Resizing The Organization 25 ppt

generated, and staff redeployed to ensure the organization retains its competitive edge and market position? What are the implica- tions for people in organizations—people who come to work every day, eager for the opportunity to excel, loyal to the company, giv- ing back in return for recognition and reward? What steps should be taken as shifts occur, when, and by whom? And why? This chap- ter is intended to help you find the answers to these questions. An Approach to Planning Using an HR planning approach that builds on the organization’s business planning process can help protect against sudden and un- planned swings in staffing levels or aid in the execution of swift re- deployments as was evident in the aftermath of the World Trade Center tragedy. Planning is a common business tool. Although there are sophisticated and complex processes available, the plan- ning approach we have used in several business settings is a simple one that does not require an army of staff to make it work. It has four key thrusts: 1. An environmental scan 2. Identification of the business issues facing the organization 3. Development of courses of action the business will undertake to deal with the issues identified 4. Development of the HR plans and strategies to facilitate suc- cessful implementation of the changes in the business Environmental Scan An environmental scan facilitates the organization’s examination of the external threats and opportunities impinging on it, as well as review its internal strengths and weaknesses. This is sometimes referred to as a SWOT (strengths, weaknesses, opportunities, and threats) analysis. This scan can be a lengthy, formal, research-based process, using national, regional, and local labor market informa- tion, as well as industry, market, and product trends. It can be de- rived through focus groups, or it can employ any combination of data-gathering techniques. We use a structured interview approach with the senior management team and their direct reports in small MOVING AS THE MARKETS MOVE 221 TEAMFLY Team-Fly ® 222 RESIZING THE ORGANIZATION groups or one-on-one, whichever will be the more effective with the organization. We have provided two approaches to developing an environmental scan in Exhibit 10.1: a macro approach and a struc- tured interview approach. The macro approach works well as part of a strategic planning process where the facilitator can help the group explore and probe for information quickly. The structured interview approach works well when there are fewer constraints on time, and the group can spend several sessions developing detailed information. Identification of Business Issues The second step in the planning process is to identify relevant busi- ness issues facing the organization. John Coutts, retired president of Peak Technologies, declared the organization is designed to ac- commodate the market: “You organize around it, and must change with it. The primary reason for resizing or restructuring an orga- nization is profitability” [interview, June 22, 2001]. Many of the threats and opportunities facing an organization may be revealed during the development of its environmental scan. The identifi- cation of the specific problems an organization is facing now or in the immediate future will help determine priorities, as well as how, when, and where to begin to take action. The business planning questions in Exhibit 10.2 provide struc- ture for the senior team to examine the business climate. They usu- ally build on the data collected during the environmental scan. When we were employed at First Interstate Bank, we would go off- site periodically for a day with the senior management team to up- date our environmental scan. Subsequently, we would come back and use it to analyze the business climate, market share, and prod- uct success and failure and then develop the business plan for the next one to three years. Developing Business Courses of Action Following the development of the environmental scan and review of business issues, the senior management team can begin to plot the strategic implications for the organization in resolving any or all of the issues identified and prioritized. For example, the team MOVING AS THE MARKETS MOVE 223 Exhibit 10.1. Environmental Scan Approaches. Macro Scan Questions for a Focus Group Analysis of External Environment • What are three forces favorable to the organization? • What are three forces unfavorable to it? • What are the three most important future external forces— favorable or unfavorable? Analysis of Internal Environment • What are our three key strengths as an organization (things we do well)? • What are our three key weaknesses (things we do not do well)? Macro Scan Questions for a Structured Interview Analysis of External Environment • What is happening with the economy in general? In the United States? In countries where you have operations? In countries whose economies could affect your operations? • What is happening in your industry? How is your competition faring? What is happening in the industries that are part of your service and delivery chain? • What is happening in your market segment or niche? What is your competitive edge? Are you retaining it? What new opportunities abound? Are you in control, or is the market in control? What about your product pricing? Can you gain an edge? What actions, if any, would be prudent for you to consider? • Where does 80 percent of your business come? What economic factors might force changes in their buying power? What about demographics? What else should you be thinking about? Internal Strengths and Weaknesses • What do you do better than your competition? What is it about your people that allows you to outperform your competition? • What are your values? How do you exemplify them? 224 RESIZING THE ORGANIZATION Exhibit 10.1. Environmental Scan Approaches, Cont’d. • How clear is your sense of direction? • What are the good things about your culture? • What competencies does your organization possess that will allow it to survive? • What is the depth of your talent pool? What holes do you have in your pool? • How strong is the management team? Have you allowed for succession? • What doesn’t work well in your organization? What will it take to fix it? Can it be fixed? • If the competition is gaining on you, what internal issues may be causing your change in market position? What do you need to do to stop that? • How do your culture and values effect your productivity? • How does your decision-making process effect your productivity? Exhibit 10.2. Identification of Business Issues. • Is there an increased demand for current products or services? • Are we adding new products? • Will we be expanding to new markets? • Will