Creative Class

In this economy, many organizations engage in downsizing as a cost-cutting measure or a means of increasing productivity. Apparently, such programs have mediocre rates of achieving the goals set by the downsizing.

In a Watson Wyatt survey (according to an article by Bob Nelson, Ph.D and author of the intriguingly entitled book, Managing for Dummies):

• Only 46 percent of companies who downsized met their expense reduction goals.
• Only 33 percent met profit objectives.
• Only 21 percent enhanced shareholder return-on-investment by doing so.

Nelson’s article goes on to say that because downsizing isn’t typically effective at meeting corporate needs, one round of layoffs tends to beget more. (This would suggest that if your employer has recently done a round of layoffs, you should probably dust off the resume and start updating.)

Downsizing tends not to help companies improve or return to profitability because they don’t take into account the perspective of (top) employees, according to Nelson. Here are a few traps employers can fall into:

• Believing survivors will be thrilled just to have jobs, and will forgive anything else.
• Believing that if anyone subsequently quits, it will be the weak and poor performers.
• Assuming that employees take what management is saying at face value.

Having been at a company that collapsed during the dot-com crash, and another that downsized following the 1991 recession, I recall management making all of these incorrect assumptions, and more.

As corrective advice, Nelson stresses the need to communicate excessively with employees during any downsizing and involve them directly in decisions. He also points out that lots of praise and recognition is free and goes a long way.

As the creative economy flattens hierarchies in day-to-day activities, any situation that creates an “us” versus “them” mentality would be especially toxic to productivity and longevity. Conversely, getting everyone involved might present some alternative solutions.

Is your organization looking for alternatives to downsizing? Or falling into the traps described by Nelson?

Status symbols are important. They’re a shortcut to letting everyone know how important we are.

When someone is rolling in their $200K 8mpg Italian supercar or hanging in their 15,000-square-foot crypto-Tuscan crib, they’re making a statement that they have money to burn.

So what’s going to happen when waste is out and green is the new cool?

Is there going to be a mass movement to smaller, more efficient cars and homes? This might be a struggle, because it would mean a fundamental shift in how we spend our money and are perceived by others.

I’ve been trying to figure how this will play out. Perhaps our new status symbols can be compact, efficient, and green… as long as they are very expensive. (Blue jeans are hip, as long as they cost $300.)

What do you think? Will people willingly downsize their lifestyle to reduce their carbon footprint, if it means appearing less important and elite? Will there be new indicators of social status, other than a big house and an expensive car? Could it be the start of a movement towards qualitative values like creativity, and away from today’s worship of wealth?