The Employers Forum on Age

It's time for downsizing to grow up
2 June 1997

The Employers Forum on Age publishes the first business-led report on downsizing
Talent lost in early retirement schemes leaves companies counting the true costs

Between 1990 and 1995 Britain's top 12 companies cut their workforces by 44%. A culture of 'downsizing' gripped the business world and reducing headcount was seen as the panacea for all corporate ills. However, a new report published by The Employers Forum on Age (EFA) finds that the cost savings which were the object of the exercise have too often proved illusory. The widespread use of early retirement and voluntary redundancy, which inevitably targeted the older worker, has left many UK companies counting the cost of losing some of their most knowledgeable and experienced workers.

'MANAGING THE SIZE AND BALANCE OF THE WORKFORCE' is released to coincide with the EFA's first Annual Conference on Tuesday 3 June. The report is unique in its approach to the issue of downsizing – it is a practical business tool that has been compiled with the co-operation of some of the county's leading employers. It offers a powerful warning to employers to learn from costly past mistakes and presents the real alternatives to voluntary redundancy and early retirement when reducing staff numbers.

'Downsizing has been seen by many as a blunt tool and its very bluntness may have limited its effectiveness,' says Chairman of the EFA and Deputy Governor of the Bank of England, Howard Davies. 'Redundancy is a painful experience for both the individual and the employer, but this report illustrates that organisations should not assume that reducing numbers in this way will save them money in the long run'.

Voluntary schemes, by their very nature, leave the decision of who stays and who goes in the hands of employees. Although volunteer schemes will always have their place, 'MANAGING THE SIZE AND BALANCE OF THE WORKFORCE' argues that in order to ensure the future health of an organisation, planning and control of workforce reduction needs to rest firmly in the hands of the employers.

'MANAGING THE SIZE AND BALANCE OF THE WORKFORCE' offers checklists for employers that will:

Clarify their reasons for seeking workplace reductions
Examine the alternatives to redundancy
Identify selection criteria other than age
Help to calculate the full costs involved
Aid the quick and efficient planning and implementation of workplace reductions
Outline employer's legal requirements

In a world where the use of automation and IT is increasing and a globalisation of markets is leading to mergers and acquisitions, there will continue to be a need to reduce workforce numbers. However, as the economy improves, businesses are better able to lift their sights from emergency reductions to a more considered and effective process of change.

It is time for 'downsizing' to grow up.

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