Conference 7.286::digital

    Don't sweat it, Brian, there're plenty more coming.  Hefner talked
    about the need for 10,000 more lay-offs as recently as yesterday.
    
    Anyhow, good luck.

    Really??  Would you care to provide some detail....excuse me, what??
    You want in the conference room in 10 minutes.....and bring my badge??
    
    Gee, I wonder what that's all about?

    What? Who? When? Who's Hefner?
    

    Bill Hefner VP of...?
    
     
    
    

    What happened to .2, it has disappeared?
    
    Dave

    I think it mentioned downsizing supposedly going on at CTC and UCF
    this week.
    
    Mark

    re: .1
    
    What remarks by Hefner?

    Nit time ... if you're going to invoke the name of Bill Heffner,
    the least you could do is spell his name correctly.

    In a meeting last week, Heffner mentioned the necessity for an
    additional 9-10,000 lay-offs.  Does this really surprise anyone?
    
    Meanwhile, I just received a very comprehensive schedule of Valuing
    Differences "events" for June.  Things can't be that bad if we can
    still play these silly games.                              

    No, it doesn't surprise me. I was an MCGer until a week before they
    went bust. It also doesn't surprise me that we can still play the
    silly games. I think the silly games are a big part of the problem.
    
    Re .2, .6 and .7. Is zis zee new Digital, vere YOU VILL NOT SAY
    DOWNSIZING?"
    
    Katherine
     

I saw a message that referred to (Mr.) Heffner's discussion about a need to
further reduce headcount based on industry comparisons of profit per employee.
I don't recall all the specifics. There were a dozen or less companies with
DEC at the bottom. The PPE ranged from some_tens_of_thousands_of_dollars
(I think) at the top to DEC at under a grand per employee at the bottom.

My question is -
   If you reduce a company's headcount by roughly 10 percent, how do you
   make major changes in a <$1K profit per employee figure?

   By my math, all else being equal, you only increase the number by about
   10 percent. Hardly seems worth it for the effort/cost.

-Jack

    RE: .12 Quite right Jack. All the cuts in people are largely cosmetic.
    They are designed to look good to Wall Street where a cursory
    examination is all anything gets. When top management is really
    serious about improving the company they'll do some serious changes
    in the way we do business. That will be as likely to add people as
    reduce the head count. In the mean time management gives raw numbers
    to make the cuts look good and percentages to make other news look
    bad. It's called lying with statistics.

    The only long term fix is to increase income faster. I haven't seen
    much in the way of indication that that has as high a priority as
    reducing expenses. It takes money to make money. Rather then blindly
    trying to spend less perhaps the company needs to spend smarter. Of
    course if I had the answer to how to do that I'd be rich. If the people
    the company is making rich can't find those answers then maybe we
    need to find other people for the company to make rich. So far it
    seems as though management is fast to say "we can't raise income"
    and faster still to say "it's not our fault we have to cut people."

    The search for only easy answers and quick fixes continues.
    
    			Alfred

    See also Live Wire today (12 June) which carries an item saying
    that benefits possible from headcount cuts are debatable.
    

	... Corporate VTX menu!  I confuse them all the time myself! :>)

