Then she handed out a sheet on which she had listed some of her own transition management concerns:
1.Apex has not had a layoff in the past twenty years. During most of that time, it was growing.
2.The one thousand workers from the two plants to be closed include some highly talented people whom the organization doesn’t want to lose.
3.The leadership team strongly favors an across-the-board cut in employment levels (“It would be fairer”), but she and some others share a concern that some parts of the company are already dangerously lean while others are “fatter.”
4.There is a perception among hourly employees that the senior managers, whose pay has always been generous, are not bearing enough of the brunt of the difficulties of the company they lead.
5.The basic announcement of the closure and downsizing decisions is scheduled to go out tomorrow in an email to all employees. A copy is attached:
To: All Apex Employees
From: R. E. Owens, President and CEO
Regarding: Measures Needed to Restore Profitability
In order to recover ground lost to foreign competitors, who have been able to dump their government-subsidized products on the American market, the executive team has decided to consolidate all manufacturing into the plants at Worthington, San Jose, and Little Rock. The plants in Stevens Mills and Grandview will be phased out over the next eight or nine months. During the same period, employment levels in the company, which have recently risen past the 4,000 mark, will be readjusted to a level around 3,200. At that level we will be able to maintain profitability if we can contain other costs. In the latter regard, all employees are asked to refrain from ordering supplies and equipment unless it has been personally approved by a member of the senior management team.
Apex has a noble tradition, but in recent years too many of our employees have forgotten that we must make a profit for our stockholders. If, however, we can tighten our belts and do more with less, we’ll not only climb back into the black, but we’ll also recover the market share that slipped through our fingers when we let ourselves get too comfortable.
I will be back in touch with you when the details of the plant closures and the layoffs have been determined. In the meantime, I am sure that I can count on your continued hard work and loyalty.
R. E. Owens
President and CEO
“We’re in a tight spot,” the human resources VP concluded. “Frankly, I’m not sure all the senior managers realize how tight it is. I’m looking to you folks to help me make the case for handling the human side of this whole mess with some care. And I’m looking to you to help me show that there is, in fact, a way to do it that doesn’t just drop everything on the people like a bomb and then leave them to take care of their own wounded.
“I’d suggest that you go back to your units and arrange to free up the next couple of days. Then I’d like you to look over the following list of suggestions that were made by different members of the senior management team and rate them on a scale of one to five.
“We’ll compare reactions in the morning and come up with some first steps. Go back to your office, postpone and cancel your meetings, and start to work on the list of suggestions.” (Do that now. Write a number to the left of each item on the list. Finish doing so before you continue.)
1 = Very important. Do this at once.
2 = Worth doing but takes more time. Start planning it.
3 = Yes and no. Depends on how it’s done.
4 = Not very important. May even be a waste of effort.
5 = No! Don’t do this.
1 = Very important. Do this at once.
2 = Worth doing but takes more time. Start planning it.
3 = Yes and no. Depends on how it’s done.
4 = Not very important. May even be a waste of effort.
5 = No! Don’t do this.
_____
Cancel the email and don’t distribute any communications until firm plans have been made for the details of the layoffs and plant closures.
_____
Rewrite the email to convey more sensitivity to the impact on the company’s employees.
_____
Set up a “manufacturing restructuring task force” to recommend the best way to consolidate operations and determine the disposition of the 1,000 excess workers from the plants at Stevens Mills and Grandview.
_____
Set up a “downsizing suggestion plan” through which everyone can have input into how the downsizing will be carried out.
_____
Sell the problem that forced the changes.
_____
Fire the CEO. He’s lost his credibility.
_____
Bring in all site managers and directors for an extensive briefing. Hold a no-holds-barred question-and-answer session. Don’t let them leave until they’re all satisfied that there is no better way to handle the situation.
_____
Make a video explaining the problem and the response to it. Hold all-hands meetings at each company site, with the site manager taking and answering all questions.
_____
Set up a site to give employees current, reliable information.
_____
Get the senior management team to agree to a one-year 20% cut in their own salaries.
_____
Order an across-the-board 20% budget cut throughout the company.
_____
Institute a program of rewards for cost-saving suggestions from employees.
_____
Plan closure ceremonies for the two plants.
_____
Use the time the company spends in the neutral zone to redesign the whole business: strategy, employment, policies, and structure.
1 = Very important. Do this at once.
2 = Worth doing but takes more time. Start planning it.
