Downsizing Digest Tuesday, 23 July 1996 Volume 01 : Number 005
In this issue:
Fat and Mean
Non-member submission from [Ray Martin ] (fwd)
Fat and Mean
Expert Advice Received
FTEs
re: QUALITY.ORG Website Downtime
unsubscribe
Re: Downsizing Digest V1 #2
Re: Downsizing Digest V1 #2
Re: Teaching Hospital Reduction
Fw: Teaching Hospital Reduction
----------------------------------------------------------------------
From: "Larry Geller"
Date: Mon, 15 Jul 1996 07:38:50 -1000
Subject: Fat and Mean
I spotted a book in the window at Borders yesterday - Fat and Mean. It
appears to be relevent to this list. Unfortunately they were closed, so I
won't get to check it out myself for a few days, but I wanted to mention
the book in case there is meat for discussion in it.
Cheerz,
- -Larry lgeller@igc.apc.org
------------------------------
From: "Bill Casti, CQA (Moderator)"
Date: Mon, 15 Jul 1996 22:52:13 -0400 (EDT)
Subject: Non-member submission from [Ray Martin ] (fwd)
NOTE: Respond only to the poster's address (see below) and/or to the
list, not to me.
Thanks.
Bill
- ---------- Forwarded message ----------
Date: Mon, 15 Jul 1996 20:50:02 -0400
From: Ray Martin
To: downsizing@quality.org
Subject: Downsizing Government
Dowinsizing colleagues:
Please pardon the long post. What follows is my response to several proposals to recover state sales taxes
lost to electronic commerce, i.e., sales tax lost because the product was shipped to a person in another
state and no sales tax collected. "Quotes" are from the list. The ECON 101 response is mine.
- ---- State Tax Issues posting start
Sara, other State Tax Issues colleagues,
The proposals on this topic thus far largely suggest a lack of understanding of introductory college
economics
(ECON 101). Addressing some of them might help?
"Mail order commerce has already caused a serious erosion of government's ability to employ sales and use
taxes (on products shipped to other states)."
ECON 101: So long as state sales tax is less than transportation costs from another state, then it
shouldn't be much of a problem--all other things being equal. When costs are a wash, most people will buy
locally. The real problem is that tax increases, along with all the others, have increased faster and are,
in many cases, higher than transportation costs.
If the future of retailing is more of the same (electronic commerce), how do we expect states to balance
their budgets?
ECON 101: By reversing the long trend toward increasing taxes, i.e., cut spending and reduce taxes. Reduce
sales tax to average transportation costs and the "problem" will largely go away.
Should they (the states that loose sales tax revenue) increase income tax rates?
ECON 101: Up to each state to consider. I counsel against it. People vote with their feet.
"The USPS won't give you the box (package mailed to you in the US from Harrods (high end retail) in the UK)
until you pay them the Customs duty."
ECON 101: The key word is Customs, i.e., not sales. Customs duties serve their primary purpose by
restricting commerce. If you purchase a product in the UK as a US citizen, Harrods will give you a receipt
so you can claim a VAT refund when you leave the UK. To the British, the value of the export exceeds the
VAT revenue (15 percent when I last checked).
"Let's get our friends at the postal service involved (and UPS, Fedex, etc.)."
ECON 101: Absurd. Think through the process. The cost imposed on the USPS, UPS, Fedex ,
etc. for collecting often petty amounts would be enormous. The tax revenue marginal at best.
"Of course, the postal guys will want a kick back so give them their due (for collecting sales taxes in
other states)."
ECON 101: You bet they will. And it won't be a small amount, treating every transaction like COD
certified mail. Any guess on the number of returns? FedEx and UPS (two which I am familiar) operate on
highly productive delivery process. Collecting pennies on a package would substantially decrease that
productivity and increase costs.)
"(firms) object to the occasional ad hoc attempt by state tax authorities to make them the collection
agents (of state sales tax)."
ECON 101: Of course they do! These are significant costs at a time when international competition is
increasing.
"(states should) . . . require mail-order operators to put on the mailing label a bar code . . . (on the
products they send to other states)"
ECON 101: Would still require manual, face-to-face or some likewise burdensome collection
process.
"The customer can either pay the (sales) tax to the mail-order company at the time the order is
given or they will have to go to the post office window and pay the (sales) tax (to the originating state)
before getting their new silk undies."
ECON 101: Customers have another choice: get it somewhere else.