<><><><><><><><>  T h e   V O G O N   N e w s   S e r v i c e  <><><><><><><><>

 Edition : 2342            Wednesday 12-Jun-1991            Circulation :  8469 


 Downsizing - Doesn't necessarily bring an upswing in corporate profitability
	{The Wall Street Journal, 6-Jun-91, p. B1}
	{Contributed by: Chris Johnson}
   Layoffs and corporate downsizing are painful and disruptive to an
 organization. They may also be unproductive.
   A recent survey by consultants Wyatt Co. indicates that whatever companies
 say publicly about the successes of their restructuring programs, privately
 they are far less positive. The survey covered 1,005 companies employing more
 than four million people and focused on the past five years. It showed that
 fewer than half of companies that said their goals in restructuring were to
 cut costs actually met their expense-reduction target; only 32% improved
 profitability to their satisfaction, while 21% met their expectations for
 improving return on investment.
   "Lots of bullets were fired, but few hit the targets," says John Parkington,
 director of the organization research and development practice at Wyatt. "Some
 companies are doing it three, four, and five times, but they still don't hit
 their expense-reduction targets. Something is wrong."
   Nonetheless, the study also suggests--in common with other predictions on
 the subject--that downsizing is far from over. More than half those surveyed
 by Wyatt expect corporate restructuring to increase or maintain its present
 level; only 8% see restructuring activity declining. The survey studied three
 types of restructuring: mergers and acquisitions, reorganizations, and
 downsizing, of which downsizing was the most prevalent.
   Many companies are being forced into successive rounds of downsizing, not
 necessarily because the first one wasn't effective, but because their
 difficulties proved more intractable than they expected. In the computer
 industry, for example, watching companies' successive cost-cutting moves is
 like watching "a Marcel Marceau pantomime. They're walking into the wind, only
 the wind keeps getting tougher and tougher," says Daniel Mandresh, and analyst
 at Merrill Lynch & Co.
   Recently, computer companies like Digital Equipment Corp., and International
 Business Machines Corp. and Hewlett-Packard Co. have all announced additional
 rounds of cutbacks.
   Many consultants assert that although the current recession increases the
 likelihood that companies will cut staff, it decreases the likelihood that
 they will be satisfied with the results. Jewell Westerman, a consultant with
 Temple, Barker, and Sloane/Strategic Plannine Associates, says that the past
 decade of cutbacks led many companies to try to become more efficient and not
 just cut people. "They were taking a longer-term approach," he says. With
 companies now under economic pressure, he adds, "we are seeing a reversion
 back to trying to get big hits."
   Hewlett-Packard says its early-retirement program that was accepted by
 nearly 800 people last year was more difficult than the one it did back in
 1986 under more relaxed circumstances. In 1986 the company decided what
 businesses it was going to leave and what work it would eliminate and then
 offered people early-retirement and severance packages. "In 1986, [the cutback
 program] was focused," says Thomas Pierson, manager of human-resources
 planning at Hewlett-Packard. "Now its far more difficult because it is
 expense-driven. Consciously deciding to eliminate work and then dealing with
 the people is easier."
   Part of the reason for companies' dissatisfaction with their restructuring,
 Mr. Parkington of Wyatt suggests, is that most companies didn't even do what
 Hewlett-Packard says it did in 1986. Of surveyed companies, he says, "86%
 downsized, but only 42% of them took steps to eliminate low-value work." That
 type of cutback puts the organization under such pressure, he says, that as
 soon as financial results improve, people come pouring back into the
 organization.
   Although American Telephone & Telegraph dropped 100,000 employees -- to
 273,000 this year from 373,000 in 1984 -- it continues to wrestle with
 pressures to add staff. "The bureaucrats know how to put people back on the
 payroll," says AT&T spokesman Burke Stinson. "It's ironic to see that managers
 will hire back people who actually do the work in order for full-time people
 to attend meetings."
   Of the surveyed companies that downsized, Mr. Parkington says, 83% ended up
 replacing some of the people they dismissed; 25% of the companies replaced
 more than 10% of those who had left. Some went much further. Chrysler Corp.,
 foe one, having effected painful cutbacks in the early 1980s, found that its
 staffing levels ballooned during the relatively good times that followed to
 levels even higher than they had been before. "We allowed ourselves to get
 fat," a Chrysler spokesman said early last year, as the company announced the
 first of two programs to reduce the white-collar staff again.
   One effect of layoffs and restructuring is "a severe adverse impact" on the
 morale of remaining employees, says Mr. Parkington. Among surveyed companies,
 58% said employee morale was hurt, and 37% said employee retention was made
 more difficult. What's more, nearly 80% of respondents said that when they
 offered employees early-retirement options, they lost good performers.
   Many companies also find that some costs continue -- or even increase --
 despite a shrinking work force. One study of the retailing industry by search
 firm Thorndike Deland Associates found that although major U.S. retailers
 restructured and cut staff since 1986, their overhead costs didn't drop. The
 median administrative expense for the 20 companies studied was 22.8% in 1986
 and 22.9% in 1989. While the retailers cut staff, the search firm notes, the
 failed to cut spending on such things as travel.
   Some consultants say a systematic examination of what the company does and
 how it does it should precede any thoughts of downsizing or layoffs; only
 after the work is redesigned more efficiently should the staff size be looked
 at. In some cases, the staff size won't even matter.
   "What I march to is reduced operating expenses," says James R. Bryant, vice
 president, shared services, at Baxter International Inc. "I am not monitored
 on headcount. I am monitored on operating costs." While the centralizing of
 functions he has been involved in has resulted in some staff cuts, he says
 that wasn't his goal. "If I can make costs go away by adding a person, I am
 going to add someone."
   The problem, says Robert Gunn, of consulting company Gunn, Hackett & Markos,
 is that such an evaluation "sounds great, it seems simple, and it takes six
 years" and the cooperation of the entire organization to accomplish.
   Facing a complete redesign of the organization, he says, "management gets
 frustrated and says, 'we are going to downsize by 10% -- every function,
 everywhere." But Mr. Gunn likens the cuts to fad diets: "They work
 instantaneously, but you didn't really change your eating habits. You just
 stopped eating."


