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					Downsizing: Layoffs/Closings



Introduction                         Leadership Examples
Business Importance                  Sample Policies
Recent Developments                  Awards
External Standards                   Resources
Implementation Steps

Introduction
Downsizing and layoffs, once phenomena associated mainly with
individual company distress or larger economic downturns, have become
permanent features of the global business landscape. This entrenchment
of job-shedding activity has been driven by a number of factors. These
factors include: more rapidly evolving technologies and business cycles,
intensified pressure to improve stock performance, and mergers and
acquisitions. At the same time, a growing body of evidence has shown
that companies often fail to realize anticipated gains from downsizing,
and nearly always suffer from substantial hidden costs. Employers
therefore have begun to understand that simply reducing headcount may
not be a strategy for long-term advantage. (For purposes of this
overview, "downsizing" - defined as a net reduction in a company's
workforce - also includes "layoffs," which can take place in one part of a
company concurrent with hiring in another part of the same company.)

Leadership companies recognize the myriad implications of downsizing
and take any of a variety of approaches to what has become known as
"responsible restructuring." Strategies can include adopting business
practices that avoid the need for layoffs, embracing training programs
that redeploy "redundant" employees to different jobs within the
company, and employing other innovative means to avoid or reduce the
need to downsize. When downsizing must occur, leadership companies
adopt practices that eliminate or reduce potential problems, including
open communications, fair severance benefits, transition services for
those being downsized, and adequate attention to "survivors" - the
employees left behind to work inside a downsized company.


Business Importance                                     Back to the top ^
Businesses are recognizing that there are hidden and often very
significant costs associated with layoffs and downsizing. This is
particularly true when job cuts are poorly planned and implemented, a
state of affairs common to companies seeking short-term results from
downsizing. At the same time, many companies are understanding that
significant benefits may be realized through strategies that avoid
downsizing and layoffs altogether, or carry out these activities in more
strategic - and, ultimately, less-costly - ways. Among the business



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rationale for responsible downsizing:

      Traditional downsizing doesn't achieve its goals. A wealth of
       evidence indicates that the benefits companies frequently hope to
       realize from downsizing fail to materialize or, if they do, are
       limited and short-lived. For example:
           o Cost Savings: While downsizing is intended to reduce a
               company's overhead, the savings frequently are less than
               expected or, in some cases, nonexistent. Research at the
               University of Wisconsin at Milwaukee showed that while
               nearly all Fortune 1000 companies downsized between
               1985 and 1990, fewer than half met their cost-cutting
               goals. A 1995 study by Watson Wyatt Worldwide found
               that only 46 percent of companies surveyed met their
               expense-reduction goals after downsizing, and fewer than
               33 percent met their profit objectives; only one in five
               enhanced shareholder return on investment.
           o Profits and Performance: These, too, are expected to
               rise following a downsizing, although this often isn't the
               case. The American Management Association, in its 1998
               Staffing and Structure Survey, concluded that firms that
               showed a workforce decrease in the 1990s are far more
               likely to report long-term decline in worker quality, product
               quality, operating profits, and shareholder value than they
               are to report a long-term improvement. Meanwhile, a 1997
               study by business school professors at the University of
               Colorado at Denver, which analyzed downsizing trends at
               Standard & Poor's 500 firms over a 12-year period, found
               that companies that downsize are generally no more
               profitable than those that do not.
           o Share Price: Downsizing often doesn't pay off in
               shareholder value, according to several studies. For
               example, a 1997 Wharton School of Business analysis of 52
               studies involving several thousand companies found that
               corporate restructuring had little if any positive impact on
               earnings or stock performance. The year Watson Wyatt
               study mentioned above found that only one in five
               downsizing companies enhanced shareholder return on
               investment.
      The "downstream" costs can be large. Several studies indicate
       that downsizing can have hidden and very significant costs that
       emerge over time. Among them:
           o Reduced Productivity: The morale and reduced
               productivity of employees that survive downsizing - those
               that represent the future of the company - are frequently a
               problem. They may be required to take on additional
               workloads and adapt quickly to new work situations, often
               in an environment undermined by reduced trust and
               increased uncertainty.
           o Loss of Key Talent: In a downsizing environment,
               companies often find that their key employees and top
               performers depart the company, stripping it of valuable



