Surviving the Downsizing- Ethical and Economic Considerations

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DOI: 10.1177/019263659708158810 1997 81: 62NASSP Bulletin

Gerri PerreaultSurviving the Downsizing: Ethical And Economic Considerations

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F E A T U R E S

Surviving the Downsizing: EthicalAnd Economic ConsiderationsBy Gerri Perreault

Gerri Perreault is director of the Leadership Studies Program at the University of Northern Iowa,Cedar Falls.

Administrators of schools that must downsize need to attend to the

people who remain after the layoffs have occurred as well as the peo-ple who are terminated. What are the ethical considerations of fairnessand honesty in this situation, as well as the economic considerationsof cost effectiveness in the delivery of services to students?

hen downsizing through reduction in force (RIF) is necessary,~~J~~ school administrators face tough decisions. The education jour-w V V nals devote a fair amount of discussion to this issue, yet the

focus tends to be on the people being terminated. The trauma that termina-tion brings to those terminated is well-recognized and documented (e.g.,Costello, 1991). Less noticed is the trauma and stress that results for thosewho remain, although Oehm (1991) notes this issue.

Defining the TermsThe terms &dquo;downsizing,&dquo; &dquo;reduction in force&dquo; (RIF), and &dquo;layoffs&dquo; are notsynonymous. Downsizing is the broadest term and refers to reducing thesize of ones organization. Downsizing has to do with &dquo;getting smaller inten-tionally&dquo; and &dquo;can be seen as part of a continuous corporate improvementphilosophy&dquo; (Singer, 1994, p. 7). Reduction in force refers to reducing thenumbers of ones staff. Layoffs have to do with temporarily laying off orpermanently terminating members of ones staff. Layoffs are only onemeans to downsize.

Once an organization downsizes by laying off staff members, theprocess may result in a number of responses in the people who remain.Whether the layoffs occur in education or business, a typical scenario maybe as follows (Collins and Nelson, 1983; Dahlberg, 1991; Oehm, 1991; Cox,1992; Noer, 1993; Byrne, 1994a; Smith, 1994). People fear they may be next,

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especially if they have not been told how the decisions were made or if theyperceive the process as unfair. Morale goes down. Some feel relief but also feelguilty for having been spared. Some feel a sense of loss and grief over the lossof co-workers, friends, and a pre-downsizing identity as a safe family.

People scramble to do the work of their co-workers and struggle tofind information they need in the files of laid off co-workers. Backstabbingincreases as people try to position themselves to avoid being cut in the nextwave of layoffs. Blame-shifting increases and risk taking goes down. Stresslevels increase because of loss and increased workloads. Company loyaltyand commitment decrease. This pattern of responsesis common enough that the term &dquo;survivor sickness&dquo;has been coined to describe it (Noer, 1993, p. 1).

In addition to these psychological and socialcosts experienced by survivors, the institution incurseconomic costs as well. Employees who remain mayhave low morale and less loyalty and therefore beless effective workers. Collins and Nelson (1983)warn that school employees who receive notices maymake increased use of sick and other short-term leave before their finalwork day. Depending on the terms of the union contract, unemploymentcompensation may begin as early as spring of the layoff year. In addition,layoffs may create insecurity in the minds of parents and students.

What Can the Principal do?What can you do as a school administrator? You can think in terms of twobroad modes: One anticipates what might happen, the other plans what youwill do in an actual reduction in force.

Anticipatory ModeCareful planning can help you position your school to avoid a crisis

situation or be better able to handle any downsizing that may be necessary.Your policies and procedures prior to RIF will be the major determinant inthe effectiveness of the RIF should you decide layoffs are necessary.Following are some considerations:

1 Have in place a clear policy covering the bases and the process for any1 potential RIF. The bases for layoffs could be seniority, low-valued work,inessential positions or functions, merit, or voluntary. The process shouldspecify who is to do the notification and the minimum period for notification.

Be sure the policy is communicated to all staff members and also duringthe interview process with potential hires (Winter, 1994).

Employees who remain

may have low morale

and less loyalty andtherefore be less

effective workers.


64

Develop clear performance standards and evaluation criteria so any merit-3 based layoffs can be more objective and be perceived as fair. Inadequatestandards and poor evaluation procedures leave a school district with no basison which to make layoff decisions. Under such circumstances, layoffs mayappear arbitrary to employees who remain. This can produce divisiveness aswell as generate grievances (Collins and Nelson, 1983).

