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PSE&G Create Job Orders, Not Pink Slips

June 1, 1996
Related Topics: Contingent Staffing, Downsizing, Featured Article
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There were no pink slips. There were no security guards standing by to make sure employees towed the line. There was no confiscating of company property, keys or badges. There was no escorting of employees out of the building. Although employees were shocked and disappointed to learn the company would be eliminating 575 jobs at Public Service Electric and Gas Co. (PSE&G), based in Newark, New Jersey, for the workers whose jobs were being eliminated, it could have been worse—much worse.

Rather than simply laying people off on the same day as the mid-June announcement in 1993, PSE&G—a regulated utility serving more than 1.9 million electric customers and 1.5 million gas customers in New Jersey—took a more strategic approach to people management. Not wanting to lose the investment it had made in these workers (PSE&G's average employee tenure is 16 years), the company instead gave them the chance to serve the organization in new ways. Many of them first went into a temporary worker pool, then became redeployees who took jobs in other areas of the firm.

As yet another corporate entity facing deregulation of the utility industry, PSE&G wanted to restructure before it faced big problems. "We weren't waiting until we were completely in a crisis to see where we could trim some staff," explains Carol Marcelli-Cioban, PSE&G's career-development manager. "What we did was trim staff in preparation for deregulation and competition."

A benchmarking of other utilities pointed to areas within PSE&G that could be streamlined. The analysis even suggested that the firm's human resources organization—in addition to other jobs in the company—needed trimming. PSE&G not only looked outside for help about what work to cut, it also used internal task forces to find answers.

Task-force teams (of four to eight employees each) examined every job within the organization. They dissected thousands of work processes to find inefficiencies and duplication, and gave recommendations to senior managers about what work was superfluous. Senior managers then determined some positions—that once were highly valued—no longer carried the same weight they once did. It was time for cuts—but not at the expense of people's dignity or welfare. A wholesale downsizing, managers reasoned, wasn't the solution to rectifying their problems. They committed to redeploying workers into the restructured firm.

Moving people into a transition mode.
As soon as possible after the announcement, managers met with employees (called associates) to let them know their status. Those associates whose jobs were eliminated were encouraged to apply for other jobs in the company—often entirely different jobs than people previously had before. They were given until November 30 (six months from notification) to find a new job or be separated from the firm.

A redeployment task team, made up of five professionals from human resources, had already decided on a plan. With the advice of Scottsdale, Arizona-based Marshall-Qualtec Group Inc. (a firm specializing in organizational change), the task team helped transition workers from their old jobs to new ones, or on to other jobs outside the firm. "We had looked at the traditional outplacement [process], and said, 'Maybe there's a better way to get at this,'" says Marcelli-Cioban. "What we did was develop an inplacement process."

Unique to PSE&G's transition process was the fact that it used 47 people (from the firm's total population of 11,000) inside the company to serve as transition counselors—volunteers from all levels of the organization such as engineers, line people, secretaries and general managers. "We really thought our associates would feel better [talking] with somebody from the company," says Marcelli-Cioban. "Nobody knows the lay of the land and internal politics like an in-house person."

Counselors had to be people who had good interpersonal communication skills, who could empathize with people in difficult situations and who were relatively stable in their own personal and professional affairs. Counselors spent an average of 16 hours a week over the course of six months helping transition co-workers. "The counselors really helped people evaluate their skills and abilities, helped them to present themselves for jobs, to put their best foot forward and most of all, helped them manage their emotions when they were down in the dumps or angry," says Marcelli-Cioban.

But workers also had access to resume-preparation training and interview-skills training at a career center located at the company's headquarters, where they could meet with traditional outplacement counselors from Lee Hecht Harrison, an outplacement firm based in New York City. "And, [employees] were provided with assessment which let them know what their strengths and weaknesses were," says Peter Mellett, vice president human resources for PSE&G and head of the transition team that got employees thinking about their options and deciding what to do next.

Using various self-assessment tools, employees determined where their skills, interests and abilities laid. They also pinpointed where new skills and competencies could make them more employable and more valuable to a hiring manager.

In addition, workers had access to a retraining program developed by the firm's training and development department. The curriculum included:

  • A menu of basic in-house retraining courses in areas such as computer skills or business management
  • A selection of training opportunities to improve math or writing skills
  • Pre-assessment for bargaining-unit and first-line supervisor candidates to help them gauge whether they had the skills to pass qualifying exams
  • A waiver of tuition expenses for courses identified as necessary to help the employee achieve competency in a specific area before he or she filled an open position—reimbursed for as long as one year after taking a job.