                                                                               2
            human capital, critical skills, and institutional memory. In
            some cases, downsizing disrupts or destroys the informal
            networks of employees that often contribute significantly to
            company productivity. For example, the Economist
            magazine in April 1996 reported on an insurance company
            whose claim settlements rose sharply following staff cuts in
            its claims department. Further investigation found that a
            few long-time employees who had lost their jobs had
            created an informal but effective way to screen claims,
            which disappeared after the downsizing.
        o Decreased Risk-Taking and Entrepreneurism: A 1995
            study by McGill University and the Wharton School of
            Economics found that "Downsizing seems to interfere with
            the web of informal relationships that innovators use to win
            support and resources for new products, and which helps
            mesh innovative activities with those of the firm as a
            whole."
        o Potential legal and administrative costs: Many
            companies find that the price of downsizing can be high in
            the costs of legal challenges, disability claims, and other
            unanticipated costs. For example, a 1997 survey of 300
            midsized and large companies by the American
            Management Association and CIGNA Corp. found that
            eliminating jobs can lead to an increase in disability claims,
            both occupational and non-occupational, particularly
            stress-related claims. The study also found that claims last
            an average of 25 percent longer than in companies that
            haven't downsized. A top executive at a large facilities-
            services firm quoted in Personnel Journal said that 90
            percent of the 600 claims, charges, and cases the company
            had open were filed following a termination.
   The benefits of responsible restructuring can be
    substantial. A large body of studies and company experiences
    provide compelling reasons for companies to seek alternative,
    more responsible means of managing workforce size and
    allocation. Among the benefits:
        o A more flexible, performance-oriented workforce. A
            number of successful companies attribute much of their
            success to having created a culture in which employees
            feel valued and empowered. A common element to these
            companies' cultures is an implicit or explicit company
            commitment to long-term employment. For example,
            motorcycle manufacturer Harley Davidson has made it
            clear to employees that they needn't worry about
            unemployment if they come up with an efficiency measure
            that reduces labor costs.
        o Adapt to changing conditions. Many companies that
            downsized have found themselves at a competitive
            disadvantage when market conditions required additional
            employees. By contrast, companies that engaged in
            responsible restructuring practices have found it easier to
            bring back former employees and hire new ones during



                                                                             3
              business upturns. For example, the goodwill created by a
              generous severance package offered by Aetna Inc. when it
              closed a facility in Kansas City allowed the company to
              bring back former employees when it encountered
              problems recruiting staff in other cities. Similarly,
              Lancaster, Pa.-based High Steel Structures went to great
              lengths to preserve jobs at one plant. When the market
              rebounded after six months, the company's commitment to
              its employees paid off, enabling the company to maintain
              morale and job skills (as reported in the Sloan
              Management Review).
          o   Preserve good relations with stakeholders. Some
              companies have suffered public relations problems as the
              result of employee cutbacks, or have found themselves
              bitterly unpopular with their local communities when
              downsizing is handled badly. But companies that have
              downsized responsibly often are rewarded by positive
              media support and the cooperation of unions and
              community groups. Another interested party may be
              investors. Since 1996, CalPERS, a large institutional
              investor, has stepped up efforts to persuade companies it
              invests in to reduce layoffs and improve employee
              relationships.
          o   Maintain diversity. Downsizing, particularly if not well-
              planned, can hit individual demographic, gender, or racial
              groups hard, undermining years of a company's efforts to
              improve its diversity.


Recent Developments                                      Back to the top ^
Downsizing has become an entrenched feature of the global business
landscape, even in strong and growing economies. At the same time,
companies are achieving a better understanding of the links between how
they implement downsizing and their ability to achieve sustained
commercial success. Among the significant developments:

      Downsizing Goes Global. The combination of industry
       restructuring, regional economic fluctuations, the spread of free
       enterprise, and shifting market demand has led to downsizing and
       layoffs in all parts of the globe. Former Soviet bloc countries are
       grappling with downsizing issues as they privatize industries and
       shrink bureaucracies. China, as it moves to revitalize its centrally
       planned economy, is expected to conduct one of the largest
       downsizing exercises in history as state enterprises privatize.
       Mergers and acquisitions in the U.S. have continued at a steady
       pace in recent years, leading to downsizing and restructuring. The
       next wave of mergers will be in Europe, say experts, as
       globalization trends continue. The Asian economic crisis has led
       U.S.-based companies operating there to use outplacement
       services at a growing rate to deal with massive layoffs. Such
       trends have further challenged multinational companies' efforts to
       adopt fair restructuring policies and practices at the same time