Establish an employee development policy and plan. Encourage employ-~*ees to keep current in their field and develop networks, and provideopportunities for them to do this. The more employees have developed theirabilities and are able to see other possibilities, the less they will feel stuck andhopeless during a layoff.Consider carefully whether layoffs are the only answer if a RIF is neces-scary. Byrne (1994b) warns that &dquo;healthy companies that slash payrollsinstead of devising new game plans for growth are sending a demoralizingmessage to employees&dquo; (p. 69). About five years ago a study of corporatedownsizing by the American Management Association indicated that 83 per-cent said layoffs were the only alternative chosen (Singer, 1994, p. 8). Onecould expect similar results if a study were done of school districts.

Educators have used a number of alternatives

(Jacobs, 1982; Thomas, 1982; Collins and Nelson,1983; Costello, 1991; Mutter and Nichols, 1991). Theseoptions have included early retirement, unpaid or par-tially paid leaves, alternative employment leaves,giveback negotiations (benefit reductions), reassign-ments, and dual certification hires.

To keep costs down and decrease the needfor future layoffs, some educators have sought cre-ative solutions. For example, Kendrick (1991) made use of corporate exec-utive volunteers for the ongoing training of school administrators, a strate-gy that had the added benefit of informing the business community aboutthe schools. Participating executives often became public school advocates.

7be Layoff ModeThe plan you have in place prior to a RIF will have an impact on

how much of a crisis your institution will experience and on your ability tosurvive a crisis. The suggestions below are embedded in the considerationsdiscussed above. The more professionally prepared all your employees feel,the less threatened they will be during the layoff process. This is not to sayfeelings of fear and anxiety will vanish during this traumatic time, but theywill be lessened.

1. After the layoff decisions have been made, give careful consideration tothose being laid off. Carry out the layoffs in a manner that is fair to every-

To keep costs down and

decrease the need for

future layoffs, someeducators have soughtcreative solutions.


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one involved. How the layoff is done will be watched carefully by all staffmembers and will affect the views and reactions of those who remain. It iscritical to provide an adequate notice period to those being laid off, even ifit is greater than the one required by the union contract. The delivery of thisnotice can be humane or it can be impersonal and demeaning. An admin-istrator who makes personal contact with an employee being terminatedwill generate reactions quite different from an administrator who sends thesheriff to deliver notices (Winter, 1994).

A number of other considerations are possible for those laid off.Provide continuation of health benefits and severance pay. Provide out-

placement assistance or money for career search workshops or conferenceswhere terminated employees could make job contacts. Give laid off staffmembers a list of resources in the area, and allow use of office space anda phone until a new position is found.

Fairness is not only an ethical issue but an eco-nomic one as well. These suggestions may appear cost-ly, but any calculation should include the cost savingsthat will result from better performance by those whosurvive the RIF.

2. Communicate clearly to everyone the criteria and pro-cedures that were used for the RIF Layoff survivors &dquo;havean unquenchable need for information-before, during,and after reduction&dquo; (Noer, 1993, p. 2). The survivorswill be watching for any indication of lack of equity andfairness in the process and calculating how they may betreated later. If inadequate notice was provided to those who were laid off,the survivors will see this as an issue of fairness that might affect them also.Anxiety will be fueled if they believe they can be laid off on a momentsnotice and have little time to plan for a new position. The less fair theprocess, the more anxiety that will be generated by the RIF survivorsbecause they will feel their future is unpredictable.3. Avoid inequitable policies. Cutting only lower level employees, increas-ing the workload of those who remain, and giving bonuses only to top-levelexecutives is guaranteed to breed employee resentment and lower morale.If surviving employees are being asked to make sacrifices, the burdenshould be shared.

4. Communicate the status of those who remain. Lack of information fromthe top will result in creation of false information from below (rumors). Ifanother layoff is expected, state the criteria and procedures that will be usedat that time. Under conditions of uncertainty, which lack of communicationgenerates, staff may remain in what Oehm (1991) aptly titles an &dquo;unpro-ductive limbo&dquo; (p. 23).

How the layoff isdone will be watched

carefully by all staffmembers and will

affect the views and

reactions of those

who remain.