"Congress to pass fair legislation (to collect state sales tax)."
ECON 101: What's fair? How about some priorities for Congress that would include straightening out the
enormous federal income tax mess first?
"What if the IRS instituted a national sales tax and employed a revenue-sharing methodology to get the
revenue back to the states? "
ECON 101: You gotta be kidding--the IRS "instituting" a tax? The IRS has enough trouble collecting taxes
on existing legislation. But that is in Political Science K06 (grade school), not ECON 101.
" (state tax policy organizations should). . . get together with industry groups . . . (to develop
agreements on collecting sales tax"
ECON 101: Such agreements are called collusion and against the law except when government does it. They
are always (yes, always) a failure. If you are sincere, recommend: (1) try this first to the exclusion of
all others; (2) report back when complete; (3) use the exception rule, that is report only significant
progress. (I would expect the first report about 2050.)
"Wonder why no one in Congress seems interested (in mandating a sales tax collection or policy across state
lines)?"
ECON 101: Because they are not stupid. The cost of collecting a tax should be proportional to the tax
revenue--say five or less percent. It should never exceed the tax revenue.
"(treating) . . . states as different sovereign entities . . . (causes the sales tax collection problem) "
ECON 101: Thank goodness! Want to give up national sovereignty, e.g, get involved in international sales
tax collection?
ECON 101 SUMMARY: Electronic commerce is a major, positive economic trend. A major
criticism of capitalists economies has been lack of market information. The competition is good for the
US economy. State tax bureaucrats have operated in a segmented market with limited market information.
Electronic commerce has helped change that.
ECON 101 RECOMMENDATIONS:
1. Forget about trying to collect sales taxes. Solve the state problem within the state
taxes across borders.
If the revenue is that important, impose the tax on firms on all goods that go out the door. Drop the
illusion that purchaser is paying for some benefit in the form of a sales tax. There is no benefit to
Impose it on the firm. (But don't forget ECON 101. Taxing state firms will, of course, reduce commerce.
That will, of course, make these states less competitive. That will, of course, cause firms to go
elsewhere, commerce to go elsewhere, the tax base to erode. Some portion of a lot is much better than 100
percent of nothing. Check with the British if in doubt. RECOMMENDATION 2 a better choice.
2. Downsize the government organizations involved in sales taxation proportionally. Pocket the costs
avoided (sometimes called "savings" in government jargon). Downsize other government organizations just as
firms are doing. Adjust government pay and benefits just as firms have.
- ---- State Tax Issues posting end
You can find or get on the State Tax list by contacting Sara MacGhee, TA Staff/Internal/Tax Analysts/US,
Sara_MacGhee@tax.org.
Ray Martin, Ph.D.
Management Consultant
165 Palisades Drive, No. 936
Universal City, Texas 78148
210-659-8377 (tel/fax)
210-212-0783 (alphanumeric pager)
RMartin@texas.net
------------------------------
From: Asif Raza
Date: Tue, 16 Jul 1996 10:36:03 +0700
Subject: Fat and Mean
Got the book from the library last night. I have only glanced at it
briefly. It is probably written by a political economist (I don't have the
cover of the book).
So very briefly: David Gordon (the author) appears to be arguing
that despite downsizing, corporations in the USA are still fat, and as a
consequence of being fat are mean to the lower level employees. (This is
from the viewpoint of discussion on downsizing.)
Gordon argues that USA and the general American citizen are in such
poor economic condition because corporations are fat or paying too much
money to managers and supervisors. He compares the amount paid to managers
here to the amount paid by Germany and Japan. To continue to maintain a top
heavy structure corporations squeeze lower level employees (a declining wage
rate). While he does not say outright that we need to continue to downsize
it is implied.
Also says that corporations are governed by the "Stick Strategy",
and instead of "high performance workplaces" we have "high-pressure workplaces".
He ends with policy recommendations aimed at cooperative managerial
and labor relations, and community building.
Asif Raza
Loyola University Chicago
------------------------------
From:
Date: 16 Jul 96 09:32 CST
Subject: Expert Advice Received
I would like to thank all of you whom responded to my request for your
advice on handling the proposed downsizing of our Department. In order to
clarify my origional posting ( especially for those of you who hit me
pretty hard with your comments [never-the-less appreciated]), I would like
to point out several facts which I failed to include in the origional
message.
FACT#1
The MAJORITY of line staff admit there are too many employees within the
department and concede the need to downsize.