                                                                              4
    that they have received increased pressure to do so from external
    stakeholders, including the media, investors, customers,
    regulators, and citizen groups.
   Changing Company Approaches. In recent years, companies
    have significantly changed their approaches to downsizing and
    layoffs. For example, a growing number of companies of all sizes
    and sectors are seeking alternatives to reduce layoffs or mitigate
    their impacts. In its 1998 Staffing and Structure Survey, the
    American Management Association reported that 41 percent of
    companies now offer voluntary separation plans, compared to 17
    percent in 1989. At the same time, mandatory cutbacks -such as
    demotions, downgrades, transfers, and shortened work days -
    have decreased dramatically. The benefits offered to those laid off
    also are changing. A 1998 study by the New York based consulting
    firm Manchester found that while U.S. companies are providing
    less-generous cash payments to laid-off workers, they are offering
    a broader array of non-cash benefits, such as retraining, résumé
    assistance, job-finding assistance, and extended health benefits.
    The study attributed this trend to company cost-cutting measures
    and to a tighter U.S. labor market, which gave employers
    confidence their former workers would quickly find new jobs.
   A Growing Emphasis on Training. While the traditional notion
    of lifetime employment - in which employees stay with a single
    employer throughout their careers - has all but disappeared, an
    increasing number of companies are placing an emphasis on
    lifetime employability by stepping up training programs. By
    enhancing their job skills, companies not only make their
    employees more valuable, but also make them less vulnerable to
    the impacts of being laid off. Fortune magazine, in its 1998 article
    on the best companies to work for in America, noted that
    "extensive training and development" is growing in importance
    "because it offers valuable benefits to both employer and worker."
    It reported that "the 100 Best are making major investment in
    employee education at multimillion-dollar facilities and through
    generous tuition-reimbursement programs." On average, the "100
    Best" offered 43 hours of training for each employee during 1998.
    But Fortune further noted that "Education is a sensible investment
    for employers only if they can hold on to the minds they have
    expensively trained. A partial but obvious remedy is a policy, or at
    least a strong bias, against layoffs."
   A New Definition of Loyalty. In addition to increasing training,
    companies are showing other signs of loyalty to employees,
    emphasizing long-term, if not lifetime, employment. A growing
    number are helping employees establish greater financial security
    that may be portable when they change jobs; helping employees
    achieve work-life balance; encouraging employee ownership; and
    providing incentives to employees to engage in "lifetime learning."
    For example, Intel Corp. has made all employees, not just top
    managers, eligible for its stock-option plan and spends 6 percent
    to 7 percent of it annual payroll on training, four times the
    industry average. In doing so, the company has been able to
    redeploy employees from declining business units to areas of high



                                                                           5
       growth, helping Intel avoid layoffs.
      Growing Labor-Management Partnerships. There are signs
       that employers and unions are finding mutual value in working in
       partnerships to avoid or mitigate the impacts of downsizing and
       layoffs. "Rather than protest [layoffs], unions are more likely to
       help laid-off workers make the transition to new jobs, often
       working in tandem with the very manager who did the laying off,"
       reported the New York Times in 1998. For example, Maytag Corp.
       announced a 1996 layoff at its Indianapolis facility nine months in
       advance and sweetened the severance package beyond what was
       required in its contract with the Sheet Metal Workers Union.
       Among other things, the company participated in a worker-
       management committee that supervised retraining and counseling
       and added overtime in its final months to help workers reduce
       debts and increase savings. Maytag's approach was contrasted
       with that of another company that had laid off 1,000 workers on
       short notice and suffered adverse publicity for its actions.


External Standards                                        Back to the top ^
There are few clear-cut external standards in the area of downsizing. In
the absence of such standards, most companies have sought guidance by
benchmarking peer companies or other leadership companies, and by
seeking ways to avoid or mitigate the harm of layoffs and downsizing.
Companies must also refer to the sometimes complex set of legal and
government policies in effect in their countries of operation and origin.

International Standards

The International Labour Organization, as part of its Tripartite
Declaration of Principles concerning Multinational Enterprises and Social
Policy, has a number of Conventions and Recommendations that address
downsizing. Chief among these is Convention 158, concerning
Termination of Employment at the Initiative of the Employer, which
makes provisions for reasonable notice of termination, appeal of
termination, and severance benefits. The three recommendations, while
not legally binding, are the best known and most frequently cited
international standards regarding terminations. They state that
multinationals, particularly when operating in developing countries,
should "strive to assume a leading role in promoting security of
employment, and provide reasonable notice of operational changes such
as mergers, takeovers, or transfers of production to appropriate
government authorities and employee group representatives so that the
implications may be examined jointly in order to mitigate adverse affects
to the greatest possible extent. This is particularly important in the case
of a closure of an entity involving collective layoffs or dismissals."
Employers also are urged to take such measures as offering reduced
hours, voluntary early retirement, internal transfers, and retraining in lieu
of downsizing. Finally, if layoffs prove necessary, employers are urged to
assist affected workers with retraining and a search for alternative
employment.




                                                                                6
Legal Standards

Companies around the world must comply with a wide variety of laws
related to workplace practices. In addition to observing the appropriate
laws for the countries in which they are operating, global corporations
must refer both to their home countries' laws as well as to international
standards. In most European countries, for example, companies must
comply with a relatively strict body of legislation that specifically
addresses downsizing. In the U.S., very little legislation specifically
addresses downsizing, though a large body of federal law protects
employees from discriminatory practices and a range of legal standards
may come into play when an employee is terminated. Additionally, class-
action suits may be filed on behalf of a group alleging discriminatory
termination.

