LO & Big Layoffs LO5702

Sun, 18 Feb 1996 17:40:24 +1300

Replying to LO5679 --

> I detect a strong anti-corporate bias -- or anti CEO bias -- that
> seems driven by distrust.
> Yes it is sometimes necessary to let employees
> go, a decision I don't think that managers or leaders take lightly. I
> think that there is a devil's choice sometimes, do I 'downsize' and
> save the corporation or keep everyone until I file bankruptcy.

One of the reasons is demonstrated within this paragraph itself - "...do
*I* downsize.....". Many organisations set sail into participative,
organisational learning waters - until things get tough. Then suddenly all
the power, decision making, and assumptions about who has the capacity to
solve the problem, get hauled back into the senior management enclave. As
this remains the prevailing experience, then we can scarcely be surprised
that a climate of general distrust prevails.

Consider a *congruent* CEO response to an organisational crisis that I
observed (in the USA by the way, not in NZ). Because of the organisation's
commitment all employees were fully aware of the company's circumstances
as the crisis developed. (One of the myths that the hype gurus perpetrate
is that LO's are unfailingly successful - an obvious absurdity to anyone
who genuinely brings a whole systems view to their thinking).

This employee knowledge made it relatively easy for the CEO to sit down
with the employee participative management groups and say "Here's the
problem. I can see no solution except to downsize. We have about six weeks
to make that decision. We have three weeks to come up with an alternative
strategy." They did, and it worked.

But an important part of the trust environment in which this exercise
occurred is that years previously - as part of the participative shift -
the CEO had worked with the employee participative groups to address the
acknowledged issue that 'one day we may have to get into layoffs for
reasons that none of us can control. Now how could we deal with that in a
particpative setting?' The answer had a number of components, which can be
summarised as:

Open book management

No secrets in a crisis

Participative processes to the bitter end

Collective generation of solutions

Continuous learning within the company to include systematic development
of employees to be flexibly employable elsewhere

Early interventions

The tough bit in all this - which is what paralyses many CEO's - is that
it involves effectively making a public announcement that there is a
problem long before conventional CEO culture would regard such an
admission as being prudent. In my view the core cause of the secretive
reflex is stock price paranoia. That particular predisposition is
antithetical to the principles of LO's, and therefore causes serious
breakdown in trust when it manifests itself.

What is interesting is how little global changes in this behaviour we can
find despite the *demonstrable* superior crisis management performance of
those that do change their approach

Phillip Capper
Centre for Research on Work, Education and Business
PO Box 2855
New Zealand


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