FACT#2
Line staff willingly admits that approximately 20% of current staff are
inefficient workers - "slackers" due to various reasons, including mgmt.
inefficiencies. Mgmt. is in agreement, however estimates a higher rate.
FACT#3
Mgmt. AND staff agree that Fed. Employee System (including Veteran
Preferance, Seniority Preference, politically appointed positions, etc.)
contributes significantly to said problem, because employees who perform
poorly are difficult to get rid off.
FACT#4
Many Federal stations have already proven that contractor services are
successful in achieving cost reduction with higher customer satifaction.
(Several sites were visited by senior mgmt. to assess performance levels
and came back with overwelmingly positive observations)
FACT#5
While the majority of Mgmt. AND staff are willing to spend considerable
resources in making a "Last Stand" to keep services in-house, I am clearly
in the minority when I recommended that the best thing we could do IS
contract out. Reason being, the proposed contarctors all have a
record of utilyzing current staff upon take over (meanining many of us
save our jobs), they provide
greater compensation (60/40% operational equation,
meaning they will come in to do the job at 60% of existing staffing
levels, with only a 40% overall reduction of operational costs), and they
are not bound to the same employment system as the Fed'l gov't ( meaning
they don't have to put up with the slackers and can remain driven by
productivity by keeping those employees who ARE.
Would'nt you do the same if it were YOU'RE business. (which I might remind
all of you -IT IS! [it's your tax $$])
But, being the loyal & dedicated professional that I am, I welcomed the
opportunity to take on this responsibility, despite my dissention. As we
forge ahead with said process, a group of union rep's and management have
formed the Competetive Strategies for Engineering Task Force and our first
task is to create a Memorandum of Understanding, which eeffectively
outlines our mission and briefly describes what viable alternatives lie
ahead for both mgmt. and line staff in combating the external forces from
contracting our services. It is NOT intended to be a written form of brain
washing, rather a notice to staff that we are mutually committed toward
improving productivity, reducing costs (20%min.) and enhancing the
perception of customer service.
Using the term "mindset" in the context of my message may have sounded
inappropriate, however, I was trying to convey the fact that many staff
employees have such a negative perception of our future, that they may
fail to realize that opportunities still exist and lack the trust of mgmt.
to give it their full effort. I know that actions speak louder than words,
and agree that a great deal of work lies ahead for mgmt. to gain this
trust, but I was hoping that the list memebers may have some guiding
verbage to recommend just as a starting point. All comments welcome.
Later.
George A. Rivas
------------------------------
From: Jack & Jill Lipsey
Date: Tue, 16 Jul 1996 20:27:00 -0400
Subject: FTEs
Hi-Can anyone with an OB unit approx 600 births/year share their FTE =
plans and how they staff for all contingencies-inpt, outpts, l+d, =
antepartum, gyn, mother/baby, growing premie, etc.
TIA, Jill Lipsey, BSN,RNC
------------------------------
From: "Bill Casti, CQA (Moderator)"
Date: Thu, 18 Jul 1996 23:55:17 -0400 (EDT)
Subject: re: QUALITY.ORG Website Downtime
(This message is being sent to all lists supported at QUALITY.ORG. If you
belong to more than one of those lists, you will receive duplicate
copies. There is no easy way to avoid that, so accept my apology and
throw away the extras.)
- ---------
The QUALITY.ORG WWW server (not the email lists or email itself) will be
offline for about a day, while we relocate the machine that supports it.
We regret that you will not be able to access the webpage during that
time, but it's time to move the server to its new home.
Thanks.
Bill
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------------------------------
From:
Date: Fri, 19 Jul 1996 21:01:52 -0400
Subject: unsubscribe
unsubscribe
------------------------------
From: David Patrick Ryan
Date: Mon, 22 Jul 1996 11:43:45 +0000 (GMT)
Subject: Re: Downsizing Digest V1 #2
The teaching hospital in which I work has to reduce its budget by 1/5
over the next two years. Needless to say 80% of this will be reductions
in salary.
Are there models of the Preparation/Deconstruction/Reconstruction
process to guide managers/individuals/teams through this process?
What activities have people used to ease the psychological burden in the
Preparation/Deconstruction/Reconstruction process?
Thanks
David Ryan Ph.D.