Among the relevant U.S. laws:

      The Worker Adjustment and Retraining Notification Act
       (WARN) requires employers with more than 100 employees to
       give 60 days or more notice in advance of plant closings and mass
       layoffs.
      The U.S. Equal Employment Opportunity Commission (EEOC)
       has the authority to investigate complaints, to make a finding as
       to whether unlawful discrimination has occurred, and to seek
       remedy in court. The EEOC also is empowered to issue regulations
       and guidelines interpreting the law. These interpretations are not
       binding on either employers or courts, but usually are given
       considerable weight by both.
      Title VII of the Civil Rights Act of 1964 prohibits
       discrimination on the basis of race, color, religion, gender, or
       national origin.
      The Age Discrimination in Employment Act of 1967 protects
       workers who are at least 40 years old.
      The Americans with Disabilities Act of 1990 outlaws
       discrimination against people who are disabled.
      The Civil Rights Act of 1991 provides for financial damages in
       employment discrimination cases. This act has fueled a wave of
       wrongful-termination lawsuits, because it allows plaintiffs to be
       awarded not only reinstatement, back pay, and attorney's costs,
       but also compensatory and punitive damages, thus creating a
       strong incentive for both plaintiffs and their attorneys.


Implementation Steps                                      Back to the top ^
Company approaches to downsizing are many and varied and there are
few templates to follow. Following are some key issues to consider:

      Consider downsizing's full costs. Before implementing any
       layoffs or downsizing, it is important to carefully consider all of the
       costs involved - the direct costs as well as the indirect costs. Any
       decision to layoff employees should make a compelling case for
       how the job cuts will help achieve long-term company goals.



                                                                                 7
    Consider such costs as the potentially reduced productivity of
    "surviving" employees, the loss of institutional memory, the
    potential legal challenges, and the potential negative public
    relations that may result. Consider also the costs associated with
    several short- and mid-term business scenarios, including the
    potential need to hire and train staff several months or a year
    later when conditions improve.
   Examine alternative strategies. A variety of alternatives to
    downsizing may provide the same or additional benefits at a lower
    cost. These include:
        o deploying surplus workers to growth areas of the company,
            utilizing retraining and internal placement assistance when
            necessary;
        o making managers responsible for finding new positions
            within the company for downsized employees;
        o identifying temporary internal work arrangements at
            employees' standard salaries, even if the arrangements are
            for jobs that traditionally pay less;
        o establishing job-sharing or work-sharing arrangements
            among employees;
        o restricting overtime, enabling more employees to share the
            available workload;
        o establishing "employee exchanges," through which
            employees are "loaned" to customers, suppliers, or other
            local companies for temporary periods;
        o assigning employees to voluntary community activities that
            fit with the company's philanthropic goals;
        o encouraging voluntary time off and leaves of absence,
            during which employees continue to receive benefits and
            retain seniority;
        o implementing wage freezes or pay cuts that apply to all
            employees, including managers; and
        o implementing voluntary separation and early-retirement
            programs.
   Communicate fully and continually with employees.
    Research shows that employees with a full understanding of their
    industry and their company's situation feel less stress and more
    control, even if that knowledge suggests that layoffs may be
    inevitable. Make sure communication is clear, candid, and that
    employees are given the chance to ask questions and express
    their views. For example, ask employees about their ideas and
    suggestions for avoiding layoffs. Encourage them to participate in
    cost-cutting and efficiency measures, and to offer strategies for
    growth and the development of new markets that may alleviate
    the need for downsizing. In addition, make sure employees are
    the first to know about the downsizing by maintaining
    confidentiality about any layoff plans. Rumors and paranoia
    flourish - and productivity and risk-taking plummet - in an
    atmosphere of leaks and partial information. Avoid having
    employees learn about their own layoffs from news reports.
   Provide long-term notice: If layoffs are deemed necessary, give
    employees as much notice as possible. Many employers now give



