Resizing The Organization 25 ppt

generated, and staff redeployed to ensure the organization retains
its competitive edge and market position? What are the implica-
tions for people in organizations—people who come to work every
day, eager for the opportunity to excel, loyal to the company, giv-
ing back in return for recognition and reward? What steps should
be taken as shifts occur, when, and by whom? And why? This chap-
ter is intended to help you find the answers to these questions.
An Approach to Planning
Using an HR planning approach that builds on the organization’s
business planning process can help protect against sudden and un-
planned swings in staffing levels or aid in the execution of swift re-
deployments as was evident in the aftermath of the World Trade
Center tragedy. Planning is a common business tool. Although
there are sophisticated and complex processes available, the plan-
ning approach we have used in several business settings is a simple
one that does not require an army of staff to make it work. It has
four key thrusts:
1. An environmental scan
2. Identification of the business issues facing the organization
3. Development of courses of action the business will undertake
to deal with the issues identified
4. Development of the HR plans and strategies to facilitate suc-
cessful implementation of the changes in the business
Environmental Scan
An environmental scan facilitates the organization’s examination
of the external threats and opportunities impinging on it, as well
as review its internal strengths and weaknesses. This is sometimes
referred to as a SWOT (strengths, weaknesses, opportunities, and
threats) analysis. This scan can be a lengthy, formal, research-based
process, using national, regional, and local labor market informa-
tion, as well as industry, market, and product trends. It can be de-

rived through focus groups, or it can employ any combination of
data-gathering techniques. We use a structured interview approach
with the senior management team and their direct reports in small
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222 RESIZING THE ORGANIZATION
groups or one-on-one, whichever will be the more effective with the
organization. We have provided two approaches to developing an
environmental scan in Exhibit 10.1: a macro approach and a struc-
tured interview approach. The macro approach works well as part
of a strategic planning process where the facilitator can help the
group explore and probe for information quickly. The structured
interview approach works well when there are fewer constraints on
time, and the group can spend several sessions developing detailed
information.
Identification of Business Issues
The second step in the planning process is to identify relevant busi-
ness issues facing the organization. John Coutts, retired president
of Peak Technologies, declared the organization is designed to ac-
commodate the market: “You organize around it, and must change
with it. The primary reason for resizing or restructuring an orga-
nization is profitability” [interview, June 22, 2001]. Many of the
threats and opportunities facing an organization may be revealed
during the development of its environmental scan. The identifi-
cation of the specific problems an organization is facing now or in
the immediate future will help determine priorities, as well as how,
when, and where to begin to take action.
The business planning questions in Exhibit 10.2 provide struc-
ture for the senior team to examine the business climate. They usu-
ally build on the data collected during the environmental scan.
When we were employed at First Interstate Bank, we would go off-
site periodically for a day with the senior management team to up-
date our environmental scan. Subsequently, we would come back
and use it to analyze the business climate, market share, and prod-

uct success and failure and then develop the business plan for the
next one to three years.
Developing Business Courses of Action
Following the development of the environmental scan and review
of business issues, the senior management team can begin to plot
the strategic implications for the organization in resolving any or
all of the issues identified and prioritized. For example, the team
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Exhibit 10.1. Environmental Scan Approaches.
Macro Scan Questions for a Focus Group
Analysis of External Environment
• What are three forces favorable to the organization?
• What are three forces unfavorable to it?
• What are the three most important future external forces—
favorable or unfavorable?
Analysis of Internal Environment
• What are our three key strengths as an organization (things we do
well)?
• What are our three key weaknesses (things we do not do well)?
Macro Scan Questions for a Structured Interview
Analysis of External Environment
• What is happening with the economy in general?
In the United States?
In countries where you have operations?
In countries whose economies could affect your operations?
• What is happening in your industry?
How is your competition faring?
What is happening in the industries that are part of your service
and delivery chain?
• What is happening in your market segment or niche?

