Is there an alternative to downsizing?


Robert M. Tomasko


... a Newsweek cover story labels the heads of AT&T, IBM and Scott Paper "corporate killers."

... a week-long front-page series in The New York Times drives home the human dimensions of the thousands of jobs being lost each week in America's major corporations.

... Presidential candidate Pat Buchanan touches a raw nerve when he decries the trendy practice of treating American workers as disposable commodities. Bill Clinton prods executives to do a better job taking care of employees. Labor secretary Reich proposes a new program.

... Baby Bell phone companies announce merger plans; downsizing expected to follow.

Job cuts have become everybody's favorite enemy. Now that some of the outcry is subsiding, it is a good time to consider what has been missed in much of the downsizing debate. The cuts themselves won't stop until business people realize it is impossible to shrink their way to prosperity.

· Downsizings only beget more downsizings
· Eventually companies run out of things to cut
· Corporations thrive over the long haul only when they grow
· Cost-cutting without a plan for growth is slow-motion suicide

Do businesses have a right to cut when times turn hard?
Of course they do. They also need the ability to quickly adapt to changes in the global marketplace - or else they'll become mirror images of the corporate dinosaurs inhabiting Europe, a continent of high unemployment and limited new job creation. Staffing flexibility is an important privilege. Keeping it means not abusing it. The current political climate threatens this needed flexibility if shedding jobs becomes a knee-jerk reaction to every business misstep.

Downsizings become addictive when corporations reward managers based on bottom line results - without considering at the same time where the profits came from. It's usually much simpler to earn money by letting people go, than by growing revenues through paying close attention to customers, providing innovative products, and devising shrewd marketplace strategies.

Earnings derived from downsizing give false comfort
Employees in cut-oriented companies work in an environment of fear. They are always looking over their shoulder, waiting for the next shoe to drop. They are seldom inclined to take risks, to create, to move the business forward. They can't; they are too busy hunkering down.

In some companies, an entire generation of management has been weaned on cost-cutting. Corporate incentives have overemphasized internal improvements - outsourcings and reengineerings - at the expense of not encouraging managers to look outward for opportunities in the marketplace.

Are people the problem, or the solution?
Too often managers treat employees as if they are the underlying cause of a business' problems - instead of the best source of its solutions.

· People are not just a cost to minimize.
· They are an asset that challenges managers to use them to grow the business.

This is the mentality of of growth leaders like Starbucks, Southwest Airlines and Levi Strauss. It is the edge MCI has over AT&T. It's the philosophy that once propelled IBM and Apple to strong positions in their markets, and is now their best hope for renewal. It is the secret Kodak, after many years of market stumbles and perpetual layoffs, has rediscovered.

Growth is the alternative to downsizing
If you talk to people at work in growth-oriented businesses, you quickly notice their sense of spirit and elan. They are driven by aspiration, not desperation. Their focus is on the future, the marketplace, and the changing needs of their customers. They are working for leaders who understand that a company prospers and grows only when the people working there do the same.

There is a way for industries to choose growth over shrinkage. It starts with understanding what the new rules for growth are in an economy unlike any we have ever experienced. Robert Tomasko's new book, GO FOR GROWTH: Five Paths to Profit and Success - Choose the Right One for You and Your Company (John Wiley & Sons, 1996), details five distinct paths that can move a business forward:

Breaking the Rules ... destabilize an industry to create new markets.
Playing the Game ... excel by satisfying existing needs in already growing markets.
Making the Rules ... dominate an industry by controlling its standards.
Specializing ... thrive in niche markets through careful focus.
Improvising ... profit from change by rolling with the punches.

This book drives home the point that there is no single best approach to growth for everyone. Each company needs to find it own unique path. So does each employee: a strong performer in one type of growth company may be a candidate for outplacement in another.

To learn more about these ideas - and the strategies that can help companies steer clear of downsizing - read GO FOR GROWTH.

© Robert M. Tomasko 1996, 2002



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