The "use-by-date" of a CEO LO10094 ("")
Fri, 20 Sep 1996 20:34:08 +0000

Replying to LO10061 --

Rol Fessenden wrote in response to Dave's question on the success of
downsizing -

> I have done an exhaustive but informal literature search on performance of
> downsizers. The following are all true of 65% or more of downsizers.
> Their financial performance is worse than their competitors in their same
> industry.
> Their stock performance underperforms their competitors in the same
> industry.
> Their productivity -- key goal of downsizing -- does not improve.
> They end up downsizing again. And again. And again.
> Some companies have legitimately allowed their bureaucracies to swell
> during good times. Howeever, downsizing has been shown not to work as a
> solution to productivity and profitability woes. On the other hand, in
> difficult times, some companies can see no other way to reduce their
> costs, and so they are still in a quandary. These companies may need to
> shrink, but they also need to be careful of swollen expectations. Other
> companies who down-sized "proactively" have found that it has generally
> worked to their detriment.

The problem in most downsizings may be that most if not all of the same
executives are in charge after the downsizing as were there before. How
can any company expect to change and become more productive if the bosses
who caused the problem are not excised or do not undergo a major shift in
approach? Most downsized companies use top-down command and control and
have no idea how to stimulate self-control by individuals through their
own values guided and led by a supportive boss -- like Rol has
demonstrated to us in numerous posts. Very few people know how to create
an environment which supports an LO from one which does not and that is
what is needed in businesses on the way down.

Dunlap of Scott Paper fame and now attempting to turn around Sunbeam
pretty well changes out the top management in the first week or two. He
contends that the people below are always ready and willing to start
turning things around. He also contends that turning around normally
requires about a 35% downsizing because of bloated payrolls at all levels.
My associate who turned around four different organizations totally agrees
with Dunlap, but doesn't know enough to tell whether the agreement goes
beyond that to the tools to create an LO environment.

Any other ideas?

Regards, Joan

Joan Pomo The Finest Tools for Managing People
Simonton Associates Based on the book "How to Unleash the Power of People"
URL: (use caps indicated)


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