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Dealing with Downsizing
An interview with Dean Rocki-Lee DeWitt

Rocki-Lee DeWitt, dean of UVM’s School of Business Administration, was a district parts manager for International Harvester in the early 1980s when a wave of downsizing hit the industry. Her memories of notifying an employee he had lost his job and six months later suffering the same fate herself are still vivid. “After going through that, I thought there’s got to be a better way to manage this,” DeWitt says. “That experience had a lot to do with why I study the ‘doom and gloom’ stuff.” DeWitt’s recent scholarly work has focused on the particular challenges downsizing presents for managers, often caught in the middle between top-level corporate decisions and the employees they supervise. Vermont Quarterly Editor Tom Weaver recently sat down with Dean DeWitt to discuss the impact of downsizing on society, business, and the workforce.

One writer refers to downsizing as the most pervasive, yet under-studied phenomenon in the business world. Would you agree with that?

Downsizing is pervasive in that no business or not-for-profit sector has been untouched by it. It is a component of organizational life as we know it. That said, despite the efforts of the press to suggest this is a relatively new phenomenon, people have lost their jobs involuntarily for as long as we’ve had businesses.

Perhaps what is different about what has happened over the past twenty years is that people have lost white collar jobs. I find it interesting that few worried whether or not we were studying the concept and reality of work layoffs back when it wasn’t affecting somebody who thought that by virtue of their education they wouldn’t be subject to being laid-off themselves.

With regards to downsizing being understudied, I actually think there is quite a bit of literature out there on it. It may be that what people are expecting is that we would come up with this magic pill that would stop organizations from having to use downsizing if we studied it more.

I do think there is a dearth of work surrounding building sustainable business performance, how you design an organization that is built in a way that allows it to staff to meet peaks and valleys in demand. Designing an organization that is flexible, there isn’t a lot of work on that yet.

Some suggest that downsizing has gone too far, fed by a sort of corporate anorexia, or that it’s become a way for executives to earn their stripes. What do you think?

I draw a distinction between what I would call good downsizing and bad downsizing. First of all, the humanist in me says there is no such thing as good downsizing. The notion that you can be performing well at work, but you could lose your job because of circumstances the leadership of the business should have been able to control…that’s just not palatable.

But if you’re a business leader and you’ve done everything you can possibly do to make that business work —such as going to a reduced work week, taking salary reductions, and sharing that from top to bottom — and it still isn’t working, then there may be circumstances where you just have to take that step. In order to preserve the future of this firm and the jobs that remain, you’ll have to reduce activity in one area and, unfortunately, that means letting some employees go. That’s downsizing done for the right reasons. It’s business-driven. It’s market-driven.

Do you think business leaders generally explore all of the options short of downsizing?

My sense is that the smaller the company, the more likely they are to explore those kinds of options. The more that they’re privately held as opposed to publicly held, the more they’ll explore those kinds of options. I don’t have data to back that up, but it’s an impression based on my conversations with these closely held businesses.

As downsizing has become a fact of life in the white collar world, what effects are we seeing on employee attitudes?

I think this is another area where more research could be done. I think there is a far more significant consequence to society than to business firms with downsizing. When I ask Vermont business leaders about their key challenges, what consistently comes up — irrespective of the industry or part of the state — is the difficulty of finding motivated employees.

They tell me that hiring people today is not like it was hiring their parents. Members of that generation could be on their deathbed, but they would still come to work and put the hours in. Today, somebody will call you at the last minute and say, “I had a really tough night last night, and I just can’t get in today.”

I’ve heard this around other parts of the country, too. And I wonder to what extent this generation of employees has observed what has happened to their parents and co-workers, in terms of downsizing and the inability to see the relationship between the performance of an individual and the selection of that individual to be laid-off, and they just think, “Let’s do unto the firm before the firm does unto us.”

How can we shift business practices and/or employee expectations to improve the situation?

I think it requires a re-thinking on both sides of the equation regarding what the new employment model looks like. We’re seeing more interest in employee ownership programs. Employees are saying, “I’ll work really hard, I’ll commit my energy, I’ll commit my creativity, but I want a piece of the action associated with this.” And, in turn, firms are saying, “This gives us an opportunity to share data with an employee on how the unit is performing, what the drivers of success are, and how individual action is related to the performance of the firm.” Again, you’re seeing more adoption of these kinds of models in the smaller or closely held firms.

