Last month, we published a guest E-pinion by Maurizio Morselli in which he talked about HR's role in curing "fiscal decadence disorder" and ensuring that reductions in force don't cut any deeper than necessary. His column generated some interesting feedback, which we share today.

I like the article on HR's role in curing the Fiscal Decadence Disorder. We all know that SURGERY is very expensive. I wonder how many scalpel-happy employers consider the long-term effects of increased unemployment insurance costs plus the immediate problems with employee morale, decreased productivity, and increased confusion as the "survivors" try to figure out how to still get everything done in a standard day with fewer people. Those costs will eventually become evident when a decrease in the quality of the products or services offered by the company results in lost sales. And immediately, the company may have to pay a lot of overtime to their remaining employees. How much will that cost? And if the “rightsizing” efforts are extreme and without notice, what kind of impact will that have on their clients' opinion of the company? (Emphasis in original.)

What company has such a low employee turnover rate that it can’t let attrition rightsize the organization over a course of 6 to 12 months? By gradually rightsizing, the organization has more time to effectively restructure the workforce of the organization, and management can eliminate most of the problems that "surgery" can create.

Thanks for the article. It's important that HR people present strong arguments for keeping a company "rightsized" in the first place, and, if some downsizing is needed, making sure that, as you stated, a diligent diagnosis is conducted. I would like to read more from you about how to calculate the hidden costs and long-term effects of organizational "surgery."

—Karen Rhodes, HR Director
Red River Credit Union
Texarkana, TX

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One reader weighed in on her frustrations with a university employer:

My experience is that many companies do not really want to have HR at the table as an intimate member of the executive staff nor do they really want to cure their fiscal decadence disorder. For instance, my recent employer (a university in Ohio) was the most wasteful employer I have ever worked for, while at the same time screaming that it didn't have the necessary resources needed to compete with many of its major competitors.

For example, professors allege that they lack adequate teaching rooms, yet many (!) of the prime classrooms have been made in to private offices by long-term educators. Additionally, there are numerous classrooms currently being used to store older equipment (e.g., 1960-era computers "just in case someone ever comes back and a faculty member has to recreate some experiment" or radio station space located in the basement of the library even though it has not be used for at least 15 years and never since the library was renovated.)

Having had both educational and private industry experience, I truly wonder how private liberal arts institutions will make it through these tough economic times given their propensity to spend way beyond their means, and to do so in such frivolous ways!!

—Jeanette C. Mouton, SPHR, CPP

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Another reader warned of the potentially high costs of later reversing an ill-planned reduction in force:

I read Maurizio Morselli's very thorough and interesting column and absolutely agree about the potential dangers that can be caused by impulsive cutting. I believe part of the problem is also due to financial reporting systems, compelling what looks right on paper but not what is necessarily good for the business. Human Resources can help at the planning stage and also by having strategies and potential cost implications for the longer term. Seldom is the long-term (e.g., 5-year) budget adjusted at the same time as the current operating budget. If sales are down now, the resources have to be there to ensure a strong recovery, particularly to maintain an edge over the competition. The costs involved in reactively reversing cuts made, possibly, too quickly are astronomic.

Great article and great advice, Maurizio.

—Ian Welsh
HR Strategist

Our thanks to Karen, Jeanette, and Ian for their thoughtful comments and insight. We have received several other guest E-pinions that we will be running in upcoming weeks.

As always, we'd love to hear from you, too. If you have an HR-related bone to pick or insight to share, send it along to ckilbourne@blr.com. Here are the ground rules:

  1. 1. Your e-pinion article must be original and should be about 500 to 700 words. If it's a bit shorter or longer, don't worry about it. (We care more about quality than quantity.) We reserve the right to use or not use (that's right—we don't guarantee publication) and to edit any submission at our sole discretion.
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