3 = Yes and no. Depends on how it’s done.
4 = Not very important. May even be a waste of effort.
5 = No! Don’t do this.
_____
Get the CEO to make a public statement acknowledging the tardiness of the company’s response to the realities of the marketplace.
_____
Make it clear up front that the company is headed into a protracted period of change.
_____
Explain the purpose of the announced changes, provide a picture and a plan for them, and describe the parts that people will be playing in them.
_____
Circulate an upbeat news release saying that this plan has been in the works for two years, that it isn’t a sign of weakness, that its payoff will occur within a year, and so on. In all communications, accentuate the positive.
_____
Allay fears by assuring workers that the two plant closures are the only big changes that will take place.
_____
Develop a career center to help people whose jobs are being threatened or lost because of the changes.
_____
Immediately set new, higher production targets for the next quarter so that people will have something clear to shoot for and, by aiming high, adequate output will be ensured even if they fail to reach the goals.
_____
Make a video in which the CEO gives a fiery “we gotta get lean and mean” speech.
_____
Analyze who stands to lose what in the changes.
_____
Redo the compensation structure to reward compliance with the new system.
_____
Help the CEO put together a statement about organizational transition and what it does to an organization. The result should be empathetic and concerned about people.
_____
Set up Transition Monitoring Teams in the Stevens Mills and Grandview plants as well as in other units that are significantly affected by the changes.
_____
Appoint a “change manager” to be responsible for seeing that the changes go smoothly.
/> _____
Give everyone at Apex a “We’re Number One!” T-shirt.
_____
Put all managers through quality improvement training.
_____
Reorganize the executive team and redefine the CEO’s job as a “team coordinator.”
_____
Give all managers a two-hour training on the emotional impact of change.
_____
Plan some all-hands social events—picnics, outings, dinners—in each company location.
_____
Launch a plan to buy the smallest of Apex’s domestic competitors to gain market share and a strong research and development group.
_____
Find ways to “normalize” the neutral zone and to redefine it in terms that have more benefit to both the organization and its employees.
As in Chapter 2, the following comments are not meant to provide “right” answers but to raise issues so that you aren’t overlooking the transition dimension of these changes.
Category 1: Very important. Do this at once.
Rewrite the announcement to convey more sensitivity to the impact on the company’s employees. The current one is a disaster. (Emails themselves are not the best way to convey information like this if an all-hands meeting is possible, though in a multi-site organization it isn’t.) The tone of the announcement disowns any leadership responsibility for the situation and leaves the impression that people haven’t worked hard enough. See the following items for ways in which the public announcement could be improved, but at the head of the list needs to be “more sensitivity to the impact on the company’s employees”!
Get the CEO to make a public statement acknowledging the tardiness of the company’s response to the realities of the marketplace. Whatever the CEO says, his credibility has already been compromised. Just a week ago he was telling a Wall Street Journal reporter that everything was going to be great. It’s very important to address this credibility problem directly and quickly—and to take responsibility for past mistakes.
Make it clear up front that the company is headed into a protracted period of change. This is the next step in the program of credibility rebuilding. It is tempting to be “reassuring,” and even to cut a few corners in an attempt to be. But that is very dangerous because the reassurance lasts only a little while, and what lasts a long time is the mistrust generated by false reassurances.
Sell the problem that forced the changes. To do this, you’ll first have to sell the transition-related problems to the CEO. Until he buys the problem, he isn’t going to buy the solution, which is talking publicly about what’s really going on. But until he’s ready to do this, he won’t be able to sell any of his planned changes.
Help the CEO put together a statement about organizational transition and what it does to an organization. The result should be empathetic and concerned about people. This depends, of course, on the CEO’s understanding of organizational transition. You may need to administer a little shock therapy to get the message across, and this will probably have to come from an outsider. In an organization that has hidden its head in the sand as long as this one has, it’s hard for inner alarms to be heard. If you can get the CEO to understand the transition-related problems, his open discussion will set the tone for the whole transition management effort. This is necessary to prevent the company sliding down the slope to disaster.
Bring in all site managers and directors for an extensive briefing. Hold a no-holds-barred question-and-answer session. Don’t let them leave until they’re all satisfied that there is no better way to handle the situation. These people are going to have to answer a thousand questions from their employees. They will have to feel the rightness of the actions in their bones. If they believe in what is being done, they will bring others along with them.
