Downsizing: a consultant's perspective

"The 1980s have proven extremely difficult years for many resource-based organizations. Mining companies have learned how to weather the negative effects of inevitable economic cycles. However, with some notable exceptions, such as gold mining companies, the mining industry has faced a broader and deeper round of cutbacks than any experienced since the 1930s. Downsizing has been a major issue for many mining companies as they have faced the need for dramatic staffing cost reductions in the recent past.The continuing current rapid rate of change in technology and the marketplace, coupled with increasing merger and acquisition activity, will provide an on-going need for some companies to face major reorganization. This inevitably will involve down-sizing activity in some instances.Given this scenario, it is worth reviewing the industry's past experiences to identify approaches and techniques that could prove of value in handling a future staff downsizing challenge. This paper is based upon a downsizing consultant's experiences with the mining industry and other sectors, and highlights what appear to be key staff reduction planning and process issues.Planning for DownsizingA review of companies' downsizing activities of the last few years reveals four key activity stages which need to be addressed to ensure a successful transition. These stages are:1. organization planning;2. developing cost reduction strategies;3. implementing downsizing; and4. building for the future.A business situation that is severe enough to require drastic staff cuts typically affects all aspects of a company's operations. Most mining companies have reviewed cost efficiencies in many operational areas. However, these reviews often have been short term in focus . As a result, some companies have experienced multiple downsizing; each event a response to an immediate economic threat. This has sometimes resulted in an unstable organizational environment, with severe stresses on staff morale and productivity.In the long term it is more efficient and less stressful to the organization to adopt a more comprehensive and longer-term strategy. Especially in capital intensive mining operations, it makes sense to review all areas of business activity, not just staffing."