DECISION MAKING

The Case of the Downsizing
Decision
by Alan S. Train
FROM THE MARCH–APRIL 1991 ISSUE

A

ndrew Jordan sat at his desk, absentmindedly watching a barge chug slowly upstream on
the Thames. The dinner meeting he had scheduled with a select group of senior
managers at Universal Products Company, Ltd. would begin in an hour. For three years, it

had seemed enough to focus on the business problems of UPC’s Connectors Division, and Jordan,
the division’s general manager, had made it the most profitable unit in the company. His success had
brought him tremendous respect at UPC. Now problems not of his own making threatened to
undermine all those years of hard work. One last time, Jordan opened the file. • • •

Grenville Village Bankers Equities Group
Grenville House 28 High Timber Street London EC4V 3SB

March 25, 1991

Important Advisory Bulletin on Universal Products Company, Limited.

GMB Equities Group is downgrading its rating on Universal Products Company, Ltd. common stock
from “hold” to “sell.” Although analysts believe the 32-year-old electrical products company has
underlying strengths, the inability of senior management to capitalize on those strengths means
that, for the time being, UPC is not a sound investment.

Diversified Products. which have mushroomed in recent years. However.350 employees are organised in five largely autonomous divisions— Switchgear. To make matters worse. Charles Rampart. Falling stock prices. and ElectroTek. Both Connectors and Switchgear have been able to maintain strong market position and profitability—with the recent performance of the Connectors Division an especially bright spot. it is showing surprising strength—and results at ElectroTek have been unequivocally disappointing. and it remains unclear whether his appointment reflects a temporary accommodation that enables the board to continue with some semblance of order or whether he is genuinely seen as a leader who can resolve UPC’s growing troubles. constitute the clearest possible demonstration that the board of directors finally lost confidence in the company’s leadership. the company must get control of its costs. First. Since the prominent London solicitor became chairman in 1975. a step that could do much to restore confidence in the company. It is understood that a far deeper cutback is under consideration. The first three represent the company’s traditional businesses. Rampart is little known outside the company. defections of critical staff. Wire & Cable. while the latter two reflect new markets and proprietary technology. and the loss of several major accounts over the past three years have made it obvious that something is seriously wrong. formerly corporate vice president for technology. Sir Randolph’s resignation and his immediate replacement by Mr. CBE. Wire & Cable has been the least satisfactory of the five business units. is retiring is only the most recent in a long line of shocks at the company. construction costs for UPC’s new global headquarters came in significantly over budget— causing much lower than expected 1990 earnings. Performance at Diversified Products has been extremely erratic—at present. The minor redundancies announced by the company last August have had almost no impact on the situation. UPC at a Glance UPC’s global operations and 38. . Management’s Challenge The investment community is waiting to see serious action from the new management on two fronts.The surprise announcement late last Friday that UPC Chairman and CEO Sir Randolph Charteris. the company has been plagued by slower and slower growth. By contrast. Connectors.

Ltd. Although there’s no point in rehashing my thinking yet again. London E7A 6F8 Company Confidential MemorandumTo: Andrew Jordan. with fully half of that to come from the managerial and professional ranks. Please let me know by the end of the week how you propose to accomplish this. At Friday’s close. As for Wire & Cable. Obviously. and much will depend on Mr.000. Chairman and CEO Date: April 3. Note that the present P/E ratio is still quite high. 1991 Subject: Downsizing Program Dear Andrew. a decision like this is hard for everyone. We therefore need to reduce the present complement at Connectors Division from 6. Connectors Division From: Charles Rampart. Having done so. Docklands.Second. UPC common was quoted at 633/8. . SVP and GM. continuing a fairly steady decline from its modern high of 91½ at the end of 1988. I trust we can begin to show specific action within two weeks and that the entire effort will be very largely concluded by June 3. reflecting investors’ recognition of the company’s potential competitive strength. UPC must either fix it (not an easy task. • • • Universal Products Company. two months from today. management have to develop a strategy for maintaining the company’s significant and profitable participation in electrical connectors and switching equipment while actually creating the new sources of revenue that they promised would come from ElectroTek and Diversified Products. I have set as our overall objective a figure of about 11%.720 to not more than 6. In our view. given its market and competition) or eliminate it (not necessarily easier since it embodies a considerable and aging fraction of the company’s fixed assets). Rampart’s actions. I want to confirm my decision to carry out a deep across-the-board-reduction of UPC’s staff. I promised you and your colleagues that I would think over our discussion at the Executive Operations Committee meetings this morning. I do at least hope that we all understand—if not wholeheartedly accept—the logic of spreading this heavy burden across the entire company. and I appreciated the candor at this morning’s meeting. But without evidence that management are able to turn those strengths to good advantage. UPC is at a crossroads. the stocks decline is likely to continue.