                                                                          8
    notice a full year in advance, or even longer. When the rationale
    for layoffs is clearly communicated, and the package of severance
    benefits makes it clear that management values employee input,
    companies find that workers will remain productive and quality-
    conscious up until the end. More than half of the 531 U.S.
    companies that responded to a 1993 study on best practices in
    corporate restructuring conducted by outplacement firm Wyatt
    Company reported that early communications helped companies
    achieve profitability goals (59 percent) and expense-reduction
    goals (54 percent).
   Respect diversity. Keep the company's diversity in mind before,
    during, and after the layoff process. Before deciding who to
    downsize, analyze the make-up of your workforce - by gender,
    race, and age - with statistics broken down by department, job
    groups and salary grades. Then, before laying off employees,
    analyze similar data on potentially affected employees to be sure
    no particular group is disproportionately affected. Similarly, form a
    diverse, cross-functional team to plan and manage layoffs. At a
    minimum, such a team should include representatives from
    human resources, labor relations, operations, finance, public
    relations, community relations, government affairs, and legal
    affairs. Diverse, cross-functional teams have proven to be
    effective at addressing the needs of employees and external
    stakeholders, and presenting clear messages about why and how
    the company is downsizing.
   Stay on schedule: Announce a specific timeline for
    implementation of downsizing activities and transition services,
    and stick to it. Sticking to schedules and keeping promises helps
    preserve credibility and trust, both among affected employees and
    survivors.
   Share the pain: Senior managers should demonstrate that they
    are sharing the burden of downsizing. They should not announce
    management bonuses or salary increases during a period of
    downsizing. In addition to destroying trust among laid-off
    employees and survivors alike, this invites criticism from external
    stakeholders such as investors and community groups.
   Craft a fair package: Develop a fair benefits package that fits
    the needs of affected employees. In addition to severance, these
    benefits may include outplacement assistance; personal, financial,
    and career counseling; an allowance for job retraining, education
    costs, or small business startup; and assistance with medical and
    dental insurance coverage. Prepare employees for the tax
    implications of their severance packages, and consider
    compensating them for sizable one-time liabilities. In addition,
    help affected employees integrate benefits available in the public
    sector with those offered by the company. Private Investment
    Councils (PICs), State Worker Dislocation Units, local
    organizations, and federal programs such as the Job Training and
    Partnership Act can provide funds for and assist with job
    development, training, and placement. Consider also outside
    experts, who often prove to be extremely useful in assisting with
    transition services. Nonprofit organizations such as the Council for



                                                                            9
       Adult and Experiential Learning as well as a variety of for-profit
       companies can provide expert assistance, particularly in areas
       such as job placement and counseling.
      Consider external impacts: Anticipate and prepare for
       consequences outside the workplace. Layoffs frequently trigger
       sharp increases in child, spousal, and substance abuse.
       Companies often find they can assist most effectively in these
       areas by providing confidential access to counseling services, and
       by working with and providing extra support to social service
       organizations that in these areas.
      Redesign jobs: Accompany downsizing with thoughtful
       restructuring of the organization and changes in work design. The
       negative effects of downsizing are most pronounced when
       survivors are simply asked to shoulder the load of those who are
       laid off, without accompanying changes in job descriptions and
       duties. Involve employees in this process. Employees are more
       likely to feel valued and empowered within the changed
       environment when management invests in them through training.
      Avoid "survivor guilt": Anticipate morale problems and
       "survivor guilt" among employees who have not been laid off, and
       take positive steps to help employees to recommit and reengage.
       Articulate a clear vision for the company and the place within it
       that remaining employees will have, including opportunities that
       will be available to them. In addition, prepare managers for what
       is sometimes described as "terminator guilt," morale problems
       they may face after implementing a downsizing.
      Document the process: Document the planning and
       implementation of all layoff-related activities. Careful
       documentation of a well-designed process, particularly when it
       demonstrates fairness to workers and good faith efforts to assist
       them with their transitions, goes a long way toward protecting
       companies from litigation.


Leadership Examples                                     Back to the top ^
These "leadership" practices have been chosen as illustrative examples in
the area of corporate social responsibility addressed by this White Paper.
They are intended to represent innovation, higher than average
commitment, unusual industry practice or a comprehensive approach to
this issue. Periodically, the examples listed may be changed. If you wish
to share information about your company's leadership practices or
policies, please contact editor@bsr.org with the relevant information.
(Many of the company examples and policies cited in this report have
been verified and approved. Final approvals for others are pending and
information will be modified if necessary.)

These companies have demonstrated leadership in responsible
restructuring. In some cases this means they have pursued business
strategies that have allowed them to avoid layoffs. In other cases, they
have implemented layoffs in a "best practice" manner that has allowed
them to limit damage to their organizations, preserve integrity in the
relationships with both laid off and retained workers, and avoid damage



                                                                             10
to their reputations with outside stakeholders.

First Tennessee Bank has long demonstrated a strong commitment to
its employees in a dynamic industry experiencing a wave of mergers,
acquisitions, and downsizing. One company innovation was to provide
"golden parachutes" to all 6,600 employees to protect them from a
change in control (defined in several ways, such as a two-thirds change
in the make-up of the board of directors). Under such a scenario, all
employees would receive up to one year's salary, depending upon the
length of service - an average of roughly three times the severance pay
typical for this industry. First Tennessee's board views this benefit not
only as a way to formalize their commitment to employees, but also as a
"poison pill" that might deter potential suitors and enable the company to
remain independent in a consolidating industry. The company does not
have a formal no-layoff policy, but works hard to place employees in
other positions within the company if their jobs disappear. In one recent
year, the company laid off a total of only three employees. The company
believes strongly that its commitment to its employees has been a key
factor in its success - for example, that employee retention translates
directly into customer satisfaction and retention. The bank has been
highly praised and honored in the business press, and its stock and
profitability have remained high. In 1997, First Tennessee was ranked by
Forbes as the most profitable U.S. financial services company, based on
return on capital. (Large, Financial, United States)