<><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><>
        Please send subscription and backissue requests to CASEE::VNS

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<><><><><><><><>   VNS Edition : 2342   Wednesday 12-Jun-1991   <><><><><><><><>

    CNN announced yesterday, that Digital will layoff 10'000 more
    employees. It shook me good. However, I am in Switzerland now. I was
    wondering four years ago, why there were so many people running around
    doing nothing, in the facility that I was working in. I guess, it is
    time to let the "excess wood" go. That was the term people used some
    years ago.
    I think that Digital has to look in other places to improve it's
    business too. Halfsizing the expensive managers and VP's would be one
    more place. Who can afford to be without a paycheck best????
    Ruth
    
    
    

    What source did CNN give?
    
    	- andy

    <mode=sarcasm>
    Well, I don't care what I see on CNN, WSJ, or the Glob.  I won't
    believe it until I see it on LIVE WIRE.
    
    Steve

    re: 1489.18/1489.19
    
    It's note like these that I find discouraging.  I entered (and have
    been entering for the last seven years) time-critical public
    information regarding Digital which has not been circulated internally,
    and at the same time tried with several other employees acted to keep
    wild rumors from circulating.
    
    The facts are that on Friday June 14, Jack Smith, Jim Osterhoff, and
    Dallas Kirk and perhaps other senior Digital management gave on the
    record telephone interviews with the Wall Street Journal, NY Times, and
    Boston Globe, and perhaps other media.  This not not attributed to
    vague "sources at Digital".
    
    The fact is that Digital under American law has an obligation to make
    public material facts regarding the company, such as the layoff of
    10,000 employees.  This number was mentioned by Smith and is not a
    fabrication by CNN.
    
    In my role as an employee I have access to data for some joint
    development stuff with several Wall Street firms and I've chosen to
    share this public data from the Dow Jones News Service with other
    Digital employees in different forms.
    
    I've already said that I'm disappointed that LiveWire didn't share
    a version of this with employees, but I think that it's ludicrous to
    insist that this is not "official" because it hasn't appeared in VTX
    yet. 
                               

    
    I dont understand notes .18 and .19.
    
    Our European VTX livewire DOES have an excerpt from the WSJ, stating
    9000 redundancies, in the MONDAY 17th edition of LIVEWIRE.
    
    p.s. THe article was attributed to direct quotes from John Smith!, so I
    dont think its a fairy story.
    
