations will be searching for ways to function as efficiently as possible.
A downsizing and consolidation plan is one strategy to help keep a business competitive. The business must be able to continue to operate effectively but also efficiently. Downsizing is an attempt to reduce expenses, while consolidation plans are an effort to attain and retain efficiencies and competitive advantages during and following an organizational downsizing.
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Things You'll Need
- Strategy for organizational structure and workforce recovery
- Consolidation team
- Downsizing and consolidation plan
- Data and performance monitoring plan
- Organizational recovery and follow-up
Instructions
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Making downsizing/consolidation projects successful
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Determine organizational structure - The executive team should have an organizational structure plan in place before beginning to implement a downsizing and consolidation plan. Ultimately, organizational structure should go hand-in-hand with company goals. The current organizational structure or planned change in structure will help determine the consolidation plan. For example, structure will determine whether consolidation happens between departments, functions, product lines, jobs, etc.
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Form consolidation and recovery team -- Ideally, this team includes a member from departments and functions that are being considered for consolidation. The project manager of this team needs to have good conflict management and facilitation skills to mitigate the effects of "turfism" and keep the team focused on the goals of the transition of the organization. Often, the project manager is an external consultant to the organization.
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Develop consolidation plan -- Determine what functions, departments, product lines, jobs, sites, etc. can be combined to increase organizational efficiency beyond the downsizing. Most, if not all, of this step depends heavily upon the organization's long-term strategy and organizational structure needs. For example, a company may decide to combine sales and client services into one department, hoping to ease the hand-off of new client programs (sales) to operations (client services) while decreasing the staff needed to do so.
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Identify data and performance monitoring plan -- What measurement(s) will tell you that a consolidation strategy is working? It's not as simple as measuring only decreased expenses from the downsizing. As part of your consolidation plan, you will have to determine what measurements will tell you the strategy is working. Plan to monitor those measurements on an ongoing basis. For example, a manufacturing plant may more frequently monitor their product output schedule and quality indicators to track whether a recent downsizing ends up costing the company more in additional work than it may have saved them in saved expenses.
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Enable active recovery and follow-up -- In his 2003 text, "Charging Back Up the Hill," Mitchell Marks describes how organizational recovery means attending to how downsizing and consolidation will effect an organization's workforce. Changing an organization means introducing new practices and perspectives and it requires that employees grieve the loss of old ways and perspectives. This grief process can take many forms (e.g. decreased morale, diminished confidence in management) and a recovery and follow-up plan should continue well past the initial downsizing and consolidation. A focused recovery plan allows the organization to mitigate the cost of downsizing.
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Tips & Warnings
Do not underestimate the effect consolidation or downsizing will have on your organization's workforce. This will only serve to undermine the efficiencies you hoped to have gained. Have a plan in place for workforce recovery and know that it will be a long-term effort to reach peak efficiency.