Southwest Airlines, considered one of the most successful airlines in
the U.S., has grown consistently for 27 years, roughly doubling every five
years, and has never had to grapple with downsizing. While the company
does not have a formal no-layoff policy, it is nonetheless understood that
this is a key commitment of Southwest CEO Herb Kelleher, who has
focused company strategy on doing everything possible to avoid a
situation in which layoffs might be necessary. As part of that
commitment, the company has empowered employees to continually
reduce waste and contain costs, and has encouraged high productivity
through a generous benefits package and a corporate culture that
promotes fun and shuns bureaucracies. Southwest's no-layoff
commitment was tested in 1994 when the company acquired Morris Air.
It guaranteed every Morris Air employee an interview and hired three-
fourths of them; many of the others were part-timers unwilling to work
full-time. Fortune magazine ranked Southwest Airlines fourth on its list of
the 100 "most admired companies," noting that "employees love
Southwest, not excluding the 85 percent who are unionized workers."
(Large, Transportation, United States)

Siemans Nixdorf Informatica, the Italian computer manufacturing
subsidiary of the German conglomerate Siemans AG, proposed spinning
off its 18-person Information and Documentation Department into an
independent company in 1993. The move was largely a cost-cutting effort
by the company to streamline and concentrate on its core activities. One
option was to eliminate the department altogether - its services could be
readily outsourced - but the company decided not to reduce personnel or
disperse what it considered a valuable pool of knowledge workers. The



                                                                              11
other option, which the company opted to pursue, was to retain the
professional and entrepreneurial potential of the employees, but spin-off
the activity in a mutually advantageous way. All 18 employees were
involved in the planning; the parent company provided support during
the start-up phase, but had no financial participation. Since 1994, the
new company, ID & CM, has grown to 29 employees, added new services
and customers, and created an offshoot - ID & CM Consulting, devoted to
marketing and commercial information systems, Internet applications,
and electronic creation, management, distribution of documents. (Large,
Communications, Italy)

Reflexite, a small U.S. manufacturer of reflective materials for a variety
of uses, has a "Business Decline Contingency Plan" (BDCP), designed to
take the uncertainty out of the situation when faced with a downturn or
flat sales. The BDCP outlines four levels of severity, the symptoms of
each situation, the actions to be taken at each level, and the expected
results of that action. So, for example, at Stage I, with "sales below
budgeted sales but ahead of the same period in prior year," the plans
dictates that the company "defer some budgeted hires," "defer some
budgeted activities," "heighten awareness of current situation," "discuss
at staff meetings," and "monitor overall economic conditions." In the
middle stages, the plan calls for, among other things, soliciting ideas to
cut costs and improve productivity and efficiency; cutting overtime;
accelerating new product introductions; voluntary leaves and furloughs;
deferring lower-priority capital items; deferring raises; and reducing
hours. At Stage IV, the most severe condition, where Reflexite
"generates losses for a period of two quarters or more," the plan calls for
"salary deferments or reductions for balance of exempt employees," "trim
benefits," "early retirements," "voluntary resignation offering," and -
finally - layoffs. (Small/Midsize, Manufacturing, United States)


Sample Policies                                          Back to the top ^
Federal Express is one of a handful of companies that has an explicit
no-layoff philosophy. As described by the company:

"Federal Express is dedicated to the principle that its people are its most
important asset, as evidenced by its 'People, Service, Profit' corporate
philosophy. People are placed first deliberately, because putting people
first makes good business sense." [This is demonstrated by Federal
Express'] "commitment not to lay off employees except under the most
extreme circumstances as determined by the chief executive officer."
(Large, Communications, United States)


Awards                                                   Back to the top ^
BSR is not aware of any award and recognition programs related to
downsizing, although some of the "best places to work" winners have
been cited for their philosophies and programs related to downsizing. We
welcome submissions of other award programs on this topic; please
contact editor@bsr.org.
Resources                                               Back to the top ^



                                                                              12
The following list is not comprehensive. It is an illustrative group of the
many nonprofit, public sector and/or academic resources working with
the private sector in the area of corporate social responsibility addressed
by this White Paper. The resources identified below have been included
because they provide information or support that is relevant to
companies, and they are national or international in scope. Periodically,
the examples listed may be changed. At this time, the list does not
include for-profit resources. If you would like to provide information
about additional helping resources that meet our criteria, please contact
editor@bsr.org.
American Management Association
                                                                Back to the
http://www.amanet.org
                                                                     top ^

Organizational Overview: The American Management Association
(AMA) is a nonprofit membership organization that assists companies in
developing organizational effectiveness. AMA conducts its activities in
North and South America, the Pacific Rim, and East Asia, and in Europe
and the Middle East through its Management Centre Europe. It identifies
best management practices worldwide to provide assessment, design,
development, self-development, and instruction services through a
variety of print and electronic media and learning methodologies, all
designed to enhance the growth of individuals and organizations. AMA
offers a publications database with information on layoffs and downsizing
as it relates to the downsized worker, the company, and those workers
who stay on.