"We did more than most companies that have undertaken similar efforts to support people in getting the skills and competencies they need to succeed in a new position," explained Rick O'Leary, the former manager of corporate training and development, as quoted in a company newsletter during the transition phase. To help boost hiring managers' commitment to hiring the redeployees, PSE&G made a rule that if an applicant had 75% of the competencies needed for a job, he or she should be considered a strong candidate. "Our goal was to have [redeployees] be among the best prepared for a job even if they started a new position with only 75% of the competencies," O'Leary said.

He added: "As people began to examine their abilities and interests, they [often found] that there were 10 jobs they might qualify for if they brushed up on their skills in a couple of areas."

Workers became short-term "temps" while looking for other jobs.
"We provided workers with what we call a transition [job], in which they were given 90 days to look internally for another position," explains Mellett. Many employees went into this transition mode right away. Others hopped from job to job, as the company needed them to do so and as their job-searching progressed.

Robert B. Marshall, president of the Marshall-Qualtec Group explains why putting employees into temporary jobs is such a good idea: "Allowing people to participate as fully as they can in the process is a much better solution to just going up to people and saying, 'You're outta here.'"

People need something to do while they're exploring other options. He says that many companies, when they've just restructured and cut jobs, simply take people off their old jobs and just send them off to a career center where they're 100% occupied with a job search. "The best way [for people] to find a job within a company is to stay productive, so while they're in transition, they're assigned a job," Marshall explains. People get time out for career seminars and job-search activities, but they have a job in the meantime.

It's hard for some companies to do this, Marshall explains. The reason? "Company executives are overwhelmed that they have more people than jobs. The key to this approach is the leadership of the organization in recognizing they must manage this process of redeployment transition as carefully as they manage any other aspect of their business—which they're usually not willing to do," says Marshall. "Usually executives have no patience, no tolerance and no stomach for this, so their solution is just to let people go. Or, they send them across the street so they don't have to look at them every day."

Putting workers into a temporary pool was a good idea, but there was also a down side. "One thing you have to be careful about is putting in place a nomadic group of temporary people who go from temp job to temp job, because then you just move the workforce around and not necessarily put them in places where they optimize their potential," says Mellett. He also warns that it isn't good to keep workers on temp status too long because it might delay managers in making hiring decisions necessary in a competitive environment.

Managers were asked to hold up on posting new jobs for a month after the announcement while employees got settled with the reality of losing their old jobs and taking interim temp jobs. "Before these postings [were released] to the general population, the people who were in jeopardy had first crack at them," says Marcelli-Cioban. "It would have created a lot of ill-will otherwise."

If a redeployee applied for another job, and got a job offer, he or she had 72 hours to accept it. If the employee rejected the job, separation from the company was mandatory. Many employees who took new jobs in the company said the decision provided them with the chance to stay with the company, gain new skills and perhaps then move on to a different position.

By November 30, 445 of the original 575 employees (77%) found other jobs in the organization and 100 more decided to retire. Only 30 people couldn't find suitable jobs. Although most associates who stayed made lateral moves, some took lower positions. "And we protected their pay rate," says Mellett. "So if they went for a lower-paying job, we didn't reduce their base pay." This even applied during the temp phase. "They may not have gotten any raises for awhile," added Mellett, "but their pay was never reduced." Employees who couldn't find jobs in the firm received financial support from the organization for up to six months while they looked elsewhere.

The HR department ran a survey of the employees who took other jobs in the firm. "Most of them said [the redeployment process] was a really strong wake-up call," Marcelli-Cioban reports. Some said the change in jobs was actually the best thing that ever happened to them. And managers said they were generally satisfied with the workers' abilities in their new jobs. "So it was really a win-win," she adds.

Since this first wave of reorganization, PSE&G has had to reorganize and cut more jobs, but has continued to run the transition center for the past three years to help redeploy workers into other jobs. "I think most people in this company have come to the conclusion that their destiny is in their hands and that the company will do a lot for them to help and support them through whatever career growth or career transition they're experiencing. But ultimately, it's up to them," says Marcelli-Cioban. "Many people up to now haven't updated a resume in 25 years. I think most people now have one. I think the culture has changed—I really do." It has been a struggle for an organization whose culture has gone from paternalistic to entrepreneurialistic.

But it has made the transition in a humanistic way. "If you hire people one at a time, you better let them go one at a time," says Marshall. Your reputation, and possibly your business, may depend on it.

Personnel Journal, June 1996, Vol. 75, No. 6, pp. 97-99.

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