Managing retrenchment in a public service organization

Abstract: The purpose of the paper is to identify the distinguishing features of an effective approach to managing retrenchment in a public service organization. It draws on the author's experience in Alberta and makes reference to experience in the rest of Canada and in the United States. Management responses to changes in the external environment are considered under two headings: strategic and operational. Strategic responses aim to acknowledge economic reality and to increase political support by enhancing credibility and visibility. A new corporate strategy aims to position the organization for maximum effectiveness at a smaller size in the post-retrenchment period. Operational responses emphasize communication and productivity planning. Restraint measures include voluntary staff reductions, compensation reductions and non-voluntary staff reductions, usually in that sequence. The central operational issue is reducing staff complement and the principal dilemma is whether to encourage voluntary terminations or to select the staff to be dismissed. The outcome is a trade-off between fairness and rationality. Ten principles of effective retrenchment management emerge from the experience discussed: 1. scan the environment; 2. acknowledge reality; 3. foster political support; 4. renew the commitment to productivity; 5. review the corporate strategy; 6. target the reductions; 7. reduce slowly; 8. seek alternatives to staff reductions; 9. balance rationality and fairness in staff reductions; and 10. communicate, communicate, communicate.