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Business - Written by on Friday, April 17, 2009 10:57 - 2 Comments

Naumi Haque
Flexible downsizing: A conversation with Cali Yost

A recent study commissioned by Work+Life Fit found that fully 94% of those surveyed would be willing to accept flexible alternatives to their current work arrangement in order to avoid layoffs. Among the types of alternatives considered, the top three measures favored by employees include moving to a four-day workweek, but with the same amount of hours worked (78% of respondents), adding additional unpaid vacation days to the year (59%), and taking a one- to two-weeks furlough (59%).

As part of a project I’m working on that deals with talent issues in the current recession, I recently had a chance to chat with Cali Yost, CEO of Work+Life Fit and Fast Company expert blogger. Cali talked to me about flexible alternatives to mass layoffs, whether or not there’s still a war for talent, employee engagement in recessionary climate, and the need for a new enterprise mindset around agile talent and the execution of talent strategies:

Can you give me a little bit of background on Work+Life Fit and what you guys do?

We are a business-based, work/life flexibility strategy consulting firm. We develop flexibility strategies which are a way of operating. That’s different than viewing work/life flexibility as a benefit or a policy. It is a way of being; it is a way of operating in today’s world. It’s a business strategy that allows an organization to respond rapidly to challenges but also opportunities. We help companies use flexibility to manage resources, manage costs, service clients, and manage talent in order to be competitive and agile. So, it takes work/life flexibility out of the HR sphere and puts it into the business management sphere, which is where we believe it belongs.

Why is it so important that work/life flexibility be more than an HR issue?

If it’s an HR policy, a program, a benefit, it’s not agile; it’s not part of the day-to-day decision-making process of the organization. And that’s what we do. We develop it so that it’s a strategic lever; it’s part of the management process. HR is a partner in the process, but it resides in the business. HR is there to support it. HR is there to make sure the systems align. HR is there to make sure that it’s being accounted for correctly and that the benefits are aligned correctly. But, HR is not there to be the executor of the strategy; it’s not. The execution of a flexible strategy happens in the business unit, and that’s where we need to shift our mindset on this.

How do you make this happen? What’s the process for moving to a more strategic, enterprise approach to workforce flexibility?

Essentially, what you need to do is you need to brand it from the beginning as a business strategy. I know it sounds really simple, but it actually doesn’t happen. Most flexibility strategies are branded in most organizations as a policy for women. As a result, they are not seen as a core way of operating; a core business model. It’s seen as a nice thing to do to keep moms.

What about the Gen Y, or what we call the Net Generation; aren’t they a factor as well?

I will say that’s a driver. That’s becoming more of a driver in organizations. It’s one of the reasons organizations are looking at flexibility again because it’s such an expectation of young employees. Historically, the target has been moms. The more recent driver that’s getting flexibility back on the radar screen is ‘this something we need to do now to try and get young people to work here and keep them.’

You’ve written a lot about flexible downsizing, the idea that instead of large scale layoffs, companies can look at flexible options such as shorter work weeks, salary reductions, job sharing, forced furloughs, and so on. In your column on Fast Company, you said one of the main reasons for the wholesale layoffs is that financial analysts reward companies for this type of cost cutting without realizing the true cost of layoffs. What tradeoffs are they missing in their analysis?

They’re not understanding the cost in engagement. For example, when you cut a workforce, you impact morale; you make people very afraid; you challenge their loyalty to the organization – all of those things impact engagement. Reduced engagement directly impacts the bottom line.

What are some of the measures of engagement? Well, some of the core measures are: your desire to stay with the organization; your job satisfaction; your motivation; your willingness to recommend the organization to another person; your productivity, do you feel like you’re being productive and working smarter and better. Those things are all impacted by a layoff and yet they’re not being included in the calculation of the cost of a layoff.

As an example, if you were to go out to your workforce and say, “We have to save X amount of dollars in labor cost, and there’s a couple different ways we could go about this: We could lay off 20% of our workforce, or everybody could take the 20% cut in pay in their schedule and we could add six unpaid vacation days. This is a shared sacrifice; we’re going to get through this together.” Now, all of a sudden think about how you feel about that organization. Think about how you feel about whether you’re motivated to try to make this work. I would argue that all of those aspects of engagement are maintained, if not enhanced, which again the research shows impacts your bottom line. But none of that gets quantified by these financial analysts. You just don’t hear it.

You mentioned the research shows that job satisfaction and motivation are connected to the bottom line, but it’s hard to put a dollar value on engagement, isn’t it?

It is, and I think that’s the challenge; how do we challenge the financial community to expand their understanding? You know, it’s interesting; there is so much research about the fact that layoffs really do not achieve your goals, and yet that seems to be what our business leaders are rewarded for. I really do believe it’s because the financial analysis modeling is not complex enough to account for the less-easily quantified results of downsizing. That includes increased legal liability because if you downsize and you don’t do it the right way, you’re hit with lawsuits from people who claim they were targeted unfairly. There’s also the cost of paying severance. So there are a variety of things, but my point is there’s a complexity of analysis here that needs to be taken into account, and that’s not happening. As a result, the rewards and incentives are not built into the system to encourage leaders to be more thoughtful, flexible, and strategic around how they reduce their labor cost.

On the flip side, there has to be some additional cost to the flexible alternative as well, right? I mean there’s the time to create, negotiate, manage these types of agreements, as well as the HR costs associated with the care and feeding of flexible arrangements and managing a flexible workforce.

