Rightsizing the Right Way.

Trimming the Size of the Central Office Can Be Handled Humanely

Corporate America is chopping away at its organizational structure through downsizing--or "rightsizing" as some call it. Pick up any newspaper and you will read about the Procter and Gambles, Eastman Kodaks, and IBMs of the world cutting back vast numbers of employees.

In past years, the blue-collar workers were the primary recipients of pink slips. Today those notices are destined for the palms of middle- and top-management employees.

Educators should note what is occurring to their corporate brethren, for just over the horizon is the call to "cut the fat." It's obvious. Most Americans are watching their wallets carefully and telling schools and public employers they should do the same. This attitude of "you'd better tighten your belt," coupled with what appears to be a growing distrust of public institutions at all levels, clearly indicates that the taxpayer will no longer put up with organizations they perceive as "bloated."

Whether you think your organization has too many employees, too many administrators, or is top heavy is one thing. What the public thinks is really what counts. Sensing that the organizational structure is vulnerable, therefore, it stands to reason that the school district, on its own, must make the first move to reduce its staff.

The district frontliners, its teachers, are the least likely to be exposed to the public outcry of wasted spending. They are getting enough pressure on just being accountable. The group most susceptible to the pink slips are the administrators, the executives of public education.

How can school systems make the painful process of downsizing palatable and distanced from the courtroom? As key architects of a major reorganization in the Cincinnati Public Schools in 1991-92, resulting in a 50 percent reduction of central-office jobs, we learned some lessons from experience that could help other school districts' downsizing efforts.

When given the charge to cut back the central office, we knew we were in for challenges that neither of us had ever faced. These involved decisions affecting the future course of the school district as well as our co-workers, many of our personal friends, and ourselves.

Setting Goals

The goals of downsizing are to reduce the organization's size and create a new organizational culture that is more efficient, leaner, and more responsive to the customer. Downsizing and the way you do business must go hand in hand. The equation is simple.

How can you reduce an administrative organization by 20 percent and not think about how the organization will be impacted by this loss? If it is not impacted, then it stands to good reason that your organization could have done without the people in the first place. Every corporation, when giving out the numbers of people who will be cut, usually indicates in the same press release how the business operations will be impacted. Schools must do the same.

Downsizing is a numbers game, a technical game, and most importantly a human experience. The numbers game is the easiest. Downsizing is not a shell game of moving the same people around with new titles. Many school districts have gone through reorganization without the intent of downsizing.

Unlike the old way of reorganization, downsizing guarantees that positions will be cut and people will leave. The best time to implement downsizing is when your district is in the best of times. This bold move demonstrates to the public that you are creating an organization that is "meaner and leaner" and in tune with the public demand of cutting administrative costs.

Downsizing is not only for big cities. The public cry of "too many administrators" is a pervasive attitude that doesn't stop at big city limits.

Downsizing is tough and gutsy. It hits at the perceived fat of the organization. The total number affected by downsizing may be dictated by your budget (e.g., reduce by $4.5 million) or by a percentage goal (e.g., 20 percent of the central-office staff), or both.

More important than the numbers are the principles and values that will govern how you proceed Remember, people are behind the boxes on the organizational chart that you discard. Before you speak a word bout downsizing, the leadership of the organization must understand how wit wants to treat people through what will be undoubtedly a difficult period in the life of the organization.

Start with a blank page with no givens, no favors, no sacred cows. To wink and nod to some people that "things will be okay and you don't have to worry" sets up an expectation that you may not be able to deliver. It furthermore creates a preferred versus not-wanted group that heightens your exposure to discrimination charges.

Before even thinking about who goes where on the organizational chart, ask two key questions: Whom do we serve, and how best can we serve them? Putting together a vision and mission statement may address these questions conceptually.

Public and staff input is necessary in developing the new paradigm. Although this step takes a considerable time, it provides the district with a justification that will be necessary when rolling out the new organization to internal and external publics. It says to the public that we put our customers first in our thinking and the functions we retain or create clearly serve that purpose. Further implied within that principle is the understanding that the people we keep are the most qualified to carry out that function.

A New Chart

With the assumption that the organization understands how it wants to conduct business, creating the organizational chart to support that mission becomes the next major step. This step begins with an understanding of actually what work is currently being conducted within the organization.

Throughout this first step, you must focus on the work, not the people. This is difficult, since our organization, like any other, has as its work force a sincere, committed group of employees. However, the danger of focusing initially on the people is that you may be driven by the personality of the organization, rather than its purpose. By looking at the work or functions within the organization, you will most likely determine what work needs to be continued, what needs to be discontinued, where work will be done (e.g., school or central office) and finally, what work needs to be added.

