BY JOE BUMFREY
CO-AUTHORED BY CHARLES DAVIS AND GUY WHITLEY
Post the 2008 financial crisis, we find ourselves in an era where streamlining operation processes and product portfolios is a common business event for many organisations. Firms have faced the onerous task of reducing operating costs and meeting regulatory requirements, in many cases placing them under increased pressure to restructure and downsize their operations. This is a major undertaking which impacts all aspects of the business and must be managed with a careful hand to achieve the desired results.
With any reduction in the workforce, businesses can expect a degradation on the motivation levels of their staff and therefore must identify an appropriate strategy to mitigate its effects. Without a holistic, considerate approach, where steps are not taken to manage this effectively, demotivated employees can significantly reduce the overall productivity of the organisation. More critically though, a perceived reduction in employee morale will directly impact an organisations ability to retain and attract high-calibre talent creating, and enforcing, the perception of a negative working environment.
This article highlights the importance of acknowledging workforce motivation as a significant factor that will directly influence the success of a business restructuring strategy. We have referenced two cases studies below to illustrate how two organisations from different industries have taken alternatives paths to managing employee motivation during strategic events in the past. We have tried to call out the key techniques used and to highlight the common lessons learned reflecting that there is no one-size-fits-all approach and underlining the need to take the appropriate approach that best fits your organisation, your environment and your business culture.
Case Studies: Boeing and Barclays
In the early 1990s, Boeing were faced with the challenge of reducing headcount by 50,000 over a period of 5 years. As part of their approach, Boeing implemented an Employment Stability Board consisting of senior executives from Boeing’s independent operation companies and senior functional officers across engineering, manufacturing and human resources. The Board’s primary aim was to oversee and manage the organisational reform, and address any associated issues.
A Reemployment Programme, which created Reemployment Centres with geographically separated benefits, was also set-up to assist with the reallocation of jobs, giving security and peace of mind to staff who faced imminent redundancy. It has been recognised that whilst Boeing could have taken steps to engage with local, state, and federal agencies earlier, this approach was still effective in ensuring that staff felt that their needs were prioritised and considered as part of the downsizing initiative. Boeing demonstrated the value of putting in place a robust, transparent, governance, which is key to maintaining necessary levels of morale and in turn attracting and retaining top talent. The business reduced its workforce by approximately 55,000 over the 5 years following, many of whom returned to work for Boeing through the reemployment programme.
Barclays Investment Bank adopted an alternative approach with the launch of ‘Barclays Non-Core (BNC)’. BNC was established as a restructuring initiative with an aim to: i) reduce assets and businesses that were not aligned to Barclays’ 2017 strategy and, ii) allow Barclays to redeploy capital to support future initiatives. This business problem differed from Boeing, in the fact that it required winding-down business lines rather than direct headcount reduction targets; however, with changes to business structure come indirect headcount reduction requirements. Barclays Non-Core was unique in that Barclays created a segregated working environment to the rest of the organisation, creating a culture in which staff were incentivised and empowered to achieve their shared goals.
The result of which was that BNC cultivated a working experience that was very different to the rest of the organisation where staff felt positively motivated by the work they were undertaking; we have heard staff refer to it as having a more autonomous “start-up/hedge fund type feel”. This was further re-enforced by embracing a more relaxed working environment with a separate working space and casual dress code.
From the outset each BNC employee had conversations with MD level management to discuss personal goals and to understand motivations for their time in BNC, to ensure that the necessary support and opportunities were provided. The Non-Core Unit became a part of the business that people genuinely wanted to be involved with as it gave them an effective avenue through which to meet their career goals; as identified through extensive one-to-one interviews. Its staff were given roles and responsibilities that would motivate and challenge them creating a team dynamic that emphasised collaboration and shared goals as they ultimately related to the sale of the business.
Both approaches deployed have their own merits and it is clear that the business need will often determine the approach taken. However, there are common themes which can be pulled from each instance, namely the importance on early communication and engagement of staff in the strategy deployed.
Common Pitfalls & Lessons Learned
Due to current market conditions, our clients are faced with a cost cutting challenge that requires them to consider changes to their operational processes, geographical footprint and reliance upon third party vendors and services. However, in many cases little consideration is given to the indirect impact on productivity and motivation of the workforce during such a transition. Teams may be unable to focus on workflows outside of direct cost-cutting priorities. Short-term priorities often win over the longer-term considerations leading to a focus on ‘quick wins’ and the neglect of managing staff welfare.
