David Coldwell
It may be little consolation if you lose your job, but those at the top argue that downsizing is a management tool, to be distinguished from redundancy.
Redundancy occurs as a result of sudden large-scale economic crises, or when large industries are no longer able to compete, for example, the decline in the British shipbuilding industry in the face of Japanese technological innovation.
Downsizing tends to occur in times of relative economic stability and usually at the whim of senior management. In South Africa increasing numbers of companies, and recently the government itself, have jumped on the downsizing bandwagon.
Why should the unwritten contract of job security between employer and employee that had generated loyalty and commitment among the company men and women of yesteryear be so lightly passed off as antiquated baggage today?
Perhaps the most important reason has been a change in managerial mindset that places a low premium on loyalty and a high premium on the bottom line, as if the one is incompatible with the other.
Although there is evidence that the West is moving on from this “results- before-people” approach, South African management in many cases remains transfixed by it.
Utilitarianism, a popular ethical approach, suggests that good decisions maximise benefits to society and minimise harm. This philosophy appears to give most support to downsizing, demonstrated by biologist Garrett Hardin’s lifeboat analogy.
Hardin gives a vivid analogy of lifeboats filled with the world’s rich people being surrounded by poor people desperately trying to clamber on board. What action should the rich take? They cannot allow all the poor to come on board since the lifeboats would overfill and capsize. If they allow only a select number on board, this would remove the boats’ safety margin.
Hardin suggests that the only sensible solution is to ignore the cries for help and maintain spare capacity: to ensure the lifeboats remain afloat, people have to drown.
The parallels between Hardin’s analogy and downsizing are fairly clear. Management justifies downsizing as a means of keeping the organisation (lifeboat) solvent (afloat) and although this means retrenching some (allowing them to drown), it allows others (usually the majority) to keep their jobs (be accommodated on the lifeboat).
But if the drowning poor outnumber the rich, greater aggregate harm than benefit would be generated. In South Africa, the increasing number of retrenchments has generated a large and growing underclass of unemployed poor who are floundering in water in such quantities that they are threatening to capsize the lifeboats themselves.
This growing underclass of unemployed poor threatens business in general in South Africa and undermines the prospects of the survival of democracy in this country.
It would be quite wrong to suggest that business is solely or even primarily responsible for this state of affairs, but there is little doubt that companies can help alleviate matters by reducing their dependence on downsizing.
There are no easy solutions and the government’s macro-economic policies may ultimately need to be revised to remedy matters.
However, business can help. In the short term this could be by adopting tactical retrenchment-avoidance measures such as job sharing, retraining, freezing posts and redeploying employees.
Companies must also immediately adopt a strategic approach to human resources – something that has been largely absent in South African managerial practice.
Rather than sending out the odd lifeboat to keep the company afloat, senior management should be constantly updating the ship’s course, specifications and carrying capacity by adopting a strategic approach to people planning.
Careful human-resource planning will, in many cases, eradicate the need for sudden, drastic off-loading of staff with all the dangers this presents to our economy and society.
Professor David Coldwell is acting head of the department of business administration at the University of Natal
ENDS