we need to add cross-border operations? • If we undertake a critical review of the cost-income ratio, will we need to trim costs in: • Production? • Sales, advertising, or marketing? • Administrative staff? • Other areas of the business? • Has there been a dramatic downward market or economic shift? • Will we need to exit a line of business? • Do we need to close operations in domestic or international locations? may decide to increase spending in sales, manufacturing, opera- tions, or marketing with consequent increases in staff. Or it may decide to cut costs to retain market position. There are implica- tions for employees in either of these change scenarios. The HR executive can play devil’s advocate in these sessions, reminding col- leagues of the staffing, employee relations, and legal issues that may arise in each of the scenarios under discussion. It does not mean acting as the “personnel police.” Rather, HR should facili- tate a strategic discussion and decision-making process on the human side of the business. The Americas Region of Standard Chartered Bank, headquar- tered in New York City, came to realize that its strategy of decen- tralizing certain banking operations to locate them closer to its regional corporate banking centers was too costly. After a thorough cost-benefit analysis, it was decided to centralize these operations in New York and Los Angeles. HR moved on several fronts simul- taneously, developing severance packages, scripts for small group meetings, deployment of HR staff to each affected site, and out- placement services for affected employees. A list of frequently asked questions was devised and distributed to managers. We also dealt with real estate and relocation issues. We moved quickly once the business solution was decided, deploying our HR programs and allowing the people affected to leave the company with dignity. We helped them recognize that although the bank had made a tough business decision with severe impacts on people, we had given se- rious thought to the consequences on our staff. We did all we could to assist them in making transitions in their lives as smoothly as possible. Another example of dealing with a business issue solving it with people comes from Harold J. Meyerman, former CEO of First Interstate Bank. He asserted, “Too often cost–cutting is solely top- down. In looking at innovative ways to cut expenses, at First Inter- state Bank, we set up ‘Tiger’ teams and asked each team where they would cut costs. We took a bit of time and involved employees at all levels to find expense reduction possibilities, and they came up with some incredible suggestions. We also used these teams as an assess- ment tool and noted who the best performers on these teams were” [interview, June 20, 2001]. The long-term effect of this innovative MOVING AS THE MARKETS MOVE 225 226 RESIZING THE ORGANIZATION approach to cost cutting was a tremendous boost in morale, team spirit, a strong sense of caring about the organization, and im- proved productivity. Positioning Human Resource Leadership HR leadership must take responsibility for moving expeditiously to facilitate the changes in staffing resulting from the business plan and develop the tactics necessary to make it operational. There- fore, it is important whenever HR reviews current HR plans, pro- grams, or policies that they are analyzed in the context of how these plans will help or hinder the organization if it needs to change its staffing strategy. For example, implementing a benefit program that rewards longevity and seniority may run counter to the organization’s need to be nimble and flexible. Human resource leaders must have a keen eye for business im- peratives affecting the organization and should be attuned to any economic and regional turbulence that may signal a change in di- rection. An example of an environmental signal is when labor unions decide to take on industries that have little or no union rep- resentation. With few exceptions, the banking industry is union free. The senior management in most banking systems refused to believe that such a thing could happen, until the Service Workers International Union decided to attempt to organize one of the bank card operations centers. Once this happened, it was amazing how fast CEOs became receptive to the Remaining Union Free Workshops we had been promoting. We conducted the workshops and remained union free. Human resource leaders are the change masters who must take immediate action if there are signs of a problem on the horizon, leading change efforts, anticipating what change means, and shap- ing tomorrow. For example, the sudden success of the dot-com sec- tor changed the way high-tech employees were recruited and paid. On-line recruiting became commonplace, and so did huge signing bonuses, enormous stock option grants, foosball in recreation rooms, and the like. In order to be competitive, other business sec- tors had to change their recruitment and compensation approaches to remain appealing to high-tech candidates. Then, almost as sud- denly, the dot-coms became dot-bombs. Organizations had to change their employment strategies again, so they were not overrewarding newly hired employees. Swift changes like these require HR pro- fessionals to determine the consequences to their organizations quickly and lead changes to keep them current. David Ulrich (1997), a noted academician and business con- sultant, has created a model that is helpful when examining the roles HR leaders can play in moving their organizations forward. The model also can serve HR leaders as an audit tool for measur- ing the success of the HR function in an organization. In the model, Ulrich describes four roles: strategic partner, administra- tive expert, employee champion, and change agent. A strategic partner understands the business, can diagnose the organization, and design and build effective organizational struc- tures. Human resources should be counted on to get the job ac- complished and does not wait to be asked. The HR executive’s ability to play this role and perform these tasks is critical to the suc- cess of both planning and executing effective staffing change strategies. The administrative expert acts as a relationship manager to clients, understands the technical side of HR, and believes in continual improvement. Maintaining close ties to the operating units allows HR to be effective in assisting affected managers to pre- pare their business cases for staff changes, their communications to affected employees, and working with those who survive the re- sizing efforts. The employee champion enables employees to con- trol key decisions about how work is performed, as well as for them to know where the organization is going and why. A clear, fair, and