Let's talk about downsizing. It’s a word I’ve been using a lot lately as it relates to moving from NC to VA. Indeed, used in the context of moving, it suggests that the home you’re in is too much for the size of your family. Or that you’re trying to cut costs a bit, and get somewhere a little less expensive. In either case, it’s seen as a logical move – either you’ve got too much home to look after, or you’re paying too much for it. If anything, it’s applauded as a smart move; after all, our parents downsized when the kids left home, and now we’re doing the same.
But apply the term to companies, and you have a different reaction – largely depending on the size of company and the prevailing company culture. The emotion charged in the word ‘downsizing’ in the corporate world is no doubt due to the general understanding that it means reducing people, rather than square footage. The images conjured are of displaced breadwinners and stressed-out families, of people emptying their desks and leaving like zombies, with tension and fear permeating the halls before, during and after the downsizing event. These images haunt most people who hear about their company deciding to ‘downsize’, even if they’re confident that ‘it’s not me’ this time.
We know the monetary impact, but not necessarily the psychological impact. Downsizing does impact the bottom line in usually a positive way by reducing the wage bill, even if that reduction is not immediate due to the associated one off costs in making the downsizing event happen. What is tricky to determine is the net impact of downsizing on the corporate psychology. Some companies actually find increased productivity during the period when the clouds are darkening, in part as a response to the threat of job loss. Vacations are delayed, working hours increased, responsiveness to requests quickened, and multiple cc’s on emails, to influence perceptions that the employee is a not a viable downsize candidate. Yet in other cases, mistrust of the company increases, people take less risks (“keep your head down, so it’s not shot off” was what one manager once advised), and the negative gossip and atmosphere make work truly a chore. Where trust was once in place between employee and company, now there is an ‘atmosphere’.
It’s a fact of life that as technology improves, and markets change, more work can be done with less hands. Downsizing, or right sizing, or streamlining, or tightening belts, or being fiscally responsible, or reducing headcount: whatever you call it, it’s a fact of life for any corporation over time. Just as Moore
However, if you're talking to (or marketing to) SMB owners, it's a different story. They don't automatically see a bright, shiny technology future as a good thing. Their first reaction isn't to look at the productivity gain, but at how much they need to change their business processes and, above all, what that means for the people who work for them. These people aren't just boxes on an org chart but people they know personally, often for many years: the loyal employee/friend who is suddenly obsolete. So for many SMBs downsizing is not necessarily a positive story but a painful one – even if necessitated for the entity’s survival.
So like it or loathe it, downsizing is a constant, even in an expanding economy. Companies no longer want to be accused of being complacent or ‘overweight’. Managers need to show growth, even if the top line is flat. Many SMB owners will wrestle with the emotional and rational consequences of making tech investments. And employees will continue to have to deal with the real or imagined consequences of downsizing.
BTW, if there’s anyone looking to ‘upsize’ in NC … have I got a housing deal for you!
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