Government Downsizing

 Cambridge Day February 2025

When will they ever learn: Downsizing?

In the 1990’s there was a major wave of downsizing in North America. Students of organization studied this process in some detail and came up with a series of recommendations about whether to downsize and the best way of doing so.

Downsizing alone was rarely successful in terms of achieving an organization’s long-term goals of competitiveness and profitability, though short-term cost savings were sometimes achieved.

There were two bedrock principles that were found to be essential if downsizing were to be pursued effectively. First, downsizing must be guided by a clear strategic plan that refocuses the organization on its core activities. Secondly, there must be a sharing of the pain by the senior management of the organization.

The call by Elon Musk, supported by the so–called President, Donald Trump, is the worst possible way of implementing layoffs.

They called for millions of employees to resign their offices in exchange for a few months extra salary. Any one can take it: no analysis of which parts of government needed to contract or which need to be reinforced. There was little constraint on who might or might not take the buyout. And, in the background, there was the implicit threat that people might be fired in the future; hopefully after an analysis of where the needs were. 

In this form of reducing payroll, the people who are going to take up the offer are the best and the brightest. They are the people who have deep connections with the environment in which they work and with the clients that their departments work. They are the people that can immediately move into decent jobs.

Departments will be hollowed out. The tacit knowledge based on their experience in the agency will be lost. The remaining officials will be handicapped in performing the work that needs to be done.

I would have expected Mr Musk, an experienced business man, and his advisors would have known this. Mr. Trump not so much.

It is time to pause, to engage in sensible analysis, and not to ride rough-shod over the Congress, and the laws, and the Constitution of the United States.

Oh, and I do not see Mr. Musk and Mr. Trump sharing the pain.