I would be really interested to know how many organizations practise “safe downsizing” – and how many still rush headlong into an uncertain future.
Picture credit: Chevysmom
The credit crunch holds many dangers for organizations and it is vital to understand where the less obvious risks of long-term damage lie hidden.
We can’t afford to lose the whole game by dropping the ball so here are three essential steps to protect your intangible assets when downsizing.
So why do we drop the ball?
Unlike the talented dog in the picture, my own Golden Retriever (Jasper) will only hold a ball until he thinks that he might just get something better/ different.
I have explored this behaviour and found that sometimes Jasper will fight me strenously for possession of a valued toy but if I pretend to pick up something else [that doesn't exist] he will instantly relinquish even his favourite playthings, leaving him with nothing.
This means that, as soon as his attention is distracted, he is happy to drop the valuable ball he already has.
I think that Jasper’s instinctive reaction is very much like the usual corporate approach to downsizing. Too often, we are happy to let go of value because we believe that something better/ cheaper is ours immediately, for the taking, even if we don’t really know what we are going to get.
People are undervalued
The loss of talented staff, let go to save the bottom line – or indeed the business, is usually obvious to everyone but the rush to downsize very often forgets to preserve the business-critical knowledge that leaves with them.
Letting people go is always a hard decision to make and not always taken lightly. Too often, though, there are tremendous financial pressures on the organization so departure planning somewhat inevitably focuses on two elements:
- cost saving to the business
- speed of departure
These are perceived as key survival factors for the business and I can understand why. But they do disguise the true cost of redundancy because the decision-making process does not always take into consideration the real value of those people who will leave
The disguised cost of downsizing
In times of financial stress, the real value of our staff is often sacrificed on the high altars of headcount and bottom-line performance. Which is not only sad but also highly risky.
Whenever someone leaves the organization, either as the consequence of management plans, or voluntarily for personal reasons, the intellectual and operational capital of the business is always reduced. These key business factors are rarely featured on the balance sheet or budget and are deemed to be so-called intangible assets. These intangibles are very often business-critical but not recognised as such, until it is too late – when they have walked [or been dismissed].
How can we protect our assets?
There are three absolutely vital steps that every manager needs to take before anyone leaves their employ:
- risk assess the skills/ knowledge of the potential departee(s)
- record the risks identified (worth creating a purpose-specific register)
- formally plan skills/ knowledge transfer to preserve the intellectual/ operational capital of the business
If these are performed properly, before the individual/ downsizing decisions are finalized, we have some hope of mitigating the true cost of downsizing.
We neglect these safety measures at our peril and we must be prepared to do proper due diligence, before blindly downsizing without realising what it will cost us in the long run.
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