What is your competitive edge? Are you retaining it?
What new opportunities abound?
Are you in control, or is the market in control?
What about your product pricing?
Can you gain an edge?
What actions, if any, would be prudent for you to consider?
• Where does 80 percent of your business come?
What economic factors might force changes in their buying
power?
What about demographics?
What else should you be thinking about?
Internal Strengths and Weaknesses
• What do you do better than your competition?
What is it about your people that allows you to outperform your
competition?
• What are your values?
How do you exemplify them?
224 RESIZING THE ORGANIZATION
Exhibit 10.1. Environmental Scan Approaches, Cont’d.
• How clear is your sense of direction?
• What are the good things about your culture?
• What competencies does your organization possess that will allow
it to survive?
• What is the depth of your talent pool?
What holes do you have in your pool?
• How strong is the management team?
Have you allowed for succession?
• What doesn’t work well in your organization?
What will it take to fix it? Can it be fixed?
• If the competition is gaining on you, what internal issues may be

causing your change in market position?
What do you need to do to stop that?
• How do your culture and values effect your productivity?
• How does your decision-making process effect your productivity?
Exhibit 10.2. Identification of Business Issues.
• Is there an increased demand for current products or services?
• Are we adding new products?
• Will we be expanding to new markets?
• Will we need to add cross-border operations?
• If we undertake a critical review of the cost-income ratio, will we
need to trim costs in:
• Production?
• Sales, advertising, or marketing?
• Administrative staff?
• Other areas of the business?
• Has there been a dramatic downward market or economic shift?
• Will we need to exit a line of business?
• Do we need to close operations in domestic or international
locations?
may decide to increase spending in sales, manufacturing, opera-
tions, or marketing with consequent increases in staff. Or it may
decide to cut costs to retain market position. There are implica-
tions for employees in either of these change scenarios. The HR
executive can play devil’s advocate in these sessions, reminding col-
leagues of the staffing, employee relations, and legal issues that
may arise in each of the scenarios under discussion. It does not
mean acting as the “personnel police.” Rather, HR should facili-
tate a strategic discussion and decision-making process on the
human side of the business.
The Americas Region of Standard Chartered Bank, headquar-

tered in New York City, came to realize that its strategy of decen-
tralizing certain banking operations to locate them closer to its
regional corporate banking centers was too costly. After a thorough
cost-benefit analysis, it was decided to centralize these operations
in New York and Los Angeles. HR moved on several fronts simul-
taneously, developing severance packages, scripts for small group
meetings, deployment of HR staff to each affected site, and out-
placement services for affected employees. A list of frequently
asked questions was devised and distributed to managers. We also
dealt with real estate and relocation issues. We moved quickly once
the business solution was decided, deploying our HR programs and
allowing the people affected to leave the company with dignity. We
helped them recognize that although the bank had made a tough
business decision with severe impacts on people, we had given se-
rious thought to the consequences on our staff. We did all we
could to assist them in making transitions in their lives as smoothly
as possible.
Another example of dealing with a business issue solving it with
people comes from Harold J. Meyerman, former CEO of First
Interstate Bank. He asserted, “Too often cost–cutting is solely top-
down. In looking at innovative ways to cut expenses, at First Inter-
state Bank, we set up ‘Tiger’ teams and asked each team where they
would cut costs. We took a bit of time and involved employees at all
levels to find expense reduction possibilities, and they came up with
some incredible suggestions. We also used these teams as an assess-
ment tool and noted who the best performers on these teams were”
[interview, June 20, 2001]. The long-term effect of this innovative
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226 RESIZING THE ORGANIZATION
approach to cost cutting was a tremendous boost in morale, team

