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Downside of Downsizing: How to Know Cutbacks Are Just Around the Corner

Auburn, Aug. 16, 2002---The definition of downsizing is a reduction in the workforce or manpower within a company. When workforces are reduced, employees lose jobs.

Long before companies announce layoffs or terminations, warning signs usually abound. For example, rumors circulate that layoffs are in the works. There also may be items in local papers or in the news about the health or strength of company (or industry in general). A few individuals may have been terminated here and there; a shift or department is temporarily shut down; or the company adopts a salary or hiring freeze. All of these actions are clues or warning signs to watch.

"Every employee should maintain a high level of awareness during periods when positions are most likely to be eliminated," says Dr. Jacquelyn P. Robinson, an Extension workforce development specialist. General economic downturns, business slowdowns that are often seasonal, or the period following a merger or buyout, are the most likely times for workforce reductions.

During these periods, there are always warning signs that could jeopardize job security; and most fall into two categories: proximity driven or management driven, says Robinson.

Proximity driven clues are those that affect employees directly, giving them some degree of control. An unsatisfactory job performance appraisal, especially if raises are tied to it, having work constantly scrutinized or being excluded from informal team or office meetings may be signals that jobs are being targeted. Each of these clues, either separate or in combination, should send a message that something is wrong and employees should begin to take steps to protect their jobs.

An unsatisfactory evaluation, justifiable or not, may signal the beginning of the end. Couple a poor review and little or no pay raise with work being constantly examined or no longer being trusted, may be a serious sign the employer is laying the groundwork for termination.

Being on the "inside track" is an important part of performing a job well. Taking part in the politics present in every type of working environment is essential to remaining on top of the work situation. Workers suddenly left out of the chat in the coffee break room, not being invited to impromptu business lunches, and not receiving any new assignments, are subtle proximity driven clues that the excluded employee's job may be at risk.

Management clues are those that affect the executive level of company administration. Rank and file employees have little or no control over decisions at this level. One of the first signs that terminations or layoffs may be coming is a shakeup at the executive level. Key managers are replaced with new ones who do not fit with the mission and goals of the company.

"The risk involved in changing management is the trickle-down effect," Robinson says. "New leaders usually bring different management styles and a whole new set of priorities and goals. After all, their jobs --not those of the employees -- will be on the line if they cannot make a significant impact in the company's bottom line. This means that jobs may be slashed; departments may be eliminated; or company focus may change entirely. "

Employees may not be able to save their jobs if management is determined to cut positions. They can, however, position themselves in the event their jobs are threatened. If it looks like the company may be planning some type of restructuring or downsizing move, employees need to take decisive steps to cope with upcoming changes.

Source: Dr. Jacquelyn P. Robinson, Workforce Development Specialist, Alabama Cooperative Extension System, (334) 844-5353

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