    PJK.

re .20:

    I read .19 as another complaint that Digital doesn't release this
    information to employees in a timely manner.  As soon as the WSJ sent
    the story out on its wires, it should have been posted in Livewire.
    It still hasn't been posted, and it's been public for several days.

I don't think anyone is trying to say the news is not real-

I interpret the last few notes as trying to emphasize that fact that
Digital places significant importance in notifying the news media of
layoff plans but (seemingly) takes a less formal approach in notifying
its employees (some of whom will be impacted in a very personal way).

Not all employees read the WSJ or the Glob or do VAXnotes.

Lee

    The last two notes got the point of .19 (my note).  What I meant to
    draw attention to was the issue of management credibility.  They are
    supposed to be communicating with us directly and not through third
    parties.  I may have disagreement with the "official" line, but it's
    quite another thing to not even GET an "official" line.  It damages the
    faith I have in upper-management decisions.  My understanding is that LIVE 
    WIRE is supposed to be the official line as far as on-line goes.  So, I am 
    disappointed that top management puts so little emphasis on letting the 
    lower levels know directly what is going on, preferring to have us hear 
    from outsiders about Digital's directions.  I have heard nothing from
    my supervisors other than forwardings of copies of the published
    articles.  Seems to me that something of this importance should be
    pretty high priority to notify the troops about.
    
    Steve

    Maybe the LIVEWIRE administration got laid off

    re: .24
    
    Much as we (myself included) may moan about "management"... I think
    it's only fair to give credit where credit is due:
    
    My unit manager's manager, Kevin Whittemore, has (on two occasions now)
    called special "closed door" meetins for all staff in our departments
    with the specific purpose of reading a statement answering questions, 
    explaining company policy/position regarding the layoff, and in general, 
    trying to ease the tension/apprehension which abounds.  He didn't HAVE to 
    conduct those meetings, I am sure, but, saw a need, and took to it.
    
    I commend him and other managers who care enough to "do what's right"
    for the folks who report to them.
    
    tony

    re: -.1
    
    I agree.  My management tends to do things along those lines as far as
    trying to keep us informed.  I've contacted them about the issues at
    hand.  I expect that when they get "official" word they will call us
    together to let us know and to handle questions as they have done
    before.  Even they are having to wait and are dealing with the stress
    of getting information about the company through third-party channels.
    This is not right.
    
    Steve

    RE: the last few
    
    To my Unit Manager's credit, he also took the time to meet with his 
    staff to discuss the situation.  He related all the information that 
    he knew (which wasn't very much).  I believe the break in communication 
    is somewhere above the front line manager level.  
    
    This lack of "official" information has lead me to one of two conclusions: 
    (1) either top management doesn't care to inform the rest of the 
    company, or (2) they don't know themselves what they are going to 
    do from one minute to the next.  Either way, it's not a pretty picture.
    
    
    						Dave

    I've experienced the same: my local management seems honest and
    forthcoming, and makes a real effort to get information to the troops
    in a timely manner.  I'm convinced that my Engineering Manager is as
    much in the dark as I am.
    
    However, I'd like to offer a third alternative to the two described in
    1489.28: (3) Top management knows what state the company is in, and
    knows what it wants to do about it, and communicates those desires to
    everyone.  However, somewhere in the management chain, where strategic
    directions are supposed to be converted to concrete plans, the ball is
    getting dropped.  As a result we have a disconnect between the vision
    of top management and the day-to-day operation of the company.
    
    To put it more bluntly, middle management is trying to avoid an
    uncomfortable change by practicing "business as usual" plus lip service
    to top management's requirements.  The only hope they have of getting
    away with this is by not telling anybody that it's going on, so there
    is little information available.
    
    This isn't a pretty picture either.  It will be interesting to see who
    wins this struggle.  If, two years from now, resources are still
    apportioned by "allocation" or to the manager who flatters his boss the
    best, rather than based on a realistic, achievable business plan, then 
    middle management will have won.
    