Consulting Psychologist
Toronto, Ontario
david@lglobal.com
------------------------------
From: David Patrick Ryan
Date: Mon, 22 Jul 1996 11:43:45 +0000 (GMT)
Subject: Re: Downsizing Digest V1 #2
The teaching hospital in which I work has to reduce its budget by 1/5
over the next two years. Needless to say 80% of this will be reductions
in salary.
Are there models of the Preparation/Deconstruction/Reconstruction
process to guide managers/individuals/teams through this process?
What activities have people used to ease the psychological burden in the
Preparation/Deconstruction/Reconstruction process?
Thanks
David Ryan Ph.D.
Consulting Psychologist
Toronto, Ontario
david@lglobal.com
------------------------------
From:
Date: Mon, 22 Jul 1996 12:14:03 -0400
Subject: Re: Teaching Hospital Reduction
David,
You are asking the question (below) which could become the basis for an
extensive consulting relationship, but let me offer a few suggestions that
could help:
1) You cannot just cut people, you have to cut out the work that people do.
I predict that if you just cut the people without addressing the processes
used to do work, you will have all the cost you thought you would save come
back within 1 year. They will be in different parts of the budget than they
are now, but the costs WILL return. The elimination of the work is the basis
of Reengineering. One way to help deal with the potential people problems,
is to get your people involved in the reengineering process. They are likely
your best source for understanding where there is room for improvement in
your processes.
2) Communication is critical. People do not resist change directly, they
resist being changed, they resist the lack of control they feel during
change. In this case I define control as seeing the results that you expect
from your own and others actions. So, communication must manage
expectations. Your communication should not be aimed at getting people to
accept the change, but in helping them understand what to expect from it.
You need to demonstrate that they can trust what you say and that they can
rely on their expectaions to be realized. This means that you have to build
a good case for the changes being made-- one that they can understand (even
if they do not want to accept it). You have to tell the truth. If you have
a good business case and you expect that 20% will be eliminated, tell them
that 20% will be eliminated. If you know who, tell them. If you don't know
who, tell them that you don't know who but will let them know as soon as you
do. Also tell them the criteria you will use.
3) Communication is critical. It cannot be a one shot deal. It must be
constant and consistent. I suggest that you put in place a feedback
mechanism to find out what is being heard. You know what you said, but you
also need to know what is being heard. You may have to adjust what you say so
that the message you want is heard and understood (but maybe not accepted!)
4) Communication is critical. If you do have a downsizing, you must
continue to communicate to the "survivors". They must know what is being
done for their friends. They must be allowed an opportunity to grieve. They
must know what the future implications are for them: is this the first
downsizing of several, or the only expected.
5) Communication is critical. Is there any hope of a redeployment? If
costs are saved, can revenues also be expanded to take up the resources that
are freed? Are you sure? If you only focus on cost cutting and not revenue
building, you are likely to start down a spiral of no return!
6) Lastly, communication is critical.
Joe McBride
TBS Concepts
JoeMcBride@aol.com
(708)904-2690
Visit TBS Concepts On-Line at:
http://members.aol.com/TBSConcep/homepage.htm
- -------------------------------------------------------
"Wisdom is the experiences you gain throughout life that you can share with
others"
Robert Fulghum
- -------------------------------------------------------
In a message dated 96-07-22 06:55:05 EDT, you write:
<< The teaching hospital in which I work has to reduce its budget by 1/5
over the next two years. Needless to say 80% of this will be reductions
in salary.
Are there models of the Preparation/Deconstruction/Reconstruction
process to guide managers/individuals/teams through this process?
What activities have people used to ease the psychological burden in the
Preparation/Deconstruction/Reconstruction process?
Thanks
David Ryan Ph.D.
Consulting Psychologist
Toronto, Ontario
david@lglobal.com
>>
------------------------------
From: "Ray Martin"
Date: Mon, 22 Jul 1996 23:09:07 -0500
Subject: Fw: Teaching Hospital Reduction
Downsizing colleagues:
My browser indicates Joe was sent a copy, but not the list. Please ignore
with my apologies if this is a duplicate.
Ray Martin
rmartin@texas.net
- ----------
> From: Ray Martin
> To: JoeMcBride@aol.com
> Subject: Re: Teaching Hospital Reduction
> Date: Monday, July 22, 1996 11:02 PM
>
> David, other Downsizing colleagues:
>
> I've followed Joe McBride's inputs on another list. Found them
sound--most
> of the time. However, whether or not you can cut people without cutting
> the activities they are pursueing depends. It depends a lot. A lot.