I think Charles’s decision to go for across-the-board cuts is a disaster. SVP and GM From: Samuel Godwyn. and it is a manager’s worst task. Ltd. it will hobble our ability to look after the long-term. As you know. which we all know is a basket case. Connectors Division Docklands. I understand completely how difficult this is. strategic growth of the company. certainly. • • • Universal Products Company. I’ll certainly need it. This is a case of “the sooner. Put simply. which under your leadership has been the most profitable of the company.” Dragging it out is in no one’s interest.. I know I can count on your support in this difficult but critical task. the better. It’s a disaster for Connectors Division. across-the-board cuts are the only way to accomplish this necessary downsizing quickly and fairly. some kind of downsizing is necessary. 1) Across-the-board cuts are panic masquerading as a plan. and the board of directors agree fully. But to cut across the board is to take a blunt axe to the company when a . but it is also a disaster for UPC as a whole.Andrew. It defies business sense to ask for equivalent cuts from our division. Granted. London E7A 6F8 To: Andrew Jordan. 1991 Subject: Downsizing You asked me to set out as starkly as possible the argument I was making at yesterday’s staff meeting. VP for Marketing and Sales Date: April 5. I’ve been in similar situations before. we owe it not only to our shareholders but to our employees and other stakeholders as well. In the final analysis. In fact. What’s more. But I feel we have very little choice. let me close on a more personal note. and from Wire & Cable. I am determined that those of us investing our time and our careers at UPC will have stable and satisfying employment and a fair return on our various investments.

surgeon’s scalpel is called for. which. There comes a time in every manager’s career when he has to fight a bad decision made by his boss. We have worked damn hard to become as lean as possible. we should put together the best alternative plan we can and persuade Charles to bring it to the board. Finally. Not all divisions and corporate functions are created equal. Andrew. you should coordinate with those senior managers you know will share the general perspective—like Tom Lewellyn in corporate strategy. not retrenchment. and most likely alienate our customers as well. UPC wouldn’t be in this mess. we should be prepared to fight this all the way—even if that means a wellorchestrated leak or two in the financial press. they are going to go through the roof. The company needs to figure out where its going. this company isn’t a machine. Others probably deserve to be terminated altogether. I believe you must be prepared to do that now. We will lose good people. then cut accordingly. I assume you saw the rogue e-mail message that has been making the rounds (I’ve attached a hard copy. Does anyone disagree that last August’s redundancies were handled poorly? If we come back to people seven months later with arbitrary across-the-board cuts. of course . 2) Across-the-board cuts will seriously harm our division’s ability to compete. of course. is precisely what Connectors needs to do to contribute to the revitalization that Charles says he wants to bring about. Indeed. • • • Date: 1APR91 To: sgodwyn CC: Global division distribution list. Second. I know Charles got a first in maths. First. Some units deserve additional investment. have to delay product-development projects already in the pipeline. if the entire company controlled costs the way Connectors has done. but damn it. 3) Across-the-board cuts will destroy already-poor morale. via ConnectNet Subject: April fools. Why should we be punished for our own good management? Any more cuts will hinder our capacity to build sales and improve service. just in case you haven’t).

