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Showing posts with label published oped. Show all posts
Showing posts with label published oped. Show all posts

Friday, February 7, 2025

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.

Sunday, December 8, 2024

Dr. Bhattacharya, Covid, Sweden, and the Future

 The nomination of Dr. Jay Bhattacharya to head up NIH reminds me that there was one country, Sweden, that tried to follow the principles outlined in the Great Barrington Declaration. That is, it tried to protect the elderly while allowing most other people to carry out their day to day activities unimpeded.


How did that work out? I think the results were mixed. Early in the pandemic, 2020, Sweden had over 1½ times the number of excess deaths(that is, deaths from all causes, including Covid) proportionate to the population than did other Scandinavia countries (Denmark, Finland, and Norway).  This is to be expected, as few measures were taken in Sweden to reduce the incidence of the disease in the general population.


However in 2022 with the introduction of vaccination, Sweden’s excess death rate was about ½ the rate in the remaining Scandinavian countries. Sweden reduced its excess death rate while the rate in the other Scandinavian countries increased. This is what the Great Barrington Declaration predicted: that lock-downs and other restrictions at the front end of the epidemic would result in additional excess deaths when the epidemic was over. It is too early to judge whether this long tail will continue.


 Finally, Covid deaths in Sweden, as opposed to excess deaths from all causes, over the whole course of the epidemic from 2020 to November 2024 showed Sweden doing badly: over 1½  times as many Covid deaths, proportionate to the population, as in the other Scandinavian countries.


We should note that Scandinavia as a whole, including Sweden, did better than many other European countries and much, much better than the USA where Covid death rates were higher than those in Scandinavia (leaving out Sweden). At the height of the pandemic, states controlled by Republicans had higher excess death rates than those controlled by Democrats.


As the threat of a new pandemic (a bird flu crossover to humans) approaches, we need to decide carefully which restriction over our behavior are necessary and which can be ignored. We must follow the data painfully gained from the recent Covid pandemic.


Appeared in Cambridge Day, Jan 2025

Friday, November 1, 2024

Tuesday, December 12, 2023

Friday, March 24, 2023

Downsizing 2022 style.

 You can find it here: Boston Business Journal: Downsizing.2022 style</p>

In case you are blocked by the firewall, here is what I wrote:


It is never a good time to get laid-off, the shock of being fired is traumatic. It is probably not assuaged by knowing that 10,000 others are being laid off at the same time, though it may be comforting to know that you are being forced into a labor market with a 3.5% unemployment rate as opposed to the 6%  rate of the early 1990's when downsizing became the managerial fad of the day. For those laid off by firms in the high technology industries (Amazon, Facebook (META), Microsoft.  It is also good to know that there is great demand for high technology workers in low technology firms as they adjust to the new realities of an on-line economy

In the 1990's when the first waves of downsizing occurred, it was clear that not many firms enjoyed the long term cost reductions that motivated lay-off in the first place – one estimate (Wyatt Company, now Watson-Wyatt) suggested that about 25% of downsizing forms benefitted. This because firms went about it by across the board cuts which are less effective than targeted cuts and by failing to consult employees which led to a failure to understand where the flab in the company ended and where bone and muscle began.

With such a low success rate, firms should consider alternatives before choosing layoffs: reduce or eliminate bonuses; in these post-pandemic days, reduce facilities costs by moving to at home work; and temporarily cut hours and cut wages and allow permanent downsizing to occur over time through attrition. This is much less disruptive to the firm which might otherwise suffer loss of important tacit knowledge, as seemed to happen in the disastrous, chaotic Twitter reorganization after the Musk takeover.

In undertaking downsizing, I think some firms may have learned the lessons proposed by organizational scholars, Wayne Cascio and Kim Cameron, for successful downsizing that they discovered after the downsizing events of the 1990's.  There were two major findings:

$                                  Downsizing should be undertaken in the service of a strategic shift; units compatible with the new strategy should be reinforced, units lacking such compatibility should be downsized.

$                                  Top management should share the pain by taking significant salary reductions for the year(s) layoffs were occurring. 

When we look at the downsizing decisions of the major technology companies, we find that the first lesson has been incorporated – at least in what the CEO’s say to their employees and the public.

At Microsoft, CEO, Satya Nadlia, announced the layoff of 10,000 employees (about 5% of the workforce). She explicitly said “we will continue to invest in strategic areas for the future, meaning we are allocating both our capital and talent to areas of secular growth and long term competitiveness for the company while divesting in other areas.” She did not explain which areas would grow and which would shrink.

At Facebook, CEO, Mark Zuckerberg, announced a layoff of 13% of the employees (about 11,000 employees). Again he is explicit: “We’ve shifted more of our resources onto a smaller number of high priority growth areas - like our AI discovery engine, our ads and business platforms, and our long term for the metaverse.”                                                                    

At Amazon, CEO, Andy Jassy, announced a layoff of 18,000 people (about 1% of the workforce). . He was much less explicit about a new strategic direction, but he did say where the cuts would be focused: initially in the Devices and Books businesses (with a voluntary buyout program in Human Resources; voluntary buyout programs are the worst way of downsizing; the most effective employees are those most likely to take the buyout) followed by a second required round in Stores and Human Resources (PTX).

None of these downsizing companies announced that members of the top management team would share the pain by taking salary reductions.

Goldman-Sachs seems to have partially learned both lessons. Although it did not announce areas which it would reinforce, it did target its cuts in the investment management and global markets divisions.  The CEO, David Solomon ,shared the pain by taking a pay cut from about $37 million to $25 million. In addition, they minimized the number of layoffs by cutting bonuses to junior employees from $95,000 to about $12,500.

So 30 years on from the coining of the term downsizing, some firms have learned from the efforts of management researchers. They have improved how they carry out downsizing, but they have not learned the bigger lesson: it is better not to downsize at all.

Thursday, October 22, 2020

Fresh Pond: Here I come.

 Piece in Cambridge Chronicle  https://cambridge.wickedlocal.com/news/20201029/guest-column-fresh-pond-here-i-come

Monday, August 24, 2020

Just too selfish

Just too Selfish

Column in the Cambridge Chronicle

Thursday, January 30, 2020

Thursday, February 7, 2019