Creating Abundance in Downsizing

Like many businesses, we have experienced a downturn in our order intake.  In June, one of our large military contracts was cancelled.  This resulted in around 20 excess team members.  To help calm the fears, I worked with my management team to develop a communication plan that focused on the facts and how we would work through this.  We listed the 'knowns' and 'unknowns' out through the end of 2009 including some new business opportunities that are planned for Q1 of 2009.  The picture basically showed a 6 month gap where our manpower levels exceeded our needs by 15-20 people.  I then shared the airlines example which showed the importance of virtue that we reviewed during our time in Ann Arbor.  I also pulled several recent articles on Toyota and how they handled similar situations.  As a management team, we agreed that we were committed to taking a short term loss (carrying 15-20 additional team members for 6 months) due to the long term benefits in employee morale and commitment.  Our stated commitment was to do everything possible to avoid layoffs through the end of the year.  We made the commitment not to lay anyone off during Q3 and stated that we would provide an update at the end of Q3 to review progress and what the future looked like.  In return, we asked for a commitment from each of them in doing several things to ensure that we emerged a stronger team (training, cross training for flexibility, special project focus…).  We needed to treat this like an investment in our team.

I must say that there was a great deal of anxiety as the entire management team delivered this message to all 250 team members. We stuck to the facts and were very open and honest about the situation and our commitment to work through this together.  I can honestly say that it was one of the most positive experiences (especially in discussing a negative topic…).  I was thanked by many team members regarding their appreciation of honesty and the commitment to work through this together.  They took a great deal of comfort in knowing exactly where they stood.

Last month, we reviewed the situation and provided updates on how we did in Q3 and what things were looking like for Q4.  We are able to avoid layoffs and will likely be back in a position of hiring in February of next year.  The feedback after this update was even more positive than the first.  I feel that working through this challenging event has really strengthened our team and helped to build confidence that we are committed to doing the right thing! 

• We have been able to utilize team members for various project work that had previously not been focused on due to resource constraints.

  • Interestingly, we learned of some untapped skill sets in some of our shop floor employees – ie. Accounting skills, computer/IT skills, safety knowledge, purchasing and tool management experience from the military…we have put them to good use!

• 3 employees came to me with a proposal to save several hundred thousand $'s/year by competitively quoting our NPM supplies and resourcing.

  • They were given the requested tools (phone, computer, floor space for inventory and time) to perform a 60 day trial.  Results so far are positive….

• Continuous Improvement Workshops – Several 1 week workshops focused on lean process improvements and creating value stream maps of key processes to serve as baselines for establishing improvement goals for 2009.

• Cross training to allow greater flexibility between product areas – allows reduction/elimination of overtime associated with significant swings in customer demand by product line.  We can more easily move team members to where they are needed instead of working OT in one area while we struggle with low demand in another…

• Increased ideas for cutting costs – more interest and ideas on ways to reduce our costs (shutting off lights, lowering thermostat setpoints, new recycling processes….).

It's amazing what honesty and actions that build trust can do.  When you provide respect and treat others as you would want to be treated, you build a sense of commitment that can overcome many challenges.  It has been a trying 6 months with some pretty tough business conditions (which we are not accustomed to in our industry).  I must say that I feel that our team has been strengthened through this experience and will emerge better positioned to take on future challenges that come our way.  I owe a great deal of credit to the programs in which I have participated.  They have truly helped me develop personally and allowed me to make the investments in helping my team develop.  Thanks for the support!