>
> Teaching, hospital or otherwise, smacks of grants? When grants are
> involved, all bets are off. One organization I studied carefully would
> have increased output (yes, increased) by reducing staff by 16 percent.
> The same organization could have reduced staff another 24 percent with no
> effect on output. In the case of a teaching hospital, it depends?
>
> Communication is extremely important as Joe indicates, but if it is not
in
> place when the "downsizing" takes place, it will likely be extremely
> difficult to establish.
>
> Good luck. Please let me know if I can help.
>
> Ray Martin
> rmartin@texas.net
>
>
> ----------
> > From: JoeMcBride@aol.com
> > To: david@lglobal.com; downsizing@quality.org
> > Subject: Re: Teaching Hospital Reduction
> > Date: Monday, July 22, 1996 11:14 AM
> >
> > David,
> > You are asking the question (below) which could become the basis for an
> > extensive consulting relationship, but let me offer a few suggestions
> that
> > could help:
> >
> > 1) You cannot just cut people, you have to cut out the work that
people
> do.
> > I predict that if you just cut the people without addressing the
> processes
> > used to do work, you will have all the cost you thought you would save
> come
> > back within 1 year. They will be in different parts of the budget than
> they
> > are now, but the costs WILL return. The elimination of the work is the
> basis
> > of Reengineering. One way to help deal with the potential people
> problems,
> > is to get your people involved in the reengineering process. They are
> likely
> > your best source for understanding where there is room for improvement
in
> > your processes.
> >
> > 2) Communication is critical. People do not resist change directly,
> they
> > resist being changed, they resist the lack of control they feel during
> > change. In this case I define control as seeing the results that you
> expect
> > from your own and others actions. So, communication must manage
> > expectations. Your communication should not be aimed at getting people
> to
> > accept the change, but in helping them understand what to expect from
it.
> > You need to demonstrate that they can trust what you say and that they
> can
> > rely on their expectaions to be realized. This means that you have to
> build
> > a good case for the changes being made-- one that they can understand
> (even
> > if they do not want to accept it). You have to tell the truth. If you
> have
> > a good business case and you expect that 20% will be eliminated, tell
> them
> > that 20% will be eliminated. If you know who, tell them. If you don't
> know
> > who, tell them that you don't know who but will let them know as soon
as
> you
> > do. Also tell them the criteria you will use.
> >
> > 3) Communication is critical. It cannot be a one shot deal. It must
be
> > constant and consistent. I suggest that you put in place a feedback
> > mechanism to find out what is being heard. You know what you said, but
> you
> > also need to know what is being heard. You may have to adjust what you
> say so
> > that the message you want is heard and understood (but maybe not
> accepted!)
> >
> > 4) Communication is critical. If you do have a downsizing, you must
> > continue to communicate to the "survivors". They must know what is
being
> > done for their friends. They must be allowed an opportunity to grieve.
> They
> > must know what the future implications are for them: is this the first
> > downsizing of several, or the only expected.
> >
> > 5) Communication is critical. Is there any hope of a redeployment?
If
> > costs are saved, can revenues also be expanded to take up the resources
> that
> > are freed? Are you sure? If you only focus on cost cutting and not
> revenue
> > building, you are likely to start down a spiral of no return!
> >
> > 6) Lastly, communication is critical.
> >
> > Joe McBride
> > TBS Concepts
> > JoeMcBride@aol.com
> > (708)904-2690
> > Visit TBS Concepts On-Line at:
> > http://members.aol.com/TBSConcep/homepage.htm
> > -------------------------------------------------------
> > "Wisdom is the experiences you gain throughout life that you can share
> with
> > others"
> > Robert Fulghum
> > -------------------------------------------------------
> >
> > In a message dated 96-07-22 06:55:05 EDT, you write:
> >
> > << The teaching hospital in which I work has to reduce its budget by
1/5
> > over the next two years. Needless to say 80% of this will be
reductions
> > in salary.
> >
> > Are there models of the Preparation/Deconstruction/Reconstruction
> > process to guide managers/individuals/teams through this process?
> >
> > What activities have people used to ease the psychological burden in
> the
> > Preparation/Deconstruction/Reconstruction process?
> >
> >
> > Thanks
> >
> > David Ryan Ph.D.
> > Consulting Psychologist
> > Toronto, Ontario
> > david@lglobal.com
> > >>
> >
------------------------------
End of Downsizing Digest V1 #5
******************************