Products & Services: The AMA offers reports on pertinent topics such
as job growth and creation, which can be downloaded from AMA's
website. Books about downsizing, layoffs, and job growth can be ordered
directly from the web. Related articles also are available and can be read
directly from AMA's website.

      Annual Conference: AMA sponsors several conferences and
       seminars throughout the year relating to human resources and
       personnel issues.

Website: AMA's website is a valuable tool for searching for publications,
information about other sites around the world, or finding out about
conferences, seminars, and workshops.

Awards: N/A

Contact Information:

1601 Broadway, 8th Fl.
New York, NY 10019-7420
Phone: 212.586.8100
Fax: 212.903.8168
Email: cust_serv@amanet.org




                                                                              13
The Conference Board
                                                               Back to the
http://www.conference-board.org
                                                                    top ^

Organizational Overview: The Conference Board is a global business
membership and research group linking executives from different
companies, industries, and countries in its twofold mission to improve the
business enterprise systems and enhance the contribution of business to
society. A not-for profit, non-advocacy organization, it has more than
2,900 member companies and other organizations in 65 countries, 102
Councils of executive peer networks, and holds more than 100
conferences annually. Its economics research and analyses includes the
Leading Economic Indicators of the United States. Within its six main
areas of expertise, the Human Resources and Organizational
Effectiveness Branch of The Conference Board operates several useful
programs dealing with issues such as downsizing and layoffs.

Products & Services: The Conference Board has dedicated much
research and energy to the study of dealing with employee-employer
relationships. In addition to conferences and research reports, the
organization sponsors more than 20 councils to discuss human resources
issues; several deal with downsizing and layoffs issues, such as a council
for senior executives to discuss the unique challenges they face in dealing
with sensitive employee issues.

Website: The Conference Board website features a calendar of news and
conference events, program and product and services descriptions,
recent economic developments, a list of research publications, sample
articles from its magazine, and organization history and contacts.

Awards: Administers the Ron Brown Award for Corporate Leadership,
"honoring achievement in employee and community relations," and the
Best in Class Award to recognize corporate involvement in improving
primary and secondary education.

Contact Information:

845 Third Ave.
New York, NY 10022
Phone: 212.759.0900
Fax: 212.980.7014
Email: info@conference-board.org
Council for Adult and Experiential Learning
                                                               Back to the
http://www.cael.org
                                                                    top ^

Organizational Overview: The Council for Adult and Experiential
Learning is a national organization dedicated to expanding lifelong
learning opportunities for adults. CAEL helps businesses design and
administer learning programs for active employees as well as



                                                                              14
transition/learning programs for employees affected by downsizing. For
CAEL, the key to success for both groups is access to learning and good
advice along the way. CAEL also acts as a broker, or intermediary,
among businesses, adult learners, government training programs and the
education community.

Products & Services:

      Consulting on learning system design and implementation
      Administrating tuition benefits
      Learning services for outplacement/downsizing situations, helping
       both employers and employees deal with downsizing through
       individual planning, education and development
      Brokering relationships with government agencies and
       partnerships with community colleges and universities
      Coordinating a network of career and education advisors
      Group and organizational needs assessments
      Individual skill assessments/profiles
      Annual Conference: CAEL has an international conference each
       year to discuss adult education innovations, prior learning
       assessment, and workforce development issues. The 1999
       conference in Seattle celebrates CAEL's 25th anniversary; the
       theme for the conference is "Building the Future Through
       Learning." (http://www.cael/org/confwork/default.htm)

Website: CAEL's website provides an in-depth description of services
available, as well as an information request form for those interested in
finding out more. (http://www.cael.org)

Awards: N/A

Contact Information:

55 East Monroe, Suite 1930
Chicago, IL 60603
Phone: 312.499.2600
Fax: 312.499.2601
Email: chris@cael.org
Federation of European Employers (FEE)
                                                               Back to the
http://www.euen.co.uk
                                                                    top ^

Organizational Overview: Federation of European Employers is an
independent, nonprofit membership organization open to employers with
at least 250 staff in at least two European countries. The Federation
serves as clearinghouse of information for many work-related issues in
the European community.

Products & Services: FEE provides an annual European Employers
Handbook with details about requirements on the national level. FEE also
disseminates information about employee rights, such as the rights of


                                                                             15
employees whose companies have been merged or acquired.

Website: FEE's website features the complete directive on the acquired
rights of employees, as well as ordering information for the European
Employers Handbook.

