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>>Steve Macaulay: In today’s business climate, managing downsizing and plant closures is
becoming a common and important issue. Now, in the studio today is Professor Mike Sweeney.
Now, Mike has had a lot of firsthand experience of watching, observing and noting some of
the key points about managing downsizing and operations closing down.
Now, Mike, let’s have a look at this; what is your take on downsizing and closure?
>>Mike Sweeney: Well downsizing and closure are essential activities to restructure an
organisation so they become more competitive, so we can expect a lot of this to continue.
It is a natural progression in terms of the development of an organisation.
>>Steve Macaulay: One of the key things with your operational background is the idea of
retaining corporate reputation and managing the operation smoothly – can you say a bit
more about that?
>>Mike Sweeney: Yes, when a company makes an announcement to close or to downsize its
operations, it has a big impact upon the local community and on the customer base and the
supplier base. So essentially when an organisation decides to make such a decision it must manage
the reasons, it must inform the reasons why such a decision is necessary.
>>Steve Macaulay: So don’t just pay attention to the people side, remind yourself about
the operational side, remind yourself about the necessity for keeping your reputation
strong?
>>Mike Sweeney: Absolutely, because closure or downsizing is a balancing act; we must
protect the reputation and the legacy of the organisation and we
must consider the impact of the decision upon those people who are employed within the organisation.
>>Steve Macaulay: You have developed a five stage model and that is number one on the
list, make sure you understand the impact on the strategy of the
business, on the reputation of the business.
The next one, the stage two, was managing communications. Now, I can clearly see that
is important.
>>Mike Sweeney: Yes, the communications consist of two forms – external and internal. External
is to inform the outside world of what decision has been made and the reasons for that decision.
Internal is to inform the employees and also the supply base of the reasons why the organisation
is downsizing and why that particular plant has been chosen, which many organisations
are not very good at informing.
>>Steve Macaulay: In these days of Twitter and Facebook and so on, what are the implications
of that in terms of communications?
>>Mike Sweeney: Well that technology provides an opportunity; you can either use it to better
inform everybody inside the organisation about the decision and the reasons why the plant
has been chosen for downsizing or closure. Or you can ignore that and it will be exploited
by others – those people affected – and will be used for propagation of rumour and
all sorts of negative reasons.
>>Steve Macaulay: And you have actually seen that happen, haven’t you?
>>Mike Sweeney: I have and the organisation where this has taken place is beginning to
recover from the consequences of that.
>>Steve Macaulay: So, make sure you take advantage of the means of communication, otherwise other
people will?
>>Mike Sweeney: Yes, absolutely.
>>Steve Macaulay: Now, the next one, which I guess is more predictable, you have got
to manage the actual closure well. What does that entail?
>>Mike Sweeney: That is essentially a project management activity. It is very much operations;
it is setting the vision for the closure, the timing, the run down of operations, the
reduction of employees and informing employees of their role in the future. So it is creating
a clear vision for everybody about the run down or the closure
process.
>>Steve Macaulay: If we look at the people side of this, there is a stage that you have
clearly identified that says, manage investment in employees – can you say a bit more about
that?
>>Mike Sweeney: Yes; this is where the cost of closure or downsizing will have the greatest
impact. If you don’t manage the employees properly, it will be a more costly process.
Essentially it is about counselling them about what is happening and making sure that one
understands the emotional changes that people go through on hearing such an announcement
like a closure or downsizing or redundancy.
>>Steve Macaulay: Some people would say, that’s all very well, but we have got a business
to run here, we haven’t got time to do that kind of thing.
Mike Sweeney Well, if you don’t handle this properly the continuity of the business will
be very stalled – really, stalled – and so attention to these sorts of details and
understanding – in particular counselling and training people for displacement and determining
the appropriate separation packages – is vital to the continuity
of operations.
>>Steve Macaulay: And you observed this at close hand at Luton when they closed the Vauxhall
plant, didn’t you?
>>Mike Sweeney: I did.
>>Steve Macaulay: And one of the key things from an operational perspective is about managing
continuity, can you say a bit more about that?
>>Mike Sweeney: Well the continuity there [at Vauxhall] was that they wished to continue
to produce for another fifteen months and so they had to
retain some people in a reduced operation, while at the same time managing the transfer
of others to another plant. So it was a very complex process. The needs of those two people
are different; the people that you are retaining, you have got to develop their skills so they
can take on a greater number of roles; the people who are transferring, you have got
to get them to settle in the new sister plant. So those are two different people management
activities, both vital to the survival and performance of the business.
And at the same time, of course, you still have to manage the performance of the company.
>>Steve Macaulay: So, if we were to sum up then about the dilemmas, the difficulties,
the opportunities, how would you describe closure and downsizing?
>>Mike Sweeney: A balancing act; it is managing the legacy of the organisation, its reputation
and its business performance. And it is managing the
people who are either retained by the organisation or will separate from them.
>>Steve Macaulay: Mike, thank you very much indeed.
>>Mike Sweeney: A pleasure.