Only the Most Flexible Survive Downsizing

October 14, 2001
The entire CRM industry, which provides high-end software solutions for customer support, has been hit hard by economic slowdowns. As a relatively small player in the world of CRM providers, Xchange is teetering on the brink of collapse. The company cut 15 percent of its workforce in April 2000, and another 30 percent in June. Last year, the firm projected it would have more than 1000 employees by now. Instead, it has only about half that many people, and is struggling for life.

Name: Xchange, Inc.
Location: Boston
Business: CRM software provider
Employees: 500

Not surprisingly, the training department was hit hard in both rounds of cuts, says Gretchen Hollmer, technical trainer and course developer in the global education services department. Before the layoffs, her department had a staff of six -- a coordinator, a manager, two course developers, a stand-up trainer for clients, and an internal trainer for employees.

In the first round of cuts, she lost the coordinator and the internal trainer. The decision was made by her manager, and it made sense, she says. "In-house trainers are hard to tie to the bottom line. Plus, we're not adding any new employees, so there is no need for training internally." The manager took over the administrative duties, and other positions were redefined to accommodate the smaller staff.

"The second round of cuts was done at a high executive level," she says. "Some of the managers who laid people off were getting laid off." She survived, along with her manager and a course developer, but the client trainer did not. Hollmer attributes her endurance to longevity. Even though she'd been at the company for only a year, she was the veteran of the group, and had the best knowledge of three of the company's four key products. The other trainers knew only one product well, she says.

The remaining course developer knows two of the products well and is learning the third. "We have the most skills and the most experience," Hollmer says. "We can train internally if necessary and travel if we have to. We are the revenue-generators."

Along with losing half the staff, the training department also lost the bulk of its funding for a training-room upgrade. Xchange does have a beautiful training room, she says, but it's being leased to someone else.

Instead of taking clients to a sophisticated facility with trainers to introduce them to their flagship product, Hollmer and her remaining colleagues are pulling together makeshift training rooms. They are throwing copies of the software onto unused servers in open offices that have become available since the layoffs, or delivering training programs at client sites. "We needed a lot of equipment, servers, and technical support to effectively train people on our suite of tools. We are feeling the pain of choices the company has made."

The reality, however, is that since sales are down, there's a lot less need for training, in-house or out. "We are in survival mode right now," she says. "We have to maximize our ability to make revenue flexible by keeping the versatile people and cutting the non-revenue-generators or those with limited skills."

While she admits that the cuts were a necessary business decision in the face of a crisis, she's disappointed. "A year ago, training was a priority, because we had the cash flow to support it. Now it's no longer a priority."

There is, however, a small silver lining to the story. At some companies, layoffs just pile more work onto fewer people, but Xchange's layoffs coincide with less demand. "People hate the term right-sizing, but in our case it was accurate," Hollmer says. Even with the smaller staff, the time she spends teaching clients has been cut in half, from two weeks a month in-house and client site training once a month, to one week a month in-house, with client site training every other month.

In the meantime, she and her colleagues are using the time to develop new client courses for the company's suite of products. "We had hired the extra trainers so I could get out of the classroom and do more course development," she says. "That's a plus."

Workforce, October 2001, pp. 82-86 -- Subscribe Now!