well-informed. Rampart is one of the faceless men from corporate. shame on you. There is no doubt that the cuts of 11% will hurt Connectors Division badly in the short term. across-the-board cuts may not be the best way to downsize. I’m quite clear as to the path we should take in this ghastly business. As head of technology. There is . Charles will give us that—once he has the board’s confidence and support. although not everyone knows it yet. shame on me! Last August. Unless our Jordie’s stuffed with more than straw. UPC’s problem has been a lack of systematic action and investment. But it would be a terrible mistake for us to focus only on the narrow needs of the division when the future of the whole company is at stake. That is the real issue at hand. Granted. Now we’re all going to pay for it.. London E7A 6F8 To: Andrew Jordan. “I’m going to make sure this never happens again. and damn smart. Our job is to help him get that support. he has shown that he knows how to help—and not just Connectors but everyone. He’s thoughtful.” Well guess what chaps: Sir Randy’s good intentions have paved the usual path to the usual destination. our very own Sir Randy said. It would be quite humiliating for Charles if we opposed his first decision of consequence. Ltd. 1991 Subject: Company Downsizing Re: your request for a memo outlining my position on the downsizing. but under the circumstances we don’t have the luxury of figuring out the very best way. when hundreds of undeserving folks left UPC. VP for Finance Date: April 5. SVP and GM From: Mary Wyatt. completely trustworthy and honourable. and I hope you agree. We have to think strategically and take into account the political dimensions of this decision. Charles is a wonderful choice for chairman. we’ll all be April Fools. Connectors Division Docklands. fool me twice. • • • Universal Products Company.Fool me once.

Should Andrew Jordan Support Charles Rampart’s Downsizing Plan or Fight It? And How? David Enfield is chairman and managing director of Colgate-Palmolive Limited. Who’s to say that cuts in their shops would be better for the business than cuts in ours? I’d much rather support Charles on this decision. It’s likely to lead us into a morass of interdivisional and interfunctional rivalries that will take years to sort out. After all. If you back Charles strongly now. however painful that may prove to be. This may sound harsh. UPC will be targeted for acquisition. Surely. I’m all for fighting bad decisions. both inside and outside the company. The consequences of inaction would be . we might even end up gaining staff.already great skepticism about UPC’s future. As I said at the staff meeting yesterday. We’ll have a good chance to be a new focus for growth. The stock has already declined by one third in the past year. U. Any company considering downsizing as a solution to its strategic concerns should first think through what its strategic concerns are and then fit downsizing into that context. in order to buy the political goodwill to win other struggles further down the road. The key issue here is UPC’s need to restore itself to financial health and to create a business strategy for its future. Mounting some kind of internal rebellion right now is a notoriously bad bet. other division heads can argue that they’ve been controlling costs too and making significant investments that just haven’t paid off yet. we’ll be at the top of the list when it comes time for UPC to make internal investments in the future. The company is in imminent danger of losing its independence. But I also believe it’s important to pick your fights intelligently. Indeed. Andrew Jordan’s decision is not whether to support the cuts but how to make them. but it’s the only realistic way to think of the situation: we’re not laying off 11% of our staff. Downsizing is a much needed first step for UPC on the road to preserving its independent status and getting back to financial health. you can read his intentions between the lines. Charles has got to act and act fast.K. We are investing in the future credibility and effectiveness of our new chairman. Unless the price is stabilized quickly and performance reversed.

