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New Employer-Employee Contract Replaces Loyalty and Job Security

While US companies routinely help the workers they fire to find new jobs, many are beginning to realize that they must focus attention on the people who stay, in particular, by trimming their workload.

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``What do you say to a new graduate when they come to work at your organization?'' asks David Noer, author of a book on surviving downsizing called ``Healing the Wounds'' (1993). ``We want [employers] to say: `When you leave - not if you leave, when you leave - you'll be able to take new skills that will help you grow.''

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This honesty, while scary, is also key to successful downsizing, experts agree.

Two years ago, a large service company asked Sarah Freeman, a management professor at the University of Wisconsin at Milwaukee, to help with their downsizing effort. Workers knew something was going on. ``Every time you so much as got in the elevator, you heard people talking about this,'' Dr. Freeman recalls. But management, worried about the effect on morale, waited six months before announcing anything. Morale plummeted anyway.

Honesty is best policy

The better way is to share as much information as possible with workers, Freeman says. ``Be honest about what you do and don't know.'' Adds David Harder, president of Careermotion Inc., a training and development company based in Century City, Calif.: ``Any company that doesn't identify, promote, and uphold the truth will be extinct in 10 years.''

When Boatmen's Bancshares Inc. in St. Louis decided to take over rival Centerre Bank, senior managers knew they couldn't afford a hiccup. Centerre's earnings were poor. The bank's return on assets was only one-fifth the industry average. Meanwhile, many employees at Boatmen's were still bitter about the last time the bank had acquired a rival. Morale was low. Customer satisfaction declined.

Rick Beyer, the bank's senior vice president of human resources, decided to be candid with employees. The bank began publishing ``Merger Minutes,'' a weekly news update for employees. ``As soon as we knew, we conveyed how many positions would be eliminated,'' he says.

The bank also formed transition teams - glorified rap sessions -

to let survivors express their feelings. ``You have to help people let go of the old,'' Mr. Beyer says. ``It's kind of like a trapeze artist and you let go and there's this free fall as you prepare to grab the next rope.''

Eventually, the bank was able to eliminate 150 positions - a tenth of its work force - almost completely through attrition. Morale improved, as did customer satisfaction, which Beyer says played an important role in the bank's strong rebound.

Involving survivors in the downsizing is also an important key. Nearly two-thirds of downsizing companies that involved their workers in project teams said they achieved their profit targets, according to a 1993 survey by the Wyatt Company, a consulting firm based in Washington, D.C.

Even in the best of circumstances, however, downsizing creates uncertainties about the future and a belief - often false, experts say - that employees have to work harder to keep their jobs. ``Even if you do everything right, it's never a whole positive,'' Freeman says.

The toughest part is reengineering the workload. While a growing number of companies are beginning to focus on the needs of survivors, only a small minority have succeeded in trimming the work so that it doesn't overwhelm workers. Local 599 of the United Auto Workers got so fed up with General Motors's insistence on overtime last fall that the union members went on strike until the company agreed to hire more workers.

``What you're heading for is a long-term chronic burnout with people,'' Mr. Berner predicts. ``The world that's going on right now - of faking it: `Yes! I'll do the work of three people! is not going to last.''

Pluses versus negatives

The experts disagree on whether the pluses of downsizing outweigh the negatives.

``I don't know what will happen next, but I'm not optimistic,'' Dr. Stephens says.

``I think it's terrific,'' Mr. Harder counters. ``Most of us were fed a bill of goods from our parents that the best thing about work was predictability, security.'' Today, he adds, ``what we're thinking about is: What is the optimum packaging of our talent? Entrepreneur? Temporary worker? Outsourcer? We're in a new work world where a CEO can run a multinational company from his sailboat.''

Noer adds: ``It's the paradox of freedom. What you want are voluntary armies - people who are in organizations because they want to be, not because they have to be.

``If you work for an organization for the right reasons ... to do work that is congruent with your spirit ... your job security is greatly enhanced, because the organization will do better.''

But will that work for all of us? ``I don't think companies, even the best hearted of them, can make those promises [of security],'' Freeman says. ``So where does that leave us? Individual security? To me, that's kind of scary.''