Part of our responsibility to students is making it clear that there will be no guarantees when they get out there. They’re in charge of their own professional futures. They need to be continuously engaged in keeping their résumés alive and in managing their business networks. They need to be much more studious in how they add value and how they can make a difference and how it matters not only to the firm they’re working for, but to other organizations that might employ them.

That doesn’t mean they should be job-a-month wonders, but if they see that they’re topping out in the opportunities to continue to grow and use their skills in a particular organization, it’s their responsibility to see what else is out there.

Let’s say you’re a manager on a Monday morning following layoffs at your firm, what do you do to make the work environment as positive and productive as it can be?

A lot of how productive that work environment is going to be depends on how you managed the layoff and setting the stage for the layoff in the weeks prior. The workplace is a social setting. People attend to what is going on, not only because they attend to their co-workers, but also because how you treat others says a lot about how you’re likely to treat them in the future.

The more you’ve communicated, communicated, communicated why this is happening, what the criteria were, how the decisions were made in advance, the better off you are going to be.

Do businesses get the importance of lots of communications?

I think so. They’re understanding that they need to be clear, they need to be concise, they need to be consistent. And they need to just repeat it and repeat it and repeat it.

Recent research I’ve been doing suggests that there is an aspect of this that organizations are still struggling to get. And it speaks to that issue of how a manager behaves on the Monday morning after. In talking with managers who have been through just this situation, I find that how they behave depends upon their role in the whole downsizing event.

I’ve seen extremes — one where a manager was basically handed a list of people who were going to get pink slips, their last paychecks, and an escort out of the building on Friday, and the manager had no say at all. This frequently happens to people who are in supervisory roles. You have a work unit that you’re charged with, but the manager above you is making the choice without input from you as a supervisor. It’s a done deal. Then you get Monday morning and the remaining people in that unit are coming to you with questions.

In talking with these managers, I find that how they react is a function of whether they expected to be involved in the layoff decisions. You get some of them who say, “I wouldn’t have touched that job with a twenty-foot pole; they did what they needed to do.” That person is just going to read the script and if somebody presses her on what her role was, will reply, “I had nothing to do with this. The organization felt this was necessary.”

That manager needs to understand her co-workers aren’t going to be too happy, because part of what they expect their supervisor to do is represent their interests to the folks above them. All of a sudden, she may have a workforce that’s going to start trying to undermine her and question her legitimacy and authority. It makes work difficult.

Then you’ve got the supervisor who expected to be included, but wasn’t included in the decision making. She’s angry. Because now she’s in this role of having to explain to others what happened.

I try to coach managers to understand that you’re not always going to know how the decisions were made that affect your unit. The worst thing you can do in that situation is convey to your staff that you were out of the loop and didn’t know what was going on. You have to be able to explain why the organization did what the organization did and how that affects your unit. If you don’t understand that, then you need to ask your supervisor so you can provide that explanation when your staff comes to you with questions. That’s the phone call you better be making Friday afternoon or on the weekend.

Either way, that Monday morning is not pleasant.

Over the past twenty years has the business world’s handling of layoff situations improved?

I think there’s a lot more guidance and counseling on how to manage it out there, lots of workshops on managing the legal issues, a lot more expertise in terms of outplacement. We’ve really seen a whole industry that has grown up to support firms that are doing these sorts of things.

Does the way in which it hurts for the employees who lose their jobs changed? No, people have not become inured to it. You go to work, you bust your butt, you think you’re doing the best you can do until you’re told differently, and lots of time our performance management systems don’t tell you you’re not doing a good job until you’ve been handed the pink slip.

In addition to working with firms coping with downsizing, another aspect of my work has been helping start-up businesses. Personally, it helps me keep my equanimity. And some of the things I’ve learned about how firms get sideways and business leaders end up with their backs against the wall are helpful to know when you’re starting up a business. The hope is that knowledge can help new business leaders avoid falling into the same situation.

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