However. should be communicated to Rampart. he must develop a specific plan to reduce his staff by 11% and formulate a revised business strategy to maintain the health of his division. Jordan’s easiest step will be justifying his support for Rampart’s decision. recommendations for change. Jordan has three immediate tasks. both internally and those that affect the division’s relationship with corporate headquarters.far more draconian than an 11% cut in staff. As a manager. After all. As the memos from Godwyn and Wyatt indicate. Second. However. He need not apologize that the successful Connectors Division has to suffer. with a view to creative change. Finally. Jordan should not automatically demand an equal 11% cut in each of his departments. he must devise a way to minimize the impact on the morale of those remaining as well as those being let go. Jordan will provide a backdrop for the immediate moves. They should challenge the very nature of the division’s manner of doing business. his managers have strongly divergent views. Jordan would be better advised to be more selective if he is to remain true to the needs of his own division. focusing on the trends in business practice among his customers and major competition. the move is a mistake. Rampart may have had his political reasons for this even handedness. but from a business point of view. By explaining how the investment community perceives UPC and sensitizing his division to the threat posed to the company. since this is an external threat to the company at large with little regard to individual units. Jordan and his team will then need to review his division’s business priorities. Jordan will first need to gain their individual support for what is to happen and then be prepared to start the cuts at this level if his direct reports are not prepared to match his degree of commitment. Rampart is no stranger to UPC and probably could have better tailored an overall 11% cut to the strengths and weaknesses of the company. The next step—identifying specific redundancies—is more difficult. . Finally. He must quickly make it clear that he supports the new chairman’s decision and that the real issue is the survival of UPC. Jordan must make the moves in a manner that drives home to all employees the logic behind them—that without these moves UPC will cease to be an independent entity.

First of all. Considerable duplication probably exists in traditionally overstaffed areas such as administrative and support functions. and provide them with a sense that UPC and Connectors Division is getting through its problems and remains a productive and stimulating place to work. but Jordan is as well placed as any to broach the issue and if necessary to pursue it with Rampart. This clearly cannot be done overnight. Jordan also needs to work on the broader issue of UPC’s return to health. Yet staff costs are only one element of expense. and to enlist the dinner group as an initial forum to commence the development of ideas and suggestions to help Rampart in this critical task. Jordan should probe just how much autonomy continues to be affordable for each of the five divisions. These resources could easily be shared and rationalized. Obviously this will be a highly sensitive subject involving past history. and Methods (Addison-Wesley. He is the author of Cutting Back: Retrenchment and Redevelopment in Human and Community Services (Jossey-Bass. counseling. as a member of senior management. Managing in the New Team Environment: Skills. focus them on the business. A combination of reasonably generous redundancy payments. turf. as a start. Truthfully examining every aspect of the company for waste could lead to savings of more than 11%. Finally. most recently. Jordan can also take a lead in addressing this. 1983) and. Downsizing alone is not the answer to UPC’s problem but only the first step in a bigger process. a management consulting firm in Philadelphia. 1990). Rampart and his senior management need to develop and agree on UPC’s future overall business strategy. and culture. He could start by raising several important questions at the dinner meeting with the select group of senior UPC managers. Jordan. . has a right to ask Rampart what his plans are. Tools.The third step—the redundancy strategy—is both easy and difficult. Laarry Hirschhorn is a principal in the Wharton Center for Applied Research. Pennsylvania that helps companies develop strategic initiatives and link them to their organizational practice. Jordan’s biggest challenge will be to rally his remaining people together. It is more difficult to retain the loyalty and morale of those remaining and to successfully install the changes in working practice and responsibilities that will inevitably be required. UPC needs to look critically at controlling projected expenses in all its divisions. of course. and out-placement services should ease the pain of those being let go. by pointing out the need for clear control illustrated by the overbudget construction of the new headquarters.