66

5. Acknowledge the pain. Trying to paint a rosy picture can result in peo-ple not feeling free to voice their negative feelings (Smith, 1994, p. 52).Noer points out the importance of acknowledging emotional reactions andpermitting grieving. Repressed anger and other emotions such as fear,uncertainty, guilt, betrayal, and distrust are widespread (1993, p. 3).

Communicate your understanding that it is normal for people whoremain to express a range of emotions. Offer assistance; offer to meet withthem or specify help that is available.

Caution: Depending on your workforce, you may want to try toavoid the word &dquo;counseling,&dquo; which some may perceive negatively as beingneeded only by those who are weak or mentally ill.6. Assess workloads carefully. Take time to assess priorities regarding thework that must be done. Cut back on unnecessary work. If employees areto assume tasks of laid off co-workers, provide training when it is needed.7. Whenever possible, involve employees in I21F decision making so they feelthey have some control. For example, they could beinvolved in deciding what work to cut and how to re-allocate other work.

A related concern are the consequences formid-level managers who are given the responsibilityfor the layoffs. Smith indicates clearly that the tolldescribed for employees applies also to the managersgiven the task of firing subordinates. An additionalfactor he discusses is that having to dismiss someone&dquo;assaults the ego of the person wielding the ax&dquo;(1994, p. 50). To have to let someone go is felt as afailure and defeat by some managers. Smith suggeststhat top administrators explain clearly the reasons forthe cutbacks, demonstrating that the necessary cutsare not the result of inadequacies of the manager.Winter (1995) points out the usefulness of explaining that the RIF procedureis being followed.

Similar to advice given above for survivors in general, Smith (1994)suggests that the pain mid-level managers might feel should be acknowl-edged. Usually restructuring is presented positively as an opportunity forthe organization, but this positive emphasis may create &dquo;a taboo againsttalking about the other side of the restructuring. It doesnt give people per-mission to say, This is hell&dquo; (p. 52).

Implementing a fair layoff and survivor process is both ethical andpractical. Helping your employees survive a RIF will help the school thrive. -B

Depending on yourworkforce, you maywant to try to avoid

the word &dquo;counseling,&dquo;which some may per-

ceive negatively as

being needed only bythose who are weak or

mentally ill.


67

ReferencesByrne, John A. "Belt-Tightening the Smart Way." Business Week/Enterprise, 1993.. "The Pain of Downsizing." Business Week, May 9, 1994a, pp. 60-68.. "There Is an Upside to Downsizing." Business Week, May 9, 1994b, p. 69.Collins, Philip, and Nelson, Dorothy Q. "Reducing the Teacher Workforce: A

Management Perspective." Journal of Law & Education, April 1983.Costello, Donna Marie. "The Human Cost of Cuts." American School Board

Journal, September 1991.Cox, Craig. "On the Firing Line." Business Ethics, May/June 1992.Dahlberg, David. Presenter of workshop on downsizing, College of St. Catherine,

St. Paul, Minn., Spring 1991.Jacobs, Jan W. "A Review of the Facts: The Challenges of Reduction in Force."

NASSP Bulletin, December 1982.Kendrick, William. "In This District, Its All Business." The School Administrator,

October 1991.

Mutter, Davida W., and Nichols, W. Randolph. "When To Offer an Early Out."American School Board Journal, August 1991.

Noer, David M. "Healing the Wounds." Executive Book Summaries, January 1994.. "Leadership in an Age of Layoffs." Issues and Observations 3(1993): 1-6.Oehm, J. Kent. "Enhancing Productivity: A Structured Approach to Downsizing."

School Business Affairs, September 1991.Singer, Andrew W. "Downsizing and Layoffs: A Comparative Analysis." Ethikos,

January/February 1994.Smith, Lee. "Burned-Out Bosses." Fortune, July 25, 1994.Thomas, Richard E. "Staff Reassignments/Reductions as an Alternative to Layoffs."

School Business Affairs, September 1982.Winter, Floyd. Conversations with author. November 22, 1994, and January 9, 1995.

So Much Effort, So Little ChangeHow can we spend so much time, money, and rhetoric on public educationwith so little to show for it? Why do taxpayers feel disenchanted with thenations schools? And, why do policymakers continually promise to findthe cure for the ailing education system while making relatively littleprogress?

Quality Counts, the first annual Education Week/Pew report on thecondition of public education in the 50 states, suggests a number of pos-sible answers.

Quality Counts is available from Education Week; calt (202) 467-8344.


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Surviving the Downsizing- Ethical and Economic Considerations