Masterclass: Retrenchment

What is it? Cutbacks, lay-offs, redundancies, downsizings: all ways of talking about the unpleasant but often necessary business of reducing the size of your organisation.

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Last Updated: 31 Aug 2010

Retrenchment has an authoritative ring to it, but that doesn't make it any nicer if you are on the receiving end. It's a negative experience - at least, in the short term - like amputating a limb to prevent the spread of gangrene. The problem with lopped-off limbs is that they rarely grow back. Managers may have to retrench now, but it's vital that they don't overdo it.

Where did it come from? The Bible warned us to expect seven lean years after seven fat ones. This is nature's (or God's) way of telling us to slim down a bit. That other Biblical practice of the tithe - sharing out some of your winnings - also carries that sense of cutting back for greater long-term health. So retrenchment has a worthy heritage. Food-rationing never did people any harm either. But after years of post-war economic growth, retrenchment in industry became a far more vicious matter. The 'corporate killers' of the 1980s and '90s were those flinty CEOs for whom it became a blood sport.

Where is it going? Retrenchment is back, but it's a slightly gentler, more thoughtful version that we see. Part-time working and sabbaticals are offered instead of dismissal. Many bosses have learnt that crude slash-and-burn does lasting harm to the business. The overreaction of some professional service firms at the end of the dot.com boom created big problems for them from 2003 onwards, as the global economy took off again. So far, so civilised ... unless things get even worse this year. Then we'll brace ourselves once more for some truly nasty retrenchment, 1980s-style.

Fad quotient (out of 10): Beating all restraint towards eight.

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