why would they believe him? Sir Randolph and his employees have created an organizational culture in which feelings of dependency. Consider the electronic-mail message that Samuel Godwyn attaches to his memo. one can’t really blame Sir Randolph for making so irrational a promise or his employees for believing him. As a result.” The message writer feels betrayed by the prospect of yet more layoffs. Rampart faces the challenge of building his political credibility. Facing an undemanding market. the roles they occupy in the organization. The anonymous writer reminds his colleagues that after the last cutback. Yet the tone and content of his memo suggest that he feels vulnerable. and the company’s primary business task. After all. people turn inward and lose touch with the links between their personal experience at work. As an insider. new CEO Charles Rampart is also caught up in UPC’s dependency culture. when they confront an institutional crisis.Andrew Jordan faces the difficult challenge of being a responsible follower in a company trapped by its culture of dependency.” . they take up their roles passively. and victimization are paramount. Indeed. Just as he passively let the company slide into a crisis. protection. he adopts a passive posture—“I feel we have very little choice”— rather than forthrightly spelling out what he has decided to do. How can a CEO guarantee his employees eternal protection in an increasingly unpredictable business environment? And even if he did. people expect to be protected and feel victimized when they are not. a company creates and sustains such a culture when it operates successfully in a stable market over a long period of time. Instead. former Chairman and CEO Sir Randolph Charteris had promised “…to make sure this never happens again. But such a feeling is misplaced. he paints a picture of his own precarious situation: “I know I can count on your support… I’ll certainly need it. Usually. Later. unable to draw on his inner strength to project a personal sense of his authority. the board passively stood by as he failed to protect the company’s assets. people find it difficult to refocus on the marketplace and the needs of the business. Defending his cutback strategy to Jordan. his board had protected him despite 15 years of poor performance. To be sure. In such settings.

Unfortunately. and opportunities. Because they do not take their own authority seriously and cannot see how they might authorize others.” But these internal comparisons are less relevant than each division’s performance in its marketplace. . Mary Wyatt’s proposed strategy is equally problematic. Like Godwyn. Wyatt wants him to be loyal to Rampart. correctly argues. he wants to draw on the power of outside investors and shareholders by leaking news to the financial press. In dependency cultures. Fairness and loyalty are not irrelevant. Godwyn’s proposed strategy also reflects the features of a dependency culture. Lacking such a marketplace focus.” the division versus corporate. but Wire & Cable still possesses the bulk of UPC’s assets. what counts is the strategic posture of the company as a whole. which is “a basket case. But uncertain of his own and Jordan’s authority.” But idealization. Thus. is just another way to avoid taking Rampart seriously as a real person who faces concrete choices. they replace straight talk with covert politics. he wants to persuade Jordan to bring an alternative plan to the board. they don’t feel connected to real work—and their idealization of the all-protecting company. like contempt. that Connectors is being punished for its good management. even if this means squeezing Connectors. Where Godwyn wants Jordan to be loyal to the division. It may make strategic sense to modernize Wire & Cable. Godwyn’s memo argues that Rampart’s decision is unfair. limitations. Connectors may perform well.Similarly. Where Godwyn has contempt for Rampart. she assumes that Rampart is weak and vulnerable. Defending Connectors Division. Andrew Jordan’s subordinates are blinded by UPC’s dependency culture. Jordan’s VP for finance. people typically rely on the more primitive criteria of fairness and loyalty. people cannot confront and challenge one another directly. Both contempt and idealization have deep roots in a dependency culture. They reflect people’s contempt for their own roles—after all. but unconnected to task and mission they lead people to focus inside rather than outside the company. Godwyn argues that it is the most profitable division in the company. in contrast to Wire & Cable. struggles. Believing that Rampart is weak. and to value interpersonal ties over role relationships. Wyatt idealizes him as “completely trustworthy and honourable” and “a wonderful choice for chairman. Connectors may have a good market share but is it more profitable than its competitors? What hidden subsidies might it profit from as a division of UPC? As Mary Wyatt. Godwyn frames the issue entirely in terms of “us versus them.

