» Organizational Development

Downsizing by design

Here’s how ICBC achieved its business goals while also giving employees a choice for their future: a voluntary separation program.

BY SHARON BOGLARI

No employer wants to lay off employees. But when the

Despite a reduction in services and projects, it was apparent that they could not achieve a sustainable decrease in costs without reducing the corporate payroll. In 2001, ICBC had more than 6,500 employees. The business plan developed for 2002 called for a reduction of 752 full-time employees — an expected annual savings of almost $21.4 million and a return to 1999 staffing levels.

At the time, 86 per cent of ICBC’s employees belonged to the Office and Professional Employees’ International Union (OPEIU). Obligations outlined in their negotiated collective agreement, such as bumping rights, salary protection and job security for certain employees made it cumbersome to downsize on a large scale.

John Madden, ICBC’s vice-president of human resources, wanted to avoid the “surgical” or involuntary approach to downsizing -- a voluntary separation program (VSP) seemed the logical solution. “You risk losing some skills when you downsize on a voluntary basis,” he says, “but we wanted people to have choice. We wanted those who left to be happy about leaving, while those who remained to feel that they had elected to stay.”

Although the union was opposed to workforce reductions, Jerri New, president of OPEIU local 378, says that “as a last resort,” they preferred the VSP to layoffs, as it would help minimize the

Communication a key priority

Led by Brent Mason, HR program consultant for ICBC, two teams administered the VSP: human resources helped design and implement the program, while representatives from each business area set criteria for accepting or rejecting applicants and an upper acceptance limit for their area.

A negotiated letter of understanding between ICBC and OPEIU jointly set out guidelines for developing and executing the VSP. The union was concerned that the program offer sufficient incentives to attract enough volunteers so that layoffs and bumping did not occur. They also wanted to ensure that knowledge was transferred between employees so that a void wasn’t created for those left behind. “We all wanted to iron out as many issues in advance as possible,” says New, “to avoid board hearings and other litigation that would be difficult and time consuming in an already too-stressful environment.”

ICBC’s executive pledged to keep employees informed and to communicate key decisions as soon as they were made. HR set up an internal Web site, called Directions, to facilitate this. It was a difficult time; motivation and morale were low and the rumour mill was active. Not surprisingly, tough questions from employees filled the Q&A section. Madden jokes that he wasn’t very popular with the executive members, who were responsible for personally replying to the questions.

Once the details of the VSP were presented to ICBC employees in September 2001, they had just under a month to apply. The options were identical for all eligible employees, whether they were bargaining unit, management or executives: three weeks’ pay for each full year of service with a minimum payout of six weeks and a maximum of 75. Employees who chose a salary continuance kept most of their benefits during the payout period.

Seminars provided employee support

For those who were considering leaving, ICBC provided support by running financial decision-making seminars across the province. The corporation also offered employees access to the joint employee assistance program for six months following their last day of active employment. Directions posted financial planning tools and tips and enabled employees to access a personal profile with an estimate of their pension status and VSP entitlement.

The corporation didn’t just focus on those who were leaving. How would those who chose to

Once the deadline for applications closed, the decision-making process took just two weeks. “It’s human nature to want to move through a period of discomfort as quickly as possible,” says Madden. “Once people have put up their hand to say they’re prepared to go, they usually already have one foot out the door.” Applicants were guaranteed confidentiality until they knew whether or not they had been accepted.

The corporation tried to extend the terms of the VSP to the greatest number of employees possible, while keeping the key skills it needed to do business. Out of the 700 employees who applied, 683 (98 per cent) were accepted.

In following weeks, friends and colleagues wrapped up their work. Farewell events were organized on a local level, which allowed managers to choose their own way to recognize employees’ contributions to their departments.

Some employees, however, felt that the corporation didn’t do enough to recognize departing employees. “During this process, I learned that it is difficult to manage expectations,” Mason says. The VSP team had to balance the desire of remaining employees to know who was leaving, while respecting the wishes of people who were leaving, some of whom just wanted to slip away quietly.

More upfront planning needed

In many divisions, the VSP did not reduce resources in the “right” places. “You can’t expect to effectively reduce targeted service through soliciting volunteers,” says Mason. Divisions now had to realign employees to match work requirements. While there were some forced layoffs, the VSP team tried to find appropriate alternate placement for employees whose jobs had been identified as redundant.

Unfortunately, a reduction in staff doesn’t always result in reduced services, and many departments suffered increased workloads.

Madden admits that this is one area he would have approached differently. In an effort to work through the downsizing as quickly and painlessly as possible, the management team missed doing some of the upfront strategic analysis around redefining how work gets done.

“Our biggest challenge was not just reducing the size of our workforce, but also changing the way we worked,” he says. “It took us a while as an organization to refocus and realign the work. If we had taken a bit more time at the beginning, we could have avoided a lot of the pain of making these kinds of adjustments after the fact.”

The fact that this was a new experience for ICBC, both as an organization and as an employer, helped the VSP teams design a program that kept employees front and centre, while still meeting business requirements.

“Unlike companies that have gone through this before and who just pull the last program off the shelf,” says Madden, “we had no preconditions around what the program should look like. It forced us to approach the exercise with fresh eyes and really think about the impacts on the corporation and its people.”

New adds: “For the most part, the process went smoothly and ICBC attempted to accommodate people’s individual circumstances.”

At the end of last year, ICBC formalized the focus on employees that they had espoused during the program. Their new mission statement recognizes the role of their “dedicated employees working in a performance-based culture in achieving operational excellence.”

The statement formally acknowledges the key role that ICBC employees play in serving customers across the province, says Madden. “This recognition of the value of our employees will continue to influence how we conduct our business in the future.”              

Sharon Boglari is a marketing communications specialist at ICBC. Contact: boglari@telus.net

Photo captions

1. [John standing]

John Madden, HR vice-president at the Insurance Corporation of B.C., has an enviable backdrop to his North Vancouver head office.

2.

Freelance writer Sharon Boglari interviews John Madden in his North Shore office.

3. [John seated]

John Madden poses outside ICBC’s head office.

Reprinted from PeopleTalk Magazine Fall 2003 (V6, N3)

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