Fast Company: One Company Decides When to Say “When” in the Next Phase of Flexible Downsizing

As follow-up to last week’s post, “One Year Later: Next Stage of Flexible Downsizing Post-Recession, Pre-Recovery,” I interviewed Scott Jones*, a senior executive at a national architecture, engineering and construction company (he asked not be identified since many of the issues we discussed are not yet public knowledge within his organization).

In the worst part of the crisis, Jones’ organization took a flexible approach to downsizing that reduced costs and minimized layoffs.  But a year later, the recovery across the firm’s businesses is uneven. And the pressure is building to restore salary and schedule concessions willingly made at the beginning of the downturn.  Here’s the story of how one company is navigating the next phase of its flexible response to the recession.

CY: Welcome. Talk more about your company’s flexible response to managing labor and operating costs since the downturn began.

SJ: When the recession began to really affect our business about a year ago, we started by cutting the pay of all of our principals.  When that wasn’t enough, we made pay cuts in specific offices and business units that were struggling the most.  Then, about eight months ago we reduced pay by an average of 5-10% firm-wide.  In slower units, the pay cuts were deeper than 10% and we instituted some temporary layoffs (or furloughs) of varying lengths, but generally more than 30 days.

When we started the process of making the cuts, we really weren’t sure how long the need for sacrifice was going to last.  But there was a real sense that we are all in this together.  Even the people within offices and business units that continued to be busy were willing to cover those that weren’t as active in order to limit our need to lay people off.

CY: What are you hearing and seeing now? (Click here for more)