Downsizing, rightsizing, layoffs, or whatever euphemism is used for it, the process is usually ugly and the results are often no better.
With global competition there is an urgency and importance of eliminating waste and reducing cost – and carrying costs surplus to requirements harms an organisation’s ability to survive. However, the quest for lowest internal cost has to be balanced against ability to execute – after all, you don’t compete on the basis of who has the lowest costs, but rather on execution and who actually wins the deals.
This involves having the right amount of the right intellectual talents to match the operational requirements and the business mission*.
Layoffs can unfortunately reduce costs at the expense of execution to the point where an organisation ceases to be able to survive in the medium or long term, and can eliminate people who carried vital skills or tacit knowledge – or even the ability to put explicit knowledge to work.
Part of the problem is a social one to do with attachment and motivation – several hundred thousand years of evolution have shaped us to assimilate and acculturate into groups of about tribe-size, and we put more into a work relationship and expect more from it than simply a zeroed balance-sheet on payday.
The slate isn’t really cleared each month, and we don’t really experience a layoff as just another business transaction. This is a good thing though, since people that put heart and soul into their work as a team are likely to execute far better than a similar sized and equally talented group who view their job as a strictly work-to-rule 8-5 affair.
It is important to protect the integrity of teamwork and commitment because without a sufficient level of teamwork no organisation can survive.
Another part of the puzzle is that it is frequently what staff know that is the core of what an organisation does and whether or not it can execute to achieve its mission. Unlike the Taylorite vision of workers as simple units of production, intellectual assets vary and to a large degree subsist entirely within the heads of the workers.
During one turbulent time in the IT industry, I watched as several staff members in a small specialist department of a large computer company were retrenched because their job titles seemed generic and the firm needed to reduce costs. Shortly after this, the sales department called up for specialist knowledge as part of a very large turnkey project bid – Unfortunately the firm had laid off the last remaining person who knew how to put together the security-management part of such a bid.
Nobody else had the relationships with the many different specialist sub-contractors, and nobody else understood the technologies, the terminologies, or how to put a viable security solution together for a multi-million dollar computer centre project.
As a result the firm was unable to submit a complete bid, and did not win a crucial tender.
I have seen this scenario played out many times over the years, and believe that in some instances, it was the salient mechanism in the collapse of the firms involved.
The medicine for this is a simple matter of fundamental KM practice – you need to know who knows what, and you need to know what knowledge is needed to deliver your organisational objectives. Being ignorant of either what intellectual assets are needed, or what you have, is a sure recipe for organisational collapse.
That is my story, and I am sticking to it
* I will deal with the issue of knowing what intellectual resources are needed to achieve organisational goals and acquiring them in another posting.
Matthew Loxton is the director of Knowledge Management & Change Management at Mincom, and blogs on Knowledge Management.
Matthew’s LinkedIn profile is on the web, and he has an aggregation website at www.matthewloxton.com
Opinions are the author’s and not necessarily shared by Mincom, but they should be.