For example, the hiring of teachers currently may rest with the central office. After reviewing this function, you may determine that the hiring process can be streamlined into the schools, enabling you to reduce staff in the personnel office. Determining what and where work will be processed by the new organization will lead to major functions that are critical to the mission of the organization. Now it's time to deal with the people.

Facing People

The human side of downsizing, no doubt, is the most difficult step in the process. The critical question is whether the people you currently have in your organization possess the necessary qualifications required for the new positions. Some may, some may not.

To provide flexibility in selecting people for new positions, you may consider offering an incentive package that will allow employees to separate voluntarily. The downside of downsizing as well as the great risk you face is that the "wrong" people may leave. A talent or brain drain may be a serious blow that could temporarily paralyze the organization or even permanently damage its effectiveness. This risk must be carefully calculated before offering the incentive package to employees.

Developing the incentive package, sometimes known as the "golden parachute" or "golden handshake," starts with an analysis of the employee classification (e.g., administrators) that is your target group. This breakout is, at minimum, by age, service, race, and gender.

Once you have this data, you can analyze it to answer key questions. For example, how many are eligible for retirement? What percentage must take the package to hit the designated "numbers"? What is your best guesstimate on how many will take it? What impact will the package have on race/gender breakout of the organization? Where and when will you recruit new people to replace individuals in specialized positions (e.g., director of food services)?

The incentives must be attractive enough that it will cause employees to take notice of the package. A sizeable lump-sum payment and health insurance are probably necessities. The pie may be sweetened with retraining benefits, higher sick-leave conversion rates, retirement-year buyouts, an annuity plan, and outplacement services.

The safest legal way to proceed is a voluntary plan that addresses a particular age or experience group, such as more than 50 years old with 25 years of service. Some buyout plans use a fixed number, such as 75, allowing the individual to become eligible with any combination of age and service. This would let someone leave who is 56 years old with 19 years of service. Some plans are geared only to retirement eligibles (e.g., two years of buyout time for every eligible employee in the group) and are tied into a state retirement program.

However, one should consider a plan that allows as much flexibility as possible. This may exclude the linkage to state-retirement guidelines, since many state buyouts will not allow you to target a specific employee classification group (e.g., administrators).

A resignation program not tied to a retirement program will allow the individual to seek employment in another school district. The more you can stress the words "voluntary separation" or voluntary "resignation" as opposed to "retirement," the further you are from an age-discrimination issue.

The other way to go, but one filled with more minefields, is a voluntary-separation plan that pinpoints certain people within the organization. If you decide to use this method, create some objective evaluative criteria to make your decision on who specifically gets offered the package. Using evaluative criteria will be discussed later.

The "window" to accept the voluntary package should be within a reasonable time, but no longer than 30 days. During this time, an all-out communication campaign must be put into place to inform employees about the plan. Making the decision whether or not to accept the package, no matter how lucrative it is, becomes excruciating for all eligible employees. We found some individuals were just not ready to leave, no matter how much sense it made on paper.

If your school district never has offered the golden handshake, you will receive a barrage of questions from your employees, probably under a cloud of suspicion. If you are offering a sizeable amount of money to leave, the obvious employee question is "what's the catch?" Haying answers for all questions and narrowing the spokespersons to a few knowledgeable people will help gain employee confidence.

Other Options

If you do not offer an incentive package, another course of action is to use contract non-renewals or reduction-in-force procedures. This may play well with the public because it minimizes the downsizing cost, but it may not clean out as many individuals as needed since some may have years remaining on their administrative contracts.

You can really risk it by returning an administrator to the classroom while continuing to pay the individual the salary he would earn under the remaining years of the contract. This step normally is permitted only when there is mutual agreement to a demotion between the board and the employee. In most cases, the employee sees the handwriting on the wall and will agree to the move, assuming his pay does not decrease.

Depending on the size of the district, other creative options may be developed for specific cases that in effect serve the interests of both the employee and the board. The bottom line is that all parties become winners.

Finally, if you can achieve your "numbers" through simple attrition, do it without the package. This method is fraught with fewer legal complications and it sidesteps the challenge of how to convince the public that golden parachutes and handshakes are, at times, necessary and less expensive to the district.

All individuals separating from the district under a voluntary separation/resignation plan should sign a prepared separation form, acknowledging that the separation is voluntary. This form also should clearly release the district from all future legal claims under existing laws.

No matter what you do, think through all of your options and get good legal advice. The cost of defending against even one disgruntled employee exceeds the cost of sound legal input.

