Downsizing or Dumbsizing

Associations Struggle With Staff Reductions

Associations thrive by adapting to manage changing circumstances. When changing circumstances involve declining membership or reduced revenues, many association leaders have been quick to embrace the latest fad in corporate human resources – downsizing. But this chosen path of budgetary salvation may, in reality, be the harbinger of organizational ruin.

“Do not confuse ‘downsizing’ with ‘dumbsizing,'” Dave Mikkelsen, CAE and executive director of the Autism Treatment Services of Canada in Calgary, said. “All too often organizations make the mistake of paring down to meet budget targets without giving adequate consideration to member needs and services. If your services will be so diluted as to be inadequate or useless, perhaps ‘winding down operations’ would be a more logical solution.”

George Fleischmann, president of the Food and Consumer Products Association of Canada in Toronto, added that the urge for associations to downsize is largely a reflection of their membership. He said, judging from his experience and keen observation of the North American market, that as corporate members downsize, ‘right size,’ reduce staff and outsource, their sense of getting value from their association dues investment is heightened when they witness their association reducing its costs while sustaining or increasing its value to members. But walking this razor’s edge is not easy and its success is not guaranteed.

Like the corporate world, associations are downsizing, restructuring, outsourcing and economizing in creative ways. Some take advantage of participating in coalitions led, and financially carried by, those organizations with the most at stake. Others implement austere constraint policies regarding travel, conference attendance and all items that can be described as discretionary spending, despite what the budget reported. Some associations elect to live common-law; sharing quarters, equipment and even some common staff. In Fleischmann’s case, their office houses 12 associations and have as their objective to fill the entire office complex with associations willing to share resources and expenses.

Diane Brisebois, CAE, and president of the Retail Council of Canada knows about restructuring from experience. “While a weakening of the economy and industry consolidation may seem to have a negative effect on an organization, in RCC’s case, it forced us to review our core mission and to get a better understanding of what members valued most,” she said. “We identified our core competency and our differentiating value in a crowded marketplace. In doing so it also allowed us, with the assistance of a senior and seasoned human resources expert, to identify the human capital required as well as the core human resource competencies needed to move the organization forward.” Brisebois added that the end result was a motivated and well-trained workforce that remains focused on what members value most.

John Gustavson, president of the Canadian Marketing Association, offered other approaches to downsizing for when an association’s time has come. “The first option is always downsizing by attrition if possible. However, this means that remaining staff take on new assignments. . . don’t underestimate the re-training,” he counselled. “Another option is to sever ties with that employee you sort of thought was a problem but have been postponing.” He added that in his experience, this type of strategic move could significantly bolster staff morale.

Jack Shand, CAE and a consultant with the Association Resource Centre in Toronto, encouraged organization boards and CEOs to be humane with staff when forced to downsize. “If the only option is to terminate a person’s employment, do all that you can to ease the transition for the employee,” he suggested. “In addition to notice or pay in lieu of notice, provide staff with access to career transition consultants, coaches, and other professionals who can help the individuals find new, rewarding work as quickly as possible.” He added some of these professionals might also be volunteers within your own organization, such as human resources professionals in member firms.

Shand said the organization that downsizes still has a reputation to maintain among members, the staff who are not leaving, government and other stakeholders, not to mention future prospective employees, so it is important to do everything possible to demonstrate that the organization is a responsible employer.

Opportunities may exist to have external experts provide presentations to a group of departing employees (e.g., resume writing and job hunting skills), rather than paying for one-on-one counselling with an expensive outplacement firm.

There are a number of practical tips to follow when enacting a reduction in staff. If you are asking the remaining staff to do more, consider supporting them with flex time and working from home arrangements. If you downsize, remember to communicate with the remaining staff; they will want to know if there are to be more layoffs and what is expected of them.

Restructuring is always difficult and not always necessary. When executed with proper timing and meticulous planning, it can revive an organization. Yet not all associations turned to downsizing in the hard times of 2002.

Patrick Johnston, president of the Canadian Center for Philanthropy, said the worst was in the past in regards to associations downsizing. “There was a lot of downsizing several years ago when governments, at all levels, were reducing their spending but that isn’t the case today. While government funding for the charitable sector today isn’t anywhere need what it was five of seven years ago, it has remained fairly stable over the past few years,” he said. “In addition, there have been substantial increases in the total amount that individual Canadians donate each year and that has benefited charities and the associations that represent their interests.”

Jost am Rhyn, the new executive director of the Canadian Veterinary Medicine Association, spent the last decade working in the sports association community. He observed first-hand the impact of the government budget cutbacks of the mid-90s that Johnston referred to. His former organization, Synchro Canada, had to invest carefully in its programs, distinguishing between discretionary and non-discretionary spending. He explained all expenses had to be focused on the advancement of the athletes. New partnerships had to be explored with sponsors, suppliers and with agencies such as the Canadian Coaches Association and the National Sport Centers. Such partners had to be convinced that a partnership with Synchro advanced their own mandate and justified their investment.”

An important aspect to downsizing is working with the board of directors to agree on what services the association, in light of reduced resources, will cease providing. But what happens when the plan necessitates a reduction in the board? Wayne Glover, CAE, and owner of the multiple management company Associations First, recalled a client who did just that. They cut the number of provincial representatives in favour of regional representatives, he reported, but extended an olive branch to sponsor a member from a province not directly represented to attend the annual general meeting. “It wasn’t well used but it made the transition easier” he said.