President's Letter
Downsizing Is Here To Stay
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| Bill Ayers |
| President & CEO |
| Tel: 212.889.7788 |
October’s payroll numbers showed that U.S. employers increased hiring at the fastest rate in seven months. But in the jubilation over that good news, as well as the upward revision of the August and September numbers, some significant job-market news may have fallen off the radar screen.
According to a recent survey, employers announced plans to cut nearly 102,000 jobs in October, making September-October 2004 the worst two months for layoffs since January-February 2003. With more than 826,000 announced cuts through October, we could cross the one million mark for the fourth straight year.
These cuts seem to have caught some HR professionals by surprise. As we spoke with our colleagues in human resources earlier this year, we asked those who generally confide in us whether they saw any significant downsizing coming. The answer was “no.” So what happened? Aren’t we done with downsizing?
Downsizing is here to stay, in good economies as well as bad. That means outplacement is also here to stay, because it is now an expected, institutionalized part of the exit package. At The Ayers Group, we are currently seeing an uptick in outplacement volume from a variety of industries and for a variety of reasons.
Why hasn’t downsizing gone away?
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Companies are constantly retooling, developing new practices to keep their human resources fresh and bring in needed skills and reorganizing departments/divisions or breaking down barriers to improve efficiency, foster innovation, and achieve competitive advantage.
M&A is part of the globalization strategy for many corporations, but entering new markets doesn’t always go as anticipated. Some foreign banks, for example, are finding that the U.S. market isn’t what they expected. As a result, they are closing businesses and practices on a national basis. We recently worked on an engagement in Atlanta where the company recognized that a business unit wasn’t meeting the mark and eliminated 250 positions without transitioning any employees.
- Everyone says we’re in a good economy, but it’s not that good. The first half of the year was positive, but many companies are falling off their numbers in the last half of the year. CEOs need to show a profit before year-end and that means cuts. Unprofitable units are being downsized.
Some organizations didn’t expand as quickly as they would have in a booming economy because they were waiting for the outcome of the election. Some clients that were staffing at the beginning of the year have stopped. Some are finding they expanded too fast. In our hallways, we’re seeing the return of candidates who were with us for outplacement earlier this year and had landed successfully.
How do you avoid being caught off guard?
To make sure neither you nor your organization is unprepared, you have to be a good strategic partner to your business teammates. Don’t be lulled! Keep your eye on the forest, not the trees, and keep your ear to the ground. Being aware of what’s going on inside the business is critical to the success of all HR people—never more so than now, as Sarbanes-Oxley begins to mandate it.
What does it mean to be a good strategic partner.
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Be a client-driven executive within HR, which means doing your homework.
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Research your “client.”
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Understand the products and services.
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Know what the trends are in the industry.
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Be aware of the leadership and know who needs support through coaching, development, leadership training, or team building.
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Make sure the HR objectives are aligned with the business objectives.
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Play well to both your bosses: the HR manager and the line manager. At the end of the day, it’s the HR executive you report to who swings the weight but you have to know what both bosses want/need and then deliver. If you screw up with either, you lose. So you have to be on top of your game.
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When it comes to business building, be an architect not a journeyman. For one of our HR colleagues, the payoff for being a good strategic partner was promotion to head a corporate division. She was an architect—someone who understood the big picture and how HR tied in to everything.
Be there for your partners within a leadership role and you’ll change the direction they make in terms of growth and their commitment to human resources in terms of education, development, and training. That commitment extends to the exit process. There has been a sea of change in our world. As outplacement has become institutionalized, it has also become commoditized. But there are some companies that still have the same feeling about outplacement that we do. They want their people taken care of with classic, high-quality delivery of service. When HR is involved in the decision, that’s what happens.
As always, The Ayers Group is ready to meet your needs in staffing services and organizational development as well as outplacement.
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