Placing Names

Once the package has been developed and the window of opportunity closes, the tough process begins of putting names next to the positions on your new organizational chart. Your No. 1 task is getting the best person into a job for which he or she is qualified. Note that we did not say "best available person."

What you may find as new positions are created is that no one currently on staff has the qualifications to match the new position criteria. Although evaluations may be taken into consideration, they probably are not going to be the sole piece that hurdles you over this challenge. A system called "paired comparison" may be the solution.

With this process, you define the skills that relate to a specific job. In matrix form, listing the skills on each sheet, you compare candidate A to B. Then A to C and so forth. What should emerge is the individual who comes closest to the profile demanded by the new position.

The paired-comparison system also may be used to determine which employees are offered the voluntary-separation plan discussed earlier. Many decisions are no-brainers, such as retaining the transportation director, a specialized position where few individuals within the organization possess the appropriate qualifications.

However, if your incentive package works and many administrators opt to leave, you probably will not have to use the paired comparison system. In fact, for some positions there may be no viable inside candidates.

The Unselected

Once the voluntary separation program has been closed, you have to face those who have not taken the package and whose names do not appear on the new organization chart. A review team comprised of, at minimum, the superintendent, personnel director, and legal counsel should monitor all recommendations. Each case must be carefully scrutinized based on the criteria you are using to separate individuals as well as conformity to existing employment laws.

The big picture has to be accounted for to ensure that your actions do not disproportionately impact a protected group (e.g., women, Hispanics, those over 40, etc.). Once you have completed the number crunch and discover your numbers are out of balance, you must either reevaluate the process that you used or have an explanation that clearly justifies your results.

How you treat the displaced employee will be carefully watched by the entire organization. By treating your employees well, you tell the remainder of your organization, "We value our people, no matter how difficult the circumstances may be." No one likes to tell an employee that his or her services no longer are needed.

When giving bad news, have a prepared script and limit the time you spend with the individual. During the conference, humanely get to the point, show verbally and non-verbally your sensitivity, and if necessary, allow the employee to go home for the remainder of the day.

Discussing at length the reason for the displacement becomes a no-win situation. First, the employee is usually in such a state of shock and denial that he will not hear what you say. Above, all, no matter what you say, it probably will not appease him. Once the shock is gone, anger sets in. Telling the employee "too much" only confuses him and may in the long run get you closer to the courtroom.

On the healing side, the faster you can get the employee into an outplacement program, the faster you will be able to help him focus on the future and close the door of the past. If appropriate and financially sound, a severance package (health benefits, three months salary or more, and outplacement services) should be offered to those who simply do not have a position in the organization. This severance package must not be as sweet as the first voluntary package, but it will help dull the pain.

Again, the separation agreement, including the relinquishing of future legal claims against the district, must be signed if the package is accepted. In Cincinnati, we found some individuals were cautious in signing anything. However, as the deadline grew closer, the majority of those who were apprehensive selected the benefit of a sure and generous package against the uncertainty of litigating a wrongful termination suit.

A New Culture

Once new positions and new people are defined, the new culture will evolve. The transition into the new organization may be just as difficult as the downsizing itself.

The district is faced with the loss of many "good" people who have a great deal of experience and expertise. Taking their place, assuming that certain positions remain, may be individuals who are new to the district or the job.

Initially there may be confusion as to who is doing what. Questions such as "How do they expect us to do all of this work?" will emerge. Relationships and roles may be strained. At times, a degree of sadness will set in when the "survivors" express their feelings for acquaintances who have left the district. "It sure ain't like the old days" may be heard throughout the district.

This transitional period, which may be extremely rocky, is critical to how the organization will reshape itself. A number of factors may influence the new way of doing business, but a given is that strong leadership must emerge to guide the ship to smoother waters.

Uncertain Impact

Downsizing as defined here is so new that the jury is still out as to whether the possible negatives--new people/new jobs, the talent drain, the feeling of job insecurity--outweigh the benefits of creating a new culture. Some organizational experts indicate that to make significant systemic changes within the organization, the "old guard" must go, no matter what the cost.

What is certain is that there is no assurance that the end product--a leaner and meaner organization--has an immediate impact on student achievement.

Rightsizing is tough business but a reality of the '90s for school districts. Those who spend time planning for it, ensuring that people will be treated humanely, and realizing that by itself it may have little impact on achievement stand a better chance of coming out the right way.

Roger Effron, formerly the personnel director of Cincinnati Public Schools, retired as part of the buyout program and now manages Effron and Associates, a human resources consulting firm. John Concannon serves as legal counsel to the Cincinnati Public Schools and chairs the Ohio Council of School Board Attorneys.