DOWNSIZING

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DOWNSIZING  
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Downsizing What Does This Mean?

• A company's reduction in the number of employees,
  bureaucratic levels, and overall size in an
  attempt to increase efficiency and profitability.
  
• Have you downsized already without realising it?

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Key Examples

• Closing offices, reducing employee working hours,
  not replacing staff that have left or retired and
  replacing people with technology.
• Procter Gamble.
• Others that have downsized include IBM, ATT and
  GE.

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Benefits of Downsizing?

• Survival!
• Improve organisational efficiency, productivity,
  and/or competitiveness?
• Long term profitability and the bottom line.

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Redundancy

• Redundancy occurs most commonly, where a company
  require fewer individuals to provide specific
  type of work.
• It is not the employees who are declared
  redundant - it is always the job that is
  redundant, meaning that the job holder will leave
  as a result of the redundancy.

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How to downsize What you need to do

• A business case.
• A correct procedure.
• A fair selection process - Inform and Consult.
• Follow a fair dismissal procedure.
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Pools are identified

• If there are a group of people carrying out the
  same role then it is important that they are all
  included within the group (or pool) to be
  considered for redundancy.
• The type of work carried out by the employees and
  whether their jobs are interchangeable.
• There may be more than one pool.

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Selection Matrix

• Scoring.
• The selection matrix is a list of criteria such
  as skills, performance and aptitude of all the
  employees within a pool.
• The selection matrix must have objective
  criteria.

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Example Matrix

•  NAME OF EMPLOYEE
• John Smith Jackson
  Michael David Jones
• CRITERIA
•  
• Performance 3 2 1
• Flexibility/Adaptability 1 2
  3
• Attitude to job/company 3 2
  1
• TOTAL MARKS   7 6 5
• Therefore David Jones is the lowest scoring
  employee and would be made redundant, if only
• making one redundancy.

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Procedural Dangers

• The KEY to redundancy is CONSULTATION.
• Discrimination and Unfair Dismissal.
• Paper trail.

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• Other Dangers...
• Lose valuable trained staff.
• Do not use to tackle poor performance!
• Survivor syndrome.
• Hidden costs.
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Alternatives to redundancies

• Lay off and short time working.
• Redeployment.
• Suitable alternative work should have similar
  status, be within the employee's capability and
  employees have a right to a four week trial.
• Flexible working optimise your staff and
  increase efficiency.

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• Other Issues
• Sub-let, under-let or share possession.
• Consider sale and leaseback.
• Retention of title clause in commercial
  contracts.
• Opportunities include a presence online.
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Commercial Considerations

• Look for activities that are duplicated - either
  within your firm or elsewhere in the value chain.
  
• Broaden the scope of your products.
• Protect the firms memory or experience.
• If making redundancies - get advice on all
  aspects of the redundancy procedure.

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For more information please visit
www.veritassolicitors.co.uk