Reducing expenses quickly, an organizational challenge

An exercise now under control? Not so sure!

The strategic equation is quite simple. We know that the age pyramid and natural turnover rates will free up jobs. We also know that the priorities of the organization must make it possible to do without certain functions or to reduce their weight.

Obviously chance does not always balance departures in areas where we are want to reduce the headcount. Then comes the work of HR to ensure a satisfactory transition, including professional development, training or even complete reorientations.

In short, today, after 20 years of Strategic Workforce Management, we know how to do it! But it is no longer enough

These operations considered relatively “painless”, done a bit on the sly, are often disappointing for two reasons:

• we forget that the reduction in cost and workforce is only a consequence: it is above all necessary to improve productivity, an exercise which requires working both on the efficiency of operations and on the organization

• we also forget that, even with internal reclassifications, such a transformation can overload the collective capacity to rebound and the engine of performance. We must therefore work on collective motivation.

To improve productivity, let’s not forget to revisit the organization

We often make the mistake, when we have to reduce the workforce quickly, especially when we want to take advantage of “natural” departures, of not re-examining the organization in depth, for fear of embarking on a complicated operation.

At JAZZ Conseil, we believe that it is on the contrary an accessible exercise if done with the right method. And our clients can testify that it makes it easier to put the organization in a positive traction than in a suffered position of downsizing.

We distinguish 4 major stages, sequenced and tooled to support our experiences of transformations:

1. First step (preliminary): take a precise photo of the organization, function by function. We often find that the managerial vision is not the right one in terms of the exact workforce, the real number of hierarchical levels or “local” organizations. To respond to this, Jazz Conseil has developed the “organizational synoptic” © which quickly identifies and qualifies operational inconsistencies or organizational redundancies from a simple and exhaustive mapping.
2. Second step (essential): take the necessary operational steps to lower costs in the face of the strategic situation, which involves either efficiency gains – improvement of the control of the core of operational performance – or a reduction of capacity when the market offers no other way out.

To do this, in both cases, it is necessary to identify the main problem to be solved by the operational staff in order to be efficient in the identified strategic context. On this key step, JAZZ Conseil has also developed an innovative approach, the “Radiography of structural problems” ©

If productivity can be improved, it is because the organization is not quite focused on the right problem. So we should identify the problem with the operational staff: for some it will be to control transversal quality where we looked at quality in stages; for others, it will be better ways to anticipate solutions where we concentrated staff to react directly, etc …

If, on the contrary, we have to reduce or vary the capacity, we must again ask ourselves: “is the market temporarily or structurally reduced, and what becomes the main difficulty and how should we be organized to resolve it? “

In both cases, this exercise on performance will give rise to the need for new structures, often new functions. We should create them without hesitation!

3. Lighten the organization of everything else; that is, whatever does not help to solve this strategic problem. This is where the main gains are made. The approach may seem more brutal because it aims to remove something that exists, one that has often settled over time. However, it will be all the more legitimate as it will not create a rupture: what is not essential often disappears without regret because the operational impact is low or zero. This will make it easier to manage change.
4. Fourth step, choose a target organizational structure, most often simplified, making it possible to respond to the initial findings – in terms of staff and hierarchical levels – and to strategic choices – in terms of the distribution of responsibilities and key cooperation.

In conclusion, revisiting the organization during a workforce reduction process quickly offers many benefits:

• identify functions that can be avoided in large numbers to get organizational leeway,
• create new, sometimes hybrid functions, conducive to repositioning of various profiles,
• highlight the cooperation priorities,
• and overall give an operational meaning to an approach that is always initially perceived as negative.

To get the interested parties on board, create a real desire for change

Downsizing is, in principle, not a very easy time for an organization. Yet experience shows that it can be crossed without compromising the collective capacity to change, vital to an organization like water is to nature!

However, there are 3 conditions for accepting the change, or even a “willingness to change”:

1. Anticipate how the changes collide with collective values and habits and will generate probable resistance. Make the effort of collective empathy to understand what it affects in particular in the people concerned. And face it firmly but with respect; never ignore it or bypass it. And if possible limit the change to what is strictly necessary, the risk always being of wanting to change too many things where only 2 or 3 points are essential, vital and assimilable. Depending on the case, we will aim for a simple resolution of the resistances or a real “mindset shift”. But we will not ignore it.
2. Explain the benefits. Even justified, downsizing is often considered superfluous, avoidable, subjective. It is imperative to build a clear business case, the “Value for the effort”, and devote to it a communication that manifests the benefits for the greatest number. It is essential that this work be done and communicated by one or more teams of stakeholders directly concerned; not just by management in a top down format.
3. Finally, devote a lot of energy to solving operational micro-problems as quickly as possible to limit the inevitable period of doubt as much as possible. This is particularly true in a workforcereduction program through internal reclassifications, which will temporarily put the organization in imbalance. In short, aim for “Uncertainty mitigation”.

As much as we all know of cost reductions focused on downsizing that have yielded costly and disappointing results.  As well, our experience of improving performance through an “organizational synoptic” © and identifying the core of performance yields impressive results in terms of people and performance. What is more, and this is the most surprising, respect for the “willingness to change” preserves the cohesion and the capacity for rebound of the organization, which is by far the most important.

Reducing quickly is now possible, but corporations must keep in mind the stakes and turn the challenge into a real project:

• By translating the strategic issues into operational and organizational priorities, which will require the “micro” exploitation of all HR opportunities and the “macro” daring of a reorganization of the structure and the divisions of business and responsibilities.
• And by involving management in the process but by taking more widely the means to make a natural and positive change because it is adjusted to the state of mind of the troops, circumscribed, shared, ambitious and taking into account the difficulties in detail .

Point of view by Jazz Conseil