Teams can become inherently disorganised and negative where there is little transparency provided, a consideration Barclays and Boeing both took very seriously. Where details of cost-cutting strategy are guarded by managers (either by choice or instruction) employees are kept unaware of the considerations taking place as to where and why reductions occur. While there may be a meaningful strategy in place, employees can revert to the thinking that ‘office politics’ and favouritism have a part to play in the decisions being made. Negative assumptions are exacerbated by an already deflated working environment where interest and trust in the organisation wanes.
- Monitoring Productivity
As part of an organisational restructure there may be a need for office space reductions resulting in staff being provided with flexible working days and increased opportunities to work from home. An ever more common practice in the financial services industry, the requirement to work from home is primarily due to the increased cost of office space and technological innovation. However, managing productivity of a demotivated workforce during an organisation restructure can be difficult to coordinate and monitor, especially when ceding certain elements of control, output levels now dictated by those operating out of the comfort of their own homes.
- Effective Training & Offshoring
Businesses must learn from the examples of successful and unsuccessful migrations of skilled roles and processes to off-shore locations. In some instances, where speed was prioritised over control, processes that were migrated to far-shore locations ultimately had to be moved back to the original location as off-shore staff had not been trained to an adequate standard and were therefore not capable of completing the required tasks. Remaining staff were becoming demotivated by the departure of colleagues, occurring in parallel with inadequate off-shore handover, leading to an overall drop in quality in their global team and as such potentially undermining any expected reductions in operating costs.
Employable Techniques / Approaches:
One of the key factors to ensure this is managed successfully is transparency of information to staff. If there is ambiguity with regards to the strategy across the workforce, it can generate fear which can dramatically reduce employee motivation. It is important to make staff understand the future aims of the business transition, and where possible, make individual staff aware of their personal future in the company and what considerations were taken in making the associated management decisions. In terms of these considerations, below we discuss some elements which can lead understanding employee enthusiasms and mitigate the risk of demotivation.
- Understanding Your Staff
Much like the Barclays Non-Core approach, a management team that knows their staff can understand what gives a workforce drive. Boards and senior management making strategic decisions will not personally know all their staff positioned in junior roles, which means the delegation of responsibility to line managers to understand a workforce should be considered. A ‘one size fits all’ approach to motivate a workforce is rarely successful and the motivational incentives implemented should be specific to the individual.
An experienced subject matter expert, at the end of their career, looking forward to retiring soon – may be motivated to gain as much future financial security as possible, e.g. through early retirement, large redundancy packages, etc. Therefore, an appropriately incentivised plan for this individual could be set by the organisation entitling them to an additional financial package which is rewarded if certain objectives are completed by a fixed date. Although the employee has been made aware they will ultimately not keep their job, which could have a negative impact on morale, the employee has direction and clear objectives to meet which are relevant and considered, ensuring productivity for the remainder of their time in the organisation.
- Financial & Non-Financial Incentives
Incentives do not have to be financial. As demonstrated by the Boeing case study, employees, dependent on the stage of their career can often also be motivated by a range of incentives including: CV enrichment, promotion / increased responsibility, training, family welfare / security, assisting recruitment / future employment. A variety of incentives can be used dependant on the two discussed variables: (i) Will the employee have a role in the restructured organisation? (ii) What motivates this individual?
Why employ such techniques / approaches?
The overall aim of these approaches is to maintain productivity of the workforce during an unsettling period. By having a transparent strategy, clear reasoning as to why decisions were made and providing a range of personalised / demographically distinguished incentives, there is a greater possibility of maintaining, and even increasing, morale in an office environment during (and after) an organisational restructure. These steps, deployed in the right way by the right organisation will be viewed positively by various stakeholders including prospective/remaining staff, worker’s unions and media outlets.
Best Practices & Future Application
Successful management of a downsizing strategy, adopting best practices explored above, should not be seen as a one-off effort, but rather seen as an investment and opportunity to refine the cadence of the company. The organisation will now have a more detailed understanding of its restructured workforce, including motivational drivers for individual employees. Understanding this level of detail opens the prospect of adjusting the office working environment, for example: desk upgrades, organising relevant social events, creating groups based on relatable interests or any other type of change. Whether a large or small amendment to the culture is sought, there is a convenient timeframe for other softer, positive, changes to be made simultaneously with an organisational restructure.
How an organisation prioritises the motivation of its workforce when faced with headcount reductions, particularly those put at risk, is pertinent to the success of the change. Organisations which do not prioritise staff motivation may stay afloat in the short term, but run the risk the organisation might suffer and sink in the long term. Better to set the course right from the off, than try and steer an ever-growing ship away from impending disaster further down the line.
 Successful Downsizing: The Case of the Boeing Reemployment Program, The Journal of Leadership Studies, 1998, vol.5, no. 3