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Executive Interviews: Interview with Elaine Eisenman on Managing Downturn without Downsizing
June 2009
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By Dr. Nagendra V Chowdary
Send workers home without
sacking them, is another oftensuggested
solution. Companies are
increasingly putting in place
telecommuting policies to cut costs
and increase productivity. Of course,
this might just work largely in service
and highly individualized sectors
and may not work in manufacturing
and where physical presence is
essential. However, what are the
challenges in allowing employees to
work from home (WFH) and what
precautions do you suggest
companies should take before
adopting WFH policies?
Telecommuting has enjoyed
increasing success over the past
decade in many different industries.
The newest industry is call centers,
with the development with new
monitoring technologies that allow
for consistent oversight of a dispersed
home-based workforce. It is
important, however, to differentiate
between telecommuting as a logical
and acceptable work site decision and
telecommuting as an alternative to
firing them. I believe that using
telecommuting as ameans to cut costs
may end up being ineffective because
it may cut out the very factors that allow for successful telecommu-ting
to occur. Companies that have
effective telecommuting workforces
do so because they put measures and
options into play that allow for the
employee to continue to perform as a
member of an ongoing team, to have
regularly scheduled days when they
are in the office, to have team
members and a supervisor who
understand their work situations and
allow for maximum balance between
required work times and flexible
hours. Further, not all employees are
psychologically well-suited for
telecommuting and find their work
inhibited by the isolation and high
need for personal self-control and
limit setting, and willingness to
tolerate ambiguity and uncertainty.
For this to be successful, managers
must set clear expectations and goals,
give frequent feedback and input, and
also have a willingness to accept that
the employee is doing real and
valuable work and not believe that
they are contributing less by the
absence of regular "face time". Two additional pitfalls to consider are
precedence and telecommuting
following the economic downturn.
Telecommuting can create morale
issues with office-bound employees if
the decisions on telecommuting
eligibility are made on an individual
versus position basis. Just as
telecommuting should not be used as
an alternative to firing, companies
alsomust be careful to ensure it is not
seen as a reward for specific
individuals. Additionally, companies
need to consider how they will
handle telecommuting policies
following the economic downturn.
Will they rescind the policy when the
economy becomes stronger? This can
lead to disgruntled employees,
similar to what occurred in the mid
1990s when employers who
previously used flex schedules,
telecommuting, and job-sharing to
woo employees, and ended up
canceling those policies when the job market tightened. Employees and
potential employees severely lost
trust in those employers. The bottom
line is that managers need to have a
company-wide perspective on
telecommuting in good and tough
times to ensure that productivity of all
employees remains high. Insuring
that all the factors are in place for
success may turn out to cost as much
as keeping the person in the office. Is there possibly a way to manage
downturn without downsizing? Of
course, many argue that it’s not
downsizing, but rather right sizing.
Are there any illustrative examples of
either companies or countries not
having gone in for downsizing during
the previous crises?
There are many ways to manage in a
downturn and downsizing is only
one of them. The real issue is about
sequencing of resource needs and
assessment. The danger for
companies is when downsizing is the
first response to any economic
downturn. It is the lack of strategic
understanding that can lead a
company to determine that the best
way to savemoney is by cutting some
arbitrary percentage of the workforce
in order to achieve the predetermined
savings goal. And this error is
intensified when the formula is based
on last hired first fired, so that new
high potential talent is lost. When
downsizing is done in a vacuum it is
completely destructive to the
company. Far more important to the
company’s ultimate success is to step
back and evaluate the current and
future success of the company’s
strategy, to understand the new
market landscape, to determine
where the most important resources
must be focused and to see how well
aligned the company is with this
model for success. Once this has
occurred, it may be that some
divisions are no longer necessary, or
some practices are inefficient and
ineffective or new resources need to
be built to address a latent market need. The need here is then aligned
to the highest potential areas for
future success. When this is done,
cuts can be achieved with a scalpel
rather than a machete. Then, it also
becomes possible, while also
building employee commitment, to
ask each division to look for ways to
cut or contain costs as a way of
streamlining the company, to identify
areas of redundancy that can be
consolidated or eliminated and to
offer attractive early retirement
packages, carefully balanced with
retention bonuses to insure that the
talent you need does not leave. These
early initiatives allow for significant
areas of unnecessary costs to be
identified and serve as a base for
building understanding and support
for the tougher decisions that may
follow.
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