spirit, a strong sense of caring about the organization, and im-
proved productivity.
Positioning Human Resource Leadership
HR leadership must take responsibility for moving expeditiously
to facilitate the changes in staffing resulting from the business plan
and develop the tactics necessary to make it operational. There-
fore, it is important whenever HR reviews current HR plans, pro-
grams, or policies that they are analyzed in the context of how
these plans will help or hinder the organization if it needs to
change its staffing strategy. For example, implementing a benefit
program that rewards longevity and seniority may run counter to
the organization’s need to be nimble and flexible.
Human resource leaders must have a keen eye for business im-
peratives affecting the organization and should be attuned to any
economic and regional turbulence that may signal a change in di-
rection. An example of an environmental signal is when labor
unions decide to take on industries that have little or no union rep-
resentation. With few exceptions, the banking industry is union
free. The senior management in most banking systems refused to
believe that such a thing could happen, until the Service Workers
International Union decided to attempt to organize one of the
bank card operations centers. Once this happened, it was amazing
how fast CEOs became receptive to the Remaining Union Free
Workshops we had been promoting. We conducted the workshops
and remained union free.
Human resource leaders are the change masters who must take
immediate action if there are signs of a problem on the horizon,
leading change efforts, anticipating what change means, and shap-
ing tomorrow. For example, the sudden success of the dot-com sec-
tor changed the way high-tech employees were recruited and paid.

On-line recruiting became commonplace, and so did huge signing
bonuses, enormous stock option grants, foosball in recreation
rooms, and the like. In order to be competitive, other business sec-
tors had to change their recruitment and compensation approaches
to remain appealing to high-tech candidates. Then, almost as sud-
denly, the dot-coms became dot-bombs. Organizations had to change
their employment strategies again, so they were not overrewarding
newly hired employees. Swift changes like these require HR pro-
fessionals to determine the consequences to their organizations
quickly and lead changes to keep them current.
David Ulrich (1997), a noted academician and business con-
sultant, has created a model that is helpful when examining the
roles HR leaders can play in moving their organizations forward.
The model also can serve HR leaders as an audit tool for measur-
ing the success of the HR function in an organization. In the
model, Ulrich describes four roles: strategic partner, administra-
tive expert, employee champion, and change agent.
A strategic partner understands the business, can diagnose the
organization, and design and build effective organizational struc-
tures. Human resources should be counted on to get the job ac-
complished and does not wait to be asked. The HR executive’s
ability to play this role and perform these tasks is critical to the suc-
cess of both planning and executing effective staffing change
strategies. The administrative expert acts as a relationship manager
to clients, understands the technical side of HR, and believes in
continual improvement. Maintaining close ties to the operating
units allows HR to be effective in assisting affected managers to pre-
pare their business cases for staff changes, their communications
to affected employees, and working with those who survive the re-
sizing efforts. The employee champion enables employees to con-

trol key decisions about how work is performed, as well as for them
to know where the organization is going and why. A clear, fair, and
equitable approach exemplified by HR leadership helps employ-
ees understand and buy in to the changes proposed. Finally, a
change agent leads the change effort. Facilitating the development
of the staffing strategies and their execution is where HR can
shine. It must shape the vision and ensure that the people strate-
gies employed fit the business case.
Aligning the Business Plan with
HR Plans and Strategies
Business planning may result in changing the organization. There
could be a layoff, a divestiture, a restructuring, a merger or acquisi-
tion, or a plant closing. The change required to support the business
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228 RESIZING THE ORGANIZATION
plan might have an impact on the number of people required by
the various lines of business. If the number of employees increase
or decrease, or if they are moved around within the organization,
a carefully thought out HR plan is essential. For organizations fac-
ing staffing flux, the ability to attract new employees, retain them,
and help them reach their potential is daunting. With the possible
exception of automated steel rolling mills, people are a critical
asset in organizations. They need care and feeding in order for the
organization to flourish.
Employees should never be viewed as a wasting asset, that is,
one that is used up in its entirety. If there is a need for a flexible
workforce, that must be an important part of the HR philosophy,
with a strategy for contingent staffing. All organizations will expe-
rience changes in staffing. It is important that the senior leader-
ship give serious thought to the relationship between staffing and