If they don’t, everyone is in trouble. Get this group on board immediately. Tell them the truth—even if some of it has to be withheld from others for the time being—and give them the chance to ask any and all questions. Don’t pull punches with this group, and don’t delay talking with them.
Make a video explaining the problem and the response to it. Hold all-hands meetings at each company site, where the site manager takes and answers all questions. Perhaps this belongs in Category 2, because it obviously takes some time—although a simple video of the CEO (or others in the executive group) talking about the problems and their solutions to them could be put together pretty quickly. The video is part of the communications effort to get beyond emails and present at least the semblance of the leadership’s personal communication.
Appoint a “change manager” to be responsible for seeing that the changes go smoothly. Even before the details of the changes are clear, it is certain that they will involve things that span different areas of authority or fall in no one’s area of authority. Someone must oversee these things—the regular lines of authority aren’t adequate. If the person appointed is someone with another position, some way must be found to relieve him or her from conflicting duties. The appointment could also go to someone who is taken out of his or her regular job completely and made the change manager for the duration of the changes. Realize, though, that this person acts as an overseer or a coordinator, not a boss.
Set up Transition Monitoring Teams in the Stevens Mills and Grandview plants, as well as in other units that are significantly affected by the changes. The leaders need new channels of upward communication—and need them immediately. The TMT is the easiest way to achieve this. Don’t sit passively and listen. Engage the TMT in a dialogue, try ideas on them, ask for their advice, push back if needed—and then act on what they tell you. If you don’t act, the TMT will quickly be tagged as just another management scam.
Category 2: Worth doing but takes more time. Start planning it.
Explain the purpose of the announced changes, provide a picture and a plan for them, and describe the parts that people will be playing in them. This is the heart of transition management, but it is impossible to do it right away. You can talk about the purpose (the why of the changes), but only the sketchiest kind of picture of the organization is going to come out of the changes. And the plan is only a plan for a couple of first steps. The Four P’s are the planning group’s agenda, but they are going to take months to work out in the detail necessary for their success. Besides, management first needs to concern itself with endings and neutral zone issues.
Analyze who stands to lose what in the changes. This is a critical task, but it is another one that takes time. It is not a onetime task, but rather an ongoing habit for people to develop as they plan and implement the thousands of changes that will be part of the big plan. (You might consider starting with what the CEO stands to lose by acknowledging that the response to the new market conditions has been dangerously tardy. Such losses may well stand in the way of his playing an effective leadership role, unless you can think of ways to help him let go.)
Give all managers training on the emotional impacts of change. Determining who’s going to lose what is just the first of many transition management tactics with which managers must become familiar. A brief training session, held as soon as possible, may be the best way to help people recognize that they have indeed lost something in these changes, that “grieving” is normal, and that it usually involves emotions like anger and depression, which are easily mistaken for “bad morale” and may even be punished.
Set up a website to give employees current, reliable information. You might put this in Category 1 because it is very important to provide fast, accurate, and reliable information. But don’t set up a site until you’ve created a reliable system to have it answered, to process the questions that it generates, and to return the answers to the questioners. Any communication that raises more questions than it answers is dangerous.
Set up a “manufacturing restructuring task force” to recommend the best way to consolidate operations and determine the disposition of the one thousand excess work
ers from the plants at Stevens Mills and Grandview. What faces Apex is not simply a task of closing down a couple of plants or laying off eight hundred excess workers. The danger is that those changes, so formidable in themselves, will preoccupy people to the point that they forget that these changes were necessary because their organization had allowed itself to maintain a status quo that was daily growing more obsolete. If Apex is to be revitalized, its manufacturing must be redesigned. That is the mega change, and it needs to be designed by the people who have to make it work. Hence the task force, made up of a combination of the brightest critics within manufacturing and representatives that now holds power. They will also need outside expertise, but no experts can do the job for them.
Develop a career center to help people whose jobs are being threatened or lost because of the changes. The one thousand people displaced by the plant closures have just run into a solid wall in their career paths. They need help in rethinking their careers. So do the people displaced in the larger company reorganization that will surely take place. If you provide them with career assistance, those who leave the company will take with them a positive feeling about the organization because it helped them find work elsewhere, and those who stay will be grateful for the assistance in redirecting their efforts inside Apex. Lacking such help, the “leavers” will be angry and talk down the company at every chance, and the “stayers,” bitter and frustrated, will undermine the company’s ongoing operations.
Managing Transitions Page 15