    Notice that the Soviet Union is also trying to get away from this kind
    of economy.  The biggest barrier, if I understand correctly, is the
    bureaucrats who are comfortable with the current system and who control
    the distribution of goods.
        John Sauter
                   

    Hey!  *I've* got the best unit manager on the face of this earth!

    One of the most essential elements of management is the ability (and
    the desire) to COMMUNICATE....mine is the best ... and ... 

    My manager can whip your manager any day ... nyah!

    Take that! :-)
    Jerry

    re .29 ----- John, I truly believe you hit the nail right on the head.
    
    Just walk the halls at Stow once.  You've gotta believe you are in The
    USSR Ministry of Economic Planning.  There're enough "managers" there
    to run General Motors, and they are all in advanced anus-protectus mode.
    
    BTW, I read Rumours this morning of 15,000 lay-off next year, and a
    $750M write-off for FY91.  I'm actually starting to believe that we
    may not make it.  

    re: .31
    
    Digital is too large a company to collapse quickly.  If NMS is not
    implemented I predict that our costs will continue to increase, and
    our better-organized competitors will slowly win market share from us.
    Eventually we will be reduced to servicing a slowly decreasing pool
    of customers, and when the last of them disappears it will take another
    two years or so of 0 sales before the doors are closed for good.
        John Sauter

    
    Costs alone are not the problem. They are part of the problem.  Revenue 
    is an equal player with cost in determining profit, and it is lack of 
    profit that is the problem.
    
    We are not paying attention to what it takes to win business. We cannot
    consitently quote "Cadilacs" at Mega buck prices when the customer
    asked for a "Chevy". We have to recognize that we need to be the LOW
    bidder in most cases to win the business. We have to listen to what the
    customer really wants, not try to sell what we think he needs. We
    cannot expect a project to absorb huge ammounts of unnecessary overhead
    and be the winning bid.
    
    We seem to be focused on cutting costs without consideration of how
    these cuts will impact our ability to deliver, and thereby destroy part
    of our ability to generate revenue. This is a downward, ever downward
    spiral. Current reductions in force highlight this. (Level 1 managers
    and individual contributors seem to be taking all the hits).
    
    We do need to address waste. We have a problem in the worker to manager
    ratio. We have a problem in spending more money to control some things
    than we can possibly save controling them. 
    
    Finally we have a severe erosion in our value system. We have long
    since forgotten the credo "do what is right". The open door policy has
    become a joke and the concept of accountability is absent. For example
    what ever happened to the concept that if lay-offs were ever needed that 
    the first to go would be the managers who had hired people they didn't
    need.
    
    What we have got to do to turn this around is have leadership again to get 
    back to our original values and to start caring about the things that count.

    John, I have no problem with NMS....in fact I strongly support it.
    
    The problem I have is with the unthinking, first-year, all-or-nothing
    implementation in an atmosphere of severe short-term thinking.  This
    kind of change is gonna require 2-3 years to get it right.
    
    In the meantime, I truly feel the panic at the highest levels, and 
    the runaway lay-offs are a good example of that.  Maybe Grant Saviers
    had right when he warned of an impending "death spiral" a few months
    back

    Layoffs are to corporations as heroin is to individuals.  A quick boost
    to the bottom line and then the pain sets in.  Once a corporation is
    hooked, it's impossible to stop laying people off.
    
    I used to work at "the other computer company," and they got hooked on
    layoffs.  I understand at one point recently they were laying people
    off every week, a few at a time to avoid the publicity.
    
    On the other hand, that firm is still in business selling computers. 
    Former colleagues are still at the same desk in the same building, as
    they have been for more than 25 years, doing the same things.  I don't
    think Digital is in any immediate danger, no matter what happens.  And
    we've only had the one losing quarter, for crying out loud!