how it might help revitalize Wire & Cable. 2. voluntary retirements. and creative programs that allow people to leave a company while still remaining connected to it through new business arrangements are ways executives can contain the trauma of a cutback while using it to strategic advantage. Jordan needs to help Rampart articulate a strategic view of the company’s prospects that highlights each division’s opportunities as well as the links among the divisions. As an insider. Jordan should help his subordinates develop a more sophisticated understanding of the division’s role in the company—how it can contribute to UPC. being a responsible follower means breaking through this culture of dependency. Ironically. Jordan can reduce head count within Connectors in a more tailored way. by defining the problem entirely in terms of fairness and loyalty. What’s more. How as a group can we . personal ties. Rather than just following Rampart out of loyalty. how its success in the marketplace may help leverage UPC resources. Jordan must take the new CEO’s authority seriously and challenge him to be the boss. or mere opportunism. When he meets with his fellow executives for dinner tonight. For example. and give Jordan’s subordinates the chance to experience directly Rampart’s authority and commitment to the company’s revitalization. while also contributing to the board’s obvious hope that a “technology” CEO like Rampart can refocus UPC on its increasingly dynamic marketplace. Samuel Godwyn inhibits Jordan’s ability to devise a cutback plan that may help people leave or remain with dignity. 3. Natural attrition. We need to do this in a way that accomplishes the most from what will necessarily be a painful cutback. This would give Rampart the opportunity to take public responsibility for his downsizing decision. Responsible followers also complement their superior’s limitations with their own strengths. Rampart may find it especially difficult to take the authority he needs to develop and implement an effective strategy. while Rampart wants across-the-board cuts from his divisions. Jordan could invite Rampart to talk with his direct reports so they can hear the new CEO spell out the business logic behind his decision. As division manager of Connectors. Jordan should start with one central question: “Charles wants us to reduce expenses and increase cash flow. That entails three tasks: 1.For Andrew Jordan.

and plumbing equipment to the construction industry. Successful companies reduce costs by reducing useless layers of work rather than blindly cutting people. Cutting by percentage is a crude and ineffective short-term solution to a deep-rooted problem. Rampart must eliminate all middle managers that exist only as power brokers and impediments to communication. Across-the-board layoffs are the worst way to reduce costs. it can rebuild the organization using only those people necessary. so that he gets the authority he needs to revitalize the company?” Emmanuel Kampouris is president and CEO of American Standard Inc. a leading supplier of airconditioning. . In the long run. They must. Jordan should agree to personnel reductions only under the condition that Rampart present these moves as a prelude to a new direction at UPC. heating. Andrew Jordan has his work cut out for him. This process is not easy. Management must begin by stripping away everything in the company that is not adding value. one where the company has a clearly defined mission and an organizational structure consistent with its new philosophy. the smaller work force will be asked to do less—not more. Rampart must undo bureaucracy. After a downsizing action. now and into the future. The only course at UPC is to find a way to eliminate excess staff permanently. Jordan will find that in no time he will be fighting the issue of excess personnel once again if these replacements become permanent. Throughout the company. in a sense. If UPC reduces the work load intelligently. It’s instant gratification that does nothing to fundamentally remedy the situation. He must convince Rampart to develop a broader vision of his company and not just make generic cuts in the work force. this could result in more than an 11% reduction in staff. go right to ground zero by scrutinizing the work load and reducing it to the essentials. The real solution here is to rationalize the work.best support Charles.. He should find where the power structure of the organization prevents workers at every level from taking responsibility. Once UPC has eliminated the nonessential work load. temporary employees are often brought in to work in positions left vacant by the laid-off personnel. and to do so in a manner that prevents the problem from creeping back. not the workers.

