Downsizing Is A Routine Occurrence In Today's Competitive Marketplace

Downsizing is a recurring activity in corporate America. The American Management Association's 1994 survey on downsizing reports that, on average, two-thirds of the firms that cut jobs in a given calendar year will do so again the following year. In this survey, 72 percent of the responding companies downsized in at least one calendar year since January 1989; 46 percent in at least two years; 27 percent in three years or more. Clearly, American businesses now believe that periodic downsizing has become essential to staying competitive. Personnel reductions will likely continue in industries employing chemical professionals. Recent activity has been primarily in the pharmaceutical industry, where there have been eight major acquisitions between November 1993 and January 1995. An article in the National Business Employment Weekly (Employment Briefs, March 5-March 11, 1995, page 27) noted that the pharmaceutical industry ranks fourth in numbers of employees separated, behind retailing, financial services, and airlines. Far-reaching changes in the pharmaceutical marketplace are making these consolidations inevitable, since, when two companies merge, opportunities to cut costs inevitably emerge. Since 1975, the American Chemical Society (ACS) has issued the Professional Employment Guidelines, which embody a broad spectrum of recommended employment practices for both professional scientists and their employers. The guidelines consist of four major sections: Terms of Employment, Employment Environment, Professional Development, and Termination Conditions. The section on termination conditions applies to situations in which the employment of three or more chemical professionals is terminated within a six-month period for reasons other than previously documented inadequate performance, completion of a contract, or cause. Specifically, the guidelines recommend that employers provide a minimum of four weeks' advance notice in writing, severance pay consisting of at least two weeks' salary for each year of service, and information on the array of benefits available to the chemical professional under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). The guidelines also urge employers to avoid releasing workers who have 10 or more years' total service. For more than 20 years, until 1994, ACS gathered and published information about downsizings in order to encourage employers to treat chemists in a fair and professional manner. The goal was to provide an unbiased view of these situations by gathering information from both the employer and former employees. The data were then measured against the recommended termination standards in the guidelines. However, certain problems were identified that weakened the program's integrity and credibility. For example, there were poor participation and low response rates from former employees, nonparticipation by employers owing to policies not to discuss personnel actions with those outside the company, and incomplete reporting by former employees who were unaware of or unable to identify other affected chemical professionals. ACS's purpose in actively investigating downsizings and publishing the information was to publicize the alleged poor treatment of laid-off chemists and to persuade employers to follow the guidelines. However, chemists should be aware that these guidelines are merely ACS's recommendations, and are not legally binding on an employer. Furthermore, ACS has not been able to assess whether employers changed their behavior because of the publicity associated with these guidelines. What is more likely to affect employers' behavior is workplace legislation, such as COBRA, as well as what other companies do. Moreover, the employment climate in which the guidelines were established 20 years ago has changed. At that time, terminating the employment of groups of chemical professionals for reasons other than cause or completion of a contract was practically unheard of, as it was for any other white-collar groups. Even at the height of the last recession, unemployment among chemical professionals as reported in the ACS salary surveys ran far below the national unemployment rate and the unemployment rates of other professions. In today's marketplace, people will most likely experience more than one job loss during their careers. Employability means people are in control of their careers and do not depend on an external source, such as the guidelines, to manage their careers for them. For a copy of the ACS Professional Employment Guidelines, call the ACS Department of Career Services at (800) 227-5558 or send E-mail to career@acs.org. Edward S. Kostiner is a professor in the department of chemistry at the University of Connecticut and is chairman of the American Chemical Society Committee on Economic and Professional Affairs.

Downsizing Is A Routine Occurrence In Today's Competitive Marketplace

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