equitable approach exemplified by HR leadership helps employ- ees understand and buy in to the changes proposed. Finally, a change agent leads the change effort. Facilitating the development of the staffing strategies and their execution is where HR can shine. It must shape the vision and ensure that the people strate- gies employed fit the business case. Aligning the Business Plan with HR Plans and Strategies Business planning may result in changing the organization. There could be a layoff, a divestiture, a restructuring, a merger or acquisi- tion, or a plant closing. The change required to support the business MOVING AS THE MARKETS MOVE 227 228 RESIZING THE ORGANIZATION plan might have an impact on the number of people required by the various lines of business. If the number of employees increase or decrease, or if they are moved around within the organization, a carefully thought out HR plan is essential. For organizations fac- ing staffing flux, the ability to attract new employees, retain them, and help them reach their potential is daunting. With the possible exception of automated steel rolling mills, people are a critical asset in organizations. They need care and feeding in order for the organization to flourish. Employees should never be viewed as a wasting asset, that is, one that is used up in its entirety. If there is a need for a flexible workforce, that must be an important part of the HR philosophy, with a strategy for contingent staffing. All organizations will expe- rience changes in staffing. It is important that the senior leader- ship give serious thought to the relationship between staffing and such business actions as these: • Developing the existing lines of business • Exiting current lines of business • Entering new markets • Adding new product lines • Changing technologies • Crossing new borders to enter markets • Streamlining business processes Questions that can aid this thought process are presented in Ex- hibit 10.3. It is important to develop staffing approaches and action plans for each of the business strategies to be executed. Asking what im- Exhibit 10.3. Questions to Aid in Analyzing the Impact of Business Planning on Staffing Strategy. • How will this action affect our long-term strategy? • What will this action buy us in the short term? • How will we determine how many to add or terminate? • How will we determine who to add or let go? • Will we ever be on this path again? If yes, what precedents are we setting, and can we live with them? pact the business strategy will have on recruitment, selection, staff reduction, and staff redeployment is the first step in developing the appropriate HR strategies to facilitate the success of the busi- ness plan. Asserts Harold J. Meyerman, “You can’t human resource plan your way to prosperity, but you can use the HR function to raise strategic and tactical issues, and get to the heart of the peo- ple issues in these transactions. By balancing HR planning with ef- ficiency, you can achieve greater profitability” [interview, June 20, 2001]. When he was CEO at First Interstate Bank, Meyerman had each of his executive committee members work together closely every time the bank faced the challenge of entering new markets with consequent increases in staffing or when it needed to down- size or exit a product area. Because of this closely knit effort, we in HR partnered effectively with our line colleagues to help them with strategies and tactics that resulted in well-thought-out changes with minimal disruption. There are four major HR strategies to consider when aligning HR strategies to business plans. Planning questions for each of these that can facilitate analysis and planning are provided in Ex- hibit 10.4. Strategy to Increase Staffing Levels There may be a need to increase head count, or add new skill sets when developing the business, entering new markets, adding new product lines, changing technologies, crossing new borders, or streamlining business processes. If this is the case, HR strategies such as competency assessment and individual skills gap analyses, job postings, employee development, project assignments, or job shadowing can be implemented. In addition, external recruitment strategies such as job fairs, contract or part-time employment, and job sharing can be used. Strategy for Redeployment Employees may be redeployed, that is, promoted, demoted, or transferred throughout the organization, as a result of the business issues identified. Redeployment may occur when specific busi- ness units are eliminated, or when units may need staffing in- creases due to new products or achieving full market penetration. MOVING AS THE MARKETS MOVE 229 230 RESIZING THE ORGANIZATION Exhibit 10.4. Strategic Questions Regarding Changes in Staffing. Questions for Staff Increases • What jobs? What skills? Where? • What flexibility do you need in staffing levels? • Will they be core jobs? Part-time? Contract? • Are they permanent or temporary increases? • Can or should the work be outsourced? • How will you fill the jobs? • Internally? Can you promote from within? Do you have to train or develop current staff? Will you need to relocate staff? • Externally? Agencies and headhunters? Contract recruiters? Employee referrals? Job fairs? Internet or Web site? • Are salary ranges and rates of pay competitive in the labor markets? • Do you need to conduct quick surveys? • Will there be incremental costs? • Will you need equity adjustments? • Are there union issues? • Seniority or bumping? • Potential for arbitration? • Internationally—do you know enough about the local union to frame a strategic approach to them? • Will increased demand for products and services require possible changes in locations? • Do you know the labor supply for the specific occupations needed in the potential new locations? • Do you know the availability and cost of housing at various socioeconomic levels? • Do you know the availability of quality K–12 schools? • Do you know the regional cultural differences if a domestic move? • Do you know the national cultural differences if an international move? • Do you know the adequacy and availability of public transportation? . tool and noted who the best performers on these teams were” [interview, June 20, 2001]. The long-term effect of this innovative MOVING AS THE MARKETS MOVE 225 226 RESIZING THE ORGANIZATION approach. plant closing. The change required to support the business MOVING AS THE MARKETS MOVE 227 228 RESIZING THE ORGANIZATION plan might have an impact on the number of people required by the various. examining the roles HR leaders can play in moving their organizations forward. The model also can serve HR leaders as an audit tool for measur- ing the success of the HR function in an organization.