But it is no reason to rush through across-the-board cuts that are completely disconnected from any longterm strategic vision. Depending on how it is carried out. downsizing can strengthen employee morale or destroy it. In this respect. Unfortunately. What Rampart fails to grasp is that gaining his top managers’ agreement to the downsizing plan is not enough. a Norwegian computer company based in Oslo. He decides on cuts across-the-board. responsive company with open lines of communication and no middle management. Far more difficult is knowing how to implement a downsizing so that it really accomplishes the objective of revitalizing the company. UPC has serious problems.” Rampart’s overall approach to change is also faulty. Roald Nomme is senior vice president for organization development at Norsk Data Group. the corporation will be free of the communication roadblocks endemic to overstaffing and middle management. the new organizational mind-set will turn its concern from how it is structured to what is important to its customers. Rampart may set the timetable for these moves. It can be a solution to a company’s problems or a serious new problem in its own right. UPC’s Charles Rampart is going about it in the worst possible way. more responsive organization is just one step of an overall philosophy. Granted. To decide that downsizing is necessary is the easy part. Once Rampart creates a delayered. Rampart should also devise a costs goal—not a personnel target. Rampart should let everyone reduce costs the way they see fit. As part of his broader strategy. presents his decision at a morning meeting. Connectors Division marketing vice-president Samuel Godwyn is right: across-the-board cuts are “panic masquerading as a plan. His strategy is simply to order people to change. He must also secure their “alignment”—their active conviction that the proposed changes . Rampart will create something far more useful than a smaller company: a more responsive and efficient company. Consistent with a philosophy of distributing responsibility lower and lower in the organization. In fact. and the impatience in the financial community is an important danger sign.By making these moves. Creating a leaner. then sends his direct reports a rather cursory memo confirming his decision and asking their support. however.

Rampart and his entire top-management team have to get together. That way. Such an approach may be more time-consuming. if he plans for immediate cost reductions. Once this strategic vision and participatory change process is in place. Instead of spending two to three months figuring out how to cut 11% of the work force across-the-board. After all.not only are necessary but will prove effective. no matter how lean and efficient they think they are. even in the short run. . the fact that the whole UPC group is introducing stronger measures may result in improved productivity for Connectors. but it leads to far more effective and long-lasting changes— not the least because participation tends to strengthen employee morale. over one or even a number of days to thrash out a common view of the company’s strategic situation and options. Loyal managers like Jordan may go along grudgingly with Rampart’s decision but without the internal commitment necessary to make the downsizing work. UPC managers should take that time to struggle with the difficult strategic issues facing the company. they develop insight into the reasons why change is necessary. Such a haphazard and cavalier approach to change is likely to lead to disaster. Jordan should also explain to Rampart that the best way to bring about change is to let the employees actively participate in it. What’s more. once corporate management crafts a new strategic vision. Therefore. What are the long-term prospects of the company’s various businesses? What should the company do about Wire & Cable? How should UPC target the burden of cost reductions? And how should the company handle the all-important communications issues in order to convince employees of the necessity of the decisions made? The end result of this exercise should be a new strategic direction that includes not only cuts but also new investments. the organizational context will exist for Jordan to take a fresh look at his own division. It may well be that his business can prosper and become considerably more profitable. he should tell Rampart that this is not the type of decision that can be presented at a half-day meeting and then discussed in memos. face-toface. Andrew Jordan has to persuade Rampart to rethink his downsizing decision. Rampart should invite UPC employees to take part in developing the methods for its implementation. To begin this process. most organizations still have considerable slack. First.

Jordan has to work with his own management team to get them to understand the need for hard measures. All postings become the property of Harvard Business Publishing. mean-spirited. and relevance. To comment. or off-topic may be deleted per the moderators' judgment.org will be energetic. Jordan’s direct reports can also develop a shared picture of the current situation and the company’s future potential. readers must sign in or register. the key is face-to-face interaction that will allow managers to confront and resolve the negative feelings and the conflicts inevitable in downsizing situations. . Once again. This article is about DECISION MAKING  FOLLOW THIS TOPIC Related Topics: CHANGE MANAGEMENT | CORPORATE GOVERNANCE | DOWNSIZING Comments Leave a Comment POST 0 COMMENTS  JOIN THE CONVERSATION POSTING GUIDELINES We hope the conversations that take place on HBR. and thought-provoking. And to ensure the quality of the discussion. In this way. Comments that are overly promotional. A version of this article appeared in the March–April 1991 issue of Harvard Business Review. Alan S. Train is a pseudonym for a management consultant who was involved in the events described in this case. constructive.Finally. length. our moderating team will review all comments and may edit them for clarity.