The board has decided – we have to let people go. The axe swingeth. Who does it hit? Often the blade chops through large teams. The rationale being something like “there’s 50 of them – they can cope as a team of 40”. In some ways this looks more achievable, and perhaps desirable than “this team of four couldn’t possibly function if it got any smaller”.
Let’s say the team of 50 are front line customer service folk earning £25,000 each, and the team of four are management folk earning £100,000 each. Now I don’t know about you but in my experience bigger organisations can often cope with the loss of one of the management team much better than the loss of several front line staff. Trouble is – this is a headcount reduction you see, so in this case four is better than one. You don’t suppose these things are designed like this to protect the more senior folk do you?
I recall a division of a big company going through a round of voluntary redundancies. It was announced and presented along with an organisation chart mainly consisting of blank spaces. The blank spaces numbered fewer than the current number of people. Reapply for your job á la musical chairs. What struck me was that the first page of the chart was already complete. The Managing Director and all his reports were deemed essential. Now there’s a funny thing eh?
No one likes having to get rid of people, but surely trying to achieve a reduction in the paybill is at least as valid a way of managing the challenge?
Protectionism, vested interests, myopia all come to mind but there is probably a more likely cause…. senior executives cost more to lay off and usually walk around with a perceived large amount of business intelligence & experience which the business is afraid of losing. Neither particularly good reasons but there you go…. the body can make do without a limb but can’t survive without a head.
I wonder what the view on people/cost reductions would be if the lowest paid staff attracted the highest redundancy costs? Or if management were always prevented from receiving a severance payment because of their privileged role?
He he – I now have Futurama style images in my mind, loads of floating heads in robotic keep me alive jars. It certainly would be interesting to try and tilt the balance re settlements towards the less well off. And I think there may be a case for a cut off point up there in the rarefied air… alas more turkeys and christmas methinks. Bah humbug!
Two and a half years ago the team I was in were being made redundant. I was a representative for my team along with 6 others. We were asked to come up with viable alternative that would be considered.
One of the options we came up with was one you suggested above. Get rid of the top heavy management allowing front line work to get done. The decision was already made whole teams were going though, therefore the front line was now an admin function. As such the top management didn’t have to be let go, and all those with the requisite requirements for applying for the new roles did. The rest of us were glad to see the back of it all.
The best ending was the newly (self)appointed CEO coming round to say thanks and goodbye. He didn’t know my name, who I was, what I did or what I helped deliver to the clients. Excellent.
So you were asked to come up with a viable alternative yet the die had already been cast? I guess I shouldn’t be surprised then that the CEO came across as vacant as he did eh?
It is a symptom of a reductionist approach. Cut a bit here, a chunk there. It at least implies that the organisation has no clear idea of how each part contributes to the success of the whole.
Organisations are systems, remove any single part and there are likely to be unintended consequences elsewhere in that system.
If the organisation were to view itself more as a system, the significance of each part of the system could be more easily assessed. Then when changes are required – including cost reductions – these can be a based on an understanding of how the organisation actually operates. Rather than a gut feel policy based on team size.
When a racing car team wishes to reduce the weight of their car to make it more competitive, they don’t simply cut off bits at random. They understand how each part helps it go (or stop!) and constantly seek to improve their understanding of how it all works together.
Cuts require a huge amount of care and skill it seems Noel. And cost cutting can be easy. To pick up on your excellent racing car team idea, we could cut costs by making the tyres a bit thinner, or go all out and just not have any tyres at all. There are cost saving opportunities everywhere 🙂 What is the intended outcome of cutting? I’m all in favour of prudence and additionally what opportunities are there to think and do differently? Thanks for popping by Noel – I appreciate it.
Hi Doug,
Been following your stuff on twitter for a while but never been to your site before … very nice and I think we might have more in common than I realised before.
I might have to come back more often.
Vince
Hi Vince – it’s a pleasure to see you here today. I’m always chuffed to have new folk pop by – you are very welcome to come back for another look whenever you like. Cheers – Doug
Outcomes, it’s always outcomes. Understanding the work helps too. Often re orgs and headcount reductions are really about increasing throughput or quality while cutting overheads (which are equally often perceived to be overheads but which are actually what oils the wheels, the benevolent end of control) or simply re purposing an organisation to do something different. Simply cutting cost is usually a symptom that management arent or weren’t thinking straight. In which case the new paired down org is unlikely to be sustainable.
Will reorgs happen in which people leave? Yes.
Can they be run on the basis that an organisation is being re engineered and through which people who understand the work can be engaged and invested in? Every time.
Takes guts, thought and management that can eat their own dog food.
Starting the conversation with an understanding of restored outcomes and a flat assertion that just cutting costs won’t be sustainable might work… Sometimes… He said, sitting on a train in his grey suit 🙂
Understand the actual outcomes and the work
Thanks – I believe you’ve just rewritten the manual on how to reorganise a business. I think your point about simple cost cutting is spot on – unsustainable (and how about unimaginative?).
In other news, weirdly – when I read the words “dog food” I felt hungry.
Cheers – Doug
Had a really interesting meeting with an NHS Director today and we talked about system-wide reform.
During the conversation about making savings, I used Noel’s (thanks Noel) racing car analogy and the Director said too often the NHS seeks to deliver savings by simply removing one wheel!
Superb! Thanks for the feedback Vince – I love it when stuff emerges on here and then finds its way into the real world. Really appreciate you letting us know.