such business actions as these:
• Developing the existing lines of business
• Exiting current lines of business
• Entering new markets
• Adding new product lines
• Changing technologies
• Crossing new borders to enter markets
• Streamlining business processes
Questions that can aid this thought process are presented in Ex-
hibit 10.3.
It is important to develop staffing approaches and action plans
for each of the business strategies to be executed. Asking what im-
Exhibit 10.3. Questions to Aid in Analyzing the
Impact of Business Planning on Staffing Strategy.
• How will this action affect our long-term strategy?
• What will this action buy us in the short term?
• How will we determine how many to add or terminate?
• How will we determine who to add or let go?
• Will we ever be on this path again? If yes, what precedents are we
setting, and can we live with them?
pact the business strategy will have on recruitment, selection, staff
reduction, and staff redeployment is the first step in developing
the appropriate HR strategies to facilitate the success of the busi-
ness plan. Asserts Harold J. Meyerman, “You can’t human resource
plan your way to prosperity, but you can use the HR function to
raise strategic and tactical issues, and get to the heart of the peo-
ple issues in these transactions. By balancing HR planning with ef-
ficiency, you can achieve greater profitability” [interview, June 20,
2001]. When he was CEO at First Interstate Bank, Meyerman had
each of his executive committee members work together closely

every time the bank faced the challenge of entering new markets
with consequent increases in staffing or when it needed to down-
size or exit a product area. Because of this closely knit effort, we in
HR partnered effectively with our line colleagues to help them with
strategies and tactics that resulted in well-thought-out changes
with minimal disruption.
There are four major HR strategies to consider when aligning
HR strategies to business plans. Planning questions for each of
these that can facilitate analysis and planning are provided in Ex-
hibit 10.4.
Strategy to Increase Staffing Levels
There may be a need to increase head count, or add new skill sets
when developing the business, entering new markets, adding new
product lines, changing technologies, crossing new borders, or
streamlining business processes. If this is the case, HR strategies
such as competency assessment and individual skills gap analyses,
job postings, employee development, project assignments, or job
shadowing can be implemented. In addition, external recruitment
strategies such as job fairs, contract or part-time employment, and
job sharing can be used.
Strategy for Redeployment
Employees may be redeployed, that is, promoted, demoted, or
transferred throughout the organization, as a result of the business
issues identified. Redeployment may occur when specific busi-
ness units are eliminated, or when units may need staffing in-
creases due to new products or achieving full market penetration.
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230 RESIZING THE ORGANIZATION
Exhibit 10.4. Strategic Questions
Regarding Changes in Staffing.

Questions for Staff Increases
• What jobs? What skills? Where?
• What flexibility do you need in staffing levels?
• Will they be core jobs? Part-time? Contract?
• Are they permanent or temporary increases?
• Can or should the work be outsourced?
• How will you fill the jobs?
• Internally?
Can you promote from within?
Do you have to train or develop current staff?
Will you need to relocate staff?
• Externally?
Agencies and headhunters?
Contract recruiters?
Employee referrals?
Job fairs?
Internet or Web site?
• Are salary ranges and rates of pay competitive in the labor markets?
• Do you need to conduct quick surveys?
• Will there be incremental costs?
• Will you need equity adjustments?
• Are there union issues?
• Seniority or bumping?
• Potential for arbitration?
• Internationally—do you know enough about the local union to
frame a strategic approach to them?
• Will increased demand for products and services require possible
changes in locations?
• Do you know the labor supply for the specific occupations needed
in the potential new locations?

• Do you know the availability and cost of housing at various
socioeconomic levels?
• Do you know the availability of quality K–12 schools?
• Do you know the regional cultural differences if a domestic move?
• Do you know the national cultural differences if an international
move?
• Do you know the adequacy and availability of public
transportation?