Awards: N/A

Contact Information:

30 Cooper Rd.
Guildford, Surrey GU1 3LY
United Kingdom
Phone: +44.1483.450.890
Fax: +44.1483.450.0894
Email: enetwk@globalnet.co.uk
International Labor Organization (ILO)
                                                              Back to the
http://www.ilo.org
                                                                   top ^

Organizational Overview: The International Labor Organization (ILO)
is a United Nations-affiliated agency that promotes social justice through
the establishment of labor rights standards. A tripartite agency (workers,
employers and governments participate as equal partners), the ILO
formulates conventions on basic labor rights, including child labor,
freedom of association, forced labor, equality of opportunity and
treatment, and other standards regulating working conditions. As one of
the largest labor organizations in the world, the ILO is able to provide
information about downsizing and layoffs to a worldwide audience.

Products & Services:

      Data Clearinghouse: The ILO serves as a clearinghouse for
       worldwide labor information. It operates many databases that
       contain information about employment trends, layoffs,
       downsizing, and similar issues in the form of reports, press
       releases, and articles. The information covers regional issues, as
       well as more specific country-related issues.
      Annual Conference: Holds a conference each year in Geneva to
       discuss labor issues.

Website: The ILO's website offers many searchable databases, along
with conference and meeting information.

Awards: N/A

Contact Information:

4 Route des Morillons
CH-1211 Geneva 22



                                                                             16
Switzerland
Phone: +41.22.799.6525
Fax: +41.22.799.8570
Email: webinfo@ilo.org
Society for Human Resource Management
                                                            Back to the
http://www.shrm.org
                                                                 top ^

Organizational Overview: SHRM is an international professional human
resources organization with more than 115,000 members worldwide.
SHRM provides members with education and information services,
conferences and seminars, government and media representation,
publications, and on-line services. SHRM serves as a clearinghouse for
information regarding a broad range of workplace issues, including
downsizing and layoffs.

Products & Services: All products and services are available to
members; many also are available to non-members:

      Reports: SHRM regularly produces reports on downsizing and
       layoffs and how they affect employers, employees, and the morale
       of the company.
      Annual Conferences: Sponsors several conferences each year to
       discuss workplace/workforce issues.

Website: The SHRM website offers several searchable databases, as well
as information about job openings, conferences, and publications.

Awards: SHRM each year gives the Award for Professional Excellence to
the human resource professional who has creatively and consistently
benefited his/her company. SHRM also offers numerous awards for
excellence in the profession.

Contact Information:

1800 Duke St.
Alexandria, VA 22314
Phone: 703.548.3440
Fax: 703.836.0367
Email: shrm@shrm.org
US Department of Labor
                                                             Back to the
http://www.dol.gov
                                                                  top ^

Organizational Overview: The U.S. Department of Labor is the federal
governmental agency that deals with issues related to workplace
concerns. The legislative mandates and regulations produced to deal with
employers and employees cover a wide variety of workplace activities for
nearly 10 million employers and well over 100 million workers, including
protecting workers' wages, health and safety, employment and pension



                                                                           17
rights; promoting equal employment opportunity; administering job
training, unemployment insurance and workers' compensation programs;
strengthening free collective bargaining and collecting, analyzing and
publishing labor and economic statistics. Among the DOL's responsibilities
is dealing with employer/employee relations before, during, and after
downsizing.

Products & Services: The Department of Labor offers several helpful
resources for employers and employees dealing with a downsizing/layoff
situation. DOL maintains an extensive library of laws, regulations, and
advisory manuals for those looking for either legal statutes or literature
about downsizing.

Website: The DOL's website offers an extensive searchable database
and manuals can be downloaded directly.

Awards: N/A

Contact Information:

200 Constitution Ave. NW
Washington, DC 20210
Phone: 202.219.6666
Fax: 202.693.1453
US Equal Employment Opportunity Commission
(EEOC)
                                                               Back to the
http://www.eeoc.gov
                                                                    top ^

Organizational Overview: EEOC is the federal governmental agency
charged with promoting equal opportunity in employment through
administrative and judicial enforcement of the federal civil rights laws and
through education and technical assistance. For those looking for
downsizing information as it relates to job discrimination, the EEOC can
be a helpful resource.

Products & Services: EEOC offers information about federal
regulations, law enforcement, and how to file a charge against an
employer. Also, the EEOC operates a technical assistance program, which
assists companies in complying with federal law.

Website: The EEOC's website provides information about the technical
assistance programs, federal regulations, and an area specifically for
small businesses.

Awards: N/A

Contact Information:

1801 L Street, N.W.



                                                                               18
Washington, D.C. 20507
Phone: 202.663.4900
Fax: 202.663.4912

This White Paper contains information from a variety of public sources
such as newspapers, books, on-line services, and reports from various
NGOs and academic studies, as well as information shared directly by
companies. Where appropriate, we have made reference to the source of
information and sought approvals for its use. If you are aware of any
information in this White Paper that is inaccurate or not properly
attributed, or if you have additional information that could be helpful to
us as we update this report, please contact editor@bsr.org with the
relevant information. Thank you.

Click here for a description of Issues and related White Papers that BSR
addresses.




                                                                             19

				
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