This document discusses strategies for downsizing with minimal impact. It notes that lower oil prices have led to decreased drilling activities and many layoffs in the oil industry. While downsizing has negative effects, communication and fair treatment of terminated employees can help reduce the impact. The document recommends engaging remaining staff through retraining, collaboration, and process improvement. It also suggests alternatives to downsizing like reducing salaries or allowing unpaid leave to manage economic downturns with less impact on employees and culture.

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Downsizing With Lesser Impact:
Due to the current economic situation with the lowering of oil prices, this has led to a decrease in
exploration and drilling activities. It is anticipated that this is a short term circumstance. However, it has
generated a significant negative impact on the employment scene. It has generated a large number of
workers being laid off, including a large number of contractors as well. This will lead to an increase in
unemployment. From the consumers’ standpoint, the lowered oil prices generate a positive effect on
spending.
Reasons for downsizing are:
- Oil price -- revenue and investment
- ROI to shareholders
- World situation due to the middle east
- Strategic directions change
- Mergers and acquisition leading to consolidation
- Restructuring and streamlining processes
- Re-assessment of workforce; their competence as they relate to the organization’s goals
The challenge for the workplace is the negative impact it has created. In the past during the boom time,
most companies have difficulties finding and hiring qualified staff. In addition, the focus was to engage
employees, leading to higher productivity and delivery of superior customer services. Under the current
situation, companies are turning around to let qualified staff leave. The better strategy would be to focus
on re-alignment of work and examine alternatives. Ultimately, one should have a better workforce plan,
and change strategy to manage this type of cyclical situation in light of the corporate Vision and Mission.
In order to do this with lesser impact, communication, building of trust and fair treatment of the
terminated employees, working with customers to deliver good customers services, and sharing of
information with the general public would be the key.
Engagement of remaining staff:
o Re-organization including re-training, re-evaluating career path, succession planning, etc.
o Involving staff through collaboration and seeking/sharing of ideas
o Re-engineering of work that may lead to process improvement, which may lead to cost savings
o Focus on research type of activities, which could be investment type of activities, may also lead to
marketing or business development
Experience had been positive through extensive communication as well as explaining the Vision of the
company as it’s related to the current economic state. This will require work on the management part.
The focus is on the cultural aspect, organization re-design as well as the time to review the workforce plan
in light of the strategic goals.
In order for it to be a great place to work, there ought to have trusting relationships between
Management and its employees. To quote Robert Levering, the co-founder of the Great Place to Work
Institute: “Trust is the defining principle of great workplaces – created through management’s credibility,
the respect with which employees feel they are treated, and the extent to which employees expect to be
treated fairly.”

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The downsizing implications are:
- Survivor syndrome
- Transition impact on employees, personal
- Company’s bottom line
- Ways to connect or redirect the company within the economy
- Focus on strategic priorities
- Focus on cost reduction
- Delay of projects
In the long term, this may lead to challenges related to the corporate culture, the focus of building
relationship, especially trust between management and employees. The longer implications could be:
- Turnover of the remaining talents
- Engagement – most employees will shift their focus in just providing their services only, but with
little or no loyalty to the company
- Stars jumping ship – just waiting for the proper opportunity to come along
- Trust of the workforce – this may lead to employees seeking more protection: changing the
employment or contracting relationship, moving toward more legalistic approach
The ultimate challenge for this type of impact is to manage the turnover cost, which could amount to one
to two times of voluntary employee’s departing salary due to training and productivity. This may also lead
to risks of employees taking some of the confidential data as well as process, or sabotages, despite legal
repercussions. Eventually, this will lead to a challenge to employees’ engagement and lowering of
productivity.
An organization may choose other means rather than downsizing, such as:
- Reduction of salaries & bonuses
- Conversion from FT to PT
- Job sharing
- Change of Benefits Plan
- Early retirement of staff
- Time off unpaid
- Job sharing
- Allowing staff to take extensive unpaid leave
- Take extensive vacations from the liability side of the financials even including forced vacations
- Reduction of hours of work
As a last resort, the approaches related to downsizing are:
- Legal – work within the legal framework. This may lead to minimal severance amount
- Voluntary Sabbatical or leave
- Hiring freeze
- Lending of employees to other organization(s)
- Reduction of overtimes
- Exit incentives
- Compassion with transitional services, and outplacement support

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- Communication within and outside
- Humanistic manner, especially during the actual event
All in all, there are other means to manage this economic cycle other than downsizing and laying off
human capital. Given the cyclical nature of the economy, one needs to focus on the engagement of
employees and get them to focus on the organizational goals.
For more information and assistance, please contact:
Peter CHUNG B. Comm., FCHRP
Managing Consultant
Royal Oak
Calgary, Alberta
Phone: (403) 617-7628
Email: geminihr@telusplanet.net