Okay. But my response to that is; that’s why you don’t wait. You do not wait to implement a business-based flexibility strategy in your organization. A year ago we were having this conversation around the increase in energy prices and all of a sudden companies are going around trying to get people to work four days a week or work from home because energy prices went up. If you have a business-based flexibility strategy and energy costs go up; you execute your strategy toward dealing with that. Similarly, when a recession hits, you take the same strategy and you execute it toward that issue. The next challenge could be 40% of your company is purchased by an Asian organization, and now all of a sudden you’re reporting to people in another time zone. Well, you execute against that so that you can have better communications with that group in Asia and you can adjust your hours accordingly.

Again, that’s why it’s not just an HR program or policy. It’s processed based, which means there’s a process that helps figure out what flexibility is going to look like in a particular business given the resources, the people, and the realities of that business. But it is executed in the operations; it’s not executed in HR. So, there shouldn’t be this massive amount of execution overhead around flexibility if it’s already built in. And I have to tell you, downsizing ain’t no trick, it’s no pretty thing or low-cost thing to implement. It takes a lot out of HR, and it takes a huge amount of money. Not so with flexibility, if you have that strategy in place.

What’s the technology/CIO perspective on enterprise flexibility?

Do you think HR and IT talk about flexibility? No. Uh-huh. Rarely are they brought in the same conversation. And that’s why flexibility strategies need to live in the business because all these players need to come together for it to work.

I had a CIO recently tell me he loves their flexibility strategy because it allows him to rebrand what they are doing in IT; meaning it allows him to take what they’re already doing and rebrand it in the context of flexibility. Flexibility provides the context to explain how enterprise technology can provide value, and allows him to help people get more out of it. It isn’t even necessarily an additional investment. It’s just taking what’s already there and helping people apply it.

In one of your posts you interviewed Dr. Cappelli from Wharton – he mentioned one of the reasons companies might opt for layoffs instead flexible solutions is that people are easy to replace. You can fire people and then get them back if you need to.

That’s what we did in the last 20 years. What I thought was most interesting about what he said is that there is a precedent for flexible downsizing 20 years earlier, in the ‘80s. We moved away from it because we moved into a period where the employee-employer contract began to disintegrate, and people were viewed as being easily replaceable. Prior to that, companies tried to hold onto their core talent.

Is there still a war for talent?

We live in a world of rapid change, and my only fear is that a year ago you were struggling for talent, and now you think all of a sudden you have the pick of the litter; you don’t need to care about it anymore. I’m just curious where we’re going to be in a year. Are you going to be looking for people again? Does it really making sense to go into this hire-cut, hire-cut cycle? My feeling is that it doesn’t. I don’t know how you run an organization like that. I think there needs to be a lot more creativity and flexibility because I think those up and down cycles are going to happen a lot more frequently and a lot closer together.

Would you include talent marketplaces and “ideagoras” as part of your flexible work strategy? I’m thinking of things such as Elance and Guru.com for freelance work or InnoCentive and Nine Sigma for R&D solutions.

I did a blog post on my Work+Life Fit blog. I’m sort of musing about the post-recession workplace, and I go back to a model that I originally read about in business school back in the ‘90s by Charles Handy; it’s called the Shamrock Organization. Basically in that Shamrock Corporation you have your core people, and then you have the experts that come in and out of your organization on a flexible basis as you need them, and then you have this third group of part-time workers on the outside.

So, I think that the marketplaces you just described are going to become more part of this flexible management process. But, on the other hand, I also don’t know if you can staff a whole company that way. I think you’re still going to always have that core group; a group of people really committed to that organization’s success and mission, that’s the primary focus. The other expert knowledge you bring in is needed, but may not be 100% focused on that core mission. Having that core partly alleviates the risk of lost organizational memory and retaining key talent

As Charles Handy said, people will move in and out of different categories over time. Meaning, as an employee you may be a core person for part of your career, then perhaps more of an expert or a flexible consultant – a free agent, if you will – for other parts of your career. And so, I do think that’s part of it as well.

I’ve been talking to some more radical thinkers and they’re saying companies could become these miscellaneous organizational entities where you’re much more opportunistic and you can get whatever resources to pursue whatever type of initiative that you see potential in.  It’s driven more by what talent you have and what opportunities are available more than a central vision or mission for the company.

Yeah, I don’t know. Maybe there will be some companies like that. I can see that working in smaller organizations. I find that tough to imagine that in a bigger organization; I just don’t know how you would organize all of that without a core with a mission, a focus, and a vision. I think a smaller organization can sort of operate that way perhaps, but for a bigger company… I think it’ll be interesting to see how it would scale out.

Any final thoughts?

I think it’s important to frame this as another, more flexible model that will not only move us through this recession, but is a way of operating going forward. I also think there are a lot of references here to the next generation of workers, which I know is obviously a very important group of people for corporations. The only thing I would say is, just make sure that when you’re talking about younger employees that you understand that a lot of older employees feel the same way about things. Sometimes there’s a tendency to focus on the next generation, but just make sure you’re always trying to find connections to the broader employee population. It’s not just younger people fearing layoffs or flooding social networks to build leads, circulate resumes, and reconnect with possible employers.



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Yost broadens downsizing calculations « PublicOrgTheory
Apr 19, 2009 5:08

[...] a Wikinomics discussion with Cali Yost about an intuitively sensible idea–flexible downsizing: For example, when you cut a workforce, you impact morale; you make people very afraid; you [...]

Are Layoffs Necessary? « Change Meme
Apr 21, 2009 2:02

[...] research shows that 94% of employees would consider a different pay/work structure rather than go through layoffs. So employees can see [...]

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