During the current economic turbulence facing corporations,
executives are searching for strategies that will
enable the organization to survive, maintain shareholder
value, and grow. One approach many companies are employing
to cope with the hostile and dynamic environment is
organizational downsizing. According to the Bureau
of Labor Statistics, downsizing activities in the
United States have exceeded two million job cuts in
the last two years, 2004 and 2005. In 2005 alone, there
were 6181 layoff events with an average layoff of
197 people laid off per event for a total of 1,216,886
jobs lost. ("Mass Layoff Statistics," 2005).
The impact of these losses on the company, the impacted
employees, and the communities, is significant. One way
corporations are mitigating this impact is by adopting
the principle of ‘Compassionate Downsizing’:
Compassionate Downsizing
A Trend in Corporate
Leadership
- Compassionate downsizing is the offering of services beyond
outplacement to help employee transition with respect and care
- It provides companies an opportunity for business success by
preserving employee moral and generating continued goodwill in the
community
- Most companies are now offering severance pay, outplacement/job
placement assistance and continued healthcare benefits
- Currently, some firms are enhancing their severance packages by
providing additional benefits:
- Education and training benefits are offered as a supplement to
outplacement, not as a replacement
- 84% of survey participants report their companies offered
traditional outplacement assistance
- 13.6% offer education and training as transition benefits
- Companies offering education and retraining benefits to laid off
employees tend to be those in the energy, utilities, healthcare and
consumer manufacturing industries
- Companies providing education and training benefits spend an
average annual cost per employee of $4,025
- Exelon Corporation, J.P Morgan, Kellogg Company are model
companies embracing compassionate downsizing offering education and
training benefits:
- The top four reasons respondents cited to offering transition
benefits to downsized employees are:
- Sustain the morale of retained employees
- Demonstrate the company's commitment to remaining employees
- Manage former employees' perceptions of the company
- Maintain the company's reputation in the community
The EA Solution:
Our mission is to help companies mitigate the negative impact of
downsizing on both workers and the community and embrace the
leadership of Compassionate Downsizing.
Instead of the negative impact of job losses, our vision is to be
the catalyst for your company to promote entrepreneurship and the
creation of new business enterprises that will add new jobs and
generate new business revenues for the communities in which your
company operates.
Significantly, 6.8 % of discharged managers started
companies last year, while 11.3 percent of adults
in the U.S were engaged in entrepreneurial activity
in 2003, up from 10.5 percent in 2002. Unfortunately,
many of these workers lacked the training and resources
needed to successfully launch a sustainable business
enterprise, so the economic benefit was not adequately
realized.
Entrepreneurship Advantage Inc. has developed a
comprehensive and customized entrepreneurship training
program for impacted employees that will empower
them to create sustainable business enterprises.
We offer your company the ability to provide the
most effective and compassionate transition for
downsized workers by offering each employee a transition
choice, an alternative to re-employment assistance,
Entrepreneurship Training.
Bottom Line for Your Company
Affording dislocated workers with the choice and
resources to pursue entrepreneurship training with
Entrepreneurship Advantage Inc, will create grateful
former employees, preserve remaining employee morale
and generate continued goodwill in the community.
By communicating the availability of entrepreneurship
training as a transition alternative early in the
downsizing process, instead of disgruntled laid
off workers you may have voluntary employee separations.
How Do I Get Started?
Contact EA when the decision is made to downsize
and our Team of consultants will work with you to
help you provide your employees with entrepreneurship
transition training and support.
