Xerox is a widely known firm worldwide, but it has been through numerous crises in the past decade. In
fact, at one point several years ago, there were questions about Xerox surviving as a firm. But no longer.
Under the leadership of Anne Mulcahy as CEO, Xerox has rebounded. Numerous strategic business and
financial decisions had to be made, including reducing the workforce by 30,000. But Mulcahy also stressed
that HR had to become a more strategic contributor.
One of the actions taken was to consolidate a number of HR functions from different business units into a
corporate HR Service Center. This center performs many administrative transactions, and has added
Internet-based systems to make HR services more accessible to managers and employees.
To track employees’ views on the company and HR, employee surveys on the company intranet
have been used for several years. Areas at which lower scores were recorded have been addressed by HR
staff and other managers. The survey results have led to another primary focus at Xerox: employee
retention. With all of the reductions and organizational restructurings,
keeping the remaining employees, especially high-potential ones, has been a continuing emphasis. Xerox
has invested significant time and resources into training and development
of its employees, an important retention factor. Greater use of e-learning, technology, and leadership
development have paid off in reducing turnover and convincing employees that career
opportunities exist at Xerox. Continuing competitive pressures are presenting new challenges
for Xerox and its HR staff. The strategic importance of HR has been demonstrated in the past,
and looks to be a part of the firm’s future.46
Questions
1. Discuss the challenges faced by HR management when significant staff cutbacks occur and how they
should be addressed.
2. Use of technology, employee retention, and HR development have been at the core of HR becoming
more strategic at Xerox. Why have those areas been so key?
Sample Answer
1. Challenges Faced by HR During Staff Cutbacks
When a significant workforce reduction, such as Xerox's cut of 30,000 employees, occurs, HR management faces a cascade of challenges related to the departing employees, the surviving employees, and the company's reputation.
A. Challenges Related to Departing Employees
The primary challenge is managing the separation process legally and ethically.
Legal Compliance: Ensuring that the layoff process adheres strictly to federal, state, and local labor laws (e.g., WARN Act, non-discrimination policies) is critical to avoid costly lawsuits. This includes calculating severance, managing benefits, and handling final paychecks correctly.
Ethical Treatment: HR must manage the communication and exit process with empathy and respect. Poor handling can damage the company's brand and morale among the remaining staff.
Outplacement Support: Providing robust outplacement services (e.g., resume writing, job search assistance) is a practical and ethical way to support laid-off employees, which also positively impacts the employer's reputation.
B. Challenges Related to Remaining Employees (Survivors)
The most complex challenges involve managing the survivor syndrome and maintaining the operational integrity of the smaller workforce.
Morale and Trust: Employees who remain often experience "survivor guilt," fear, and a significant drop in trust in management. They worry about the next round of cuts, leading to low morale and disengagement.
Addressing Strategy: Leadership, guided by HR, must communicate honestly and transparently about the financial necessity of the cuts and the future strategic direction.
Workload and Stress: The remaining staff must absorb the duties of the departed, leading to increased workload, stress, and burnout.
Addressing Strategy: HR must collaborate with managers to redistribute work equitably and ensure the remaining team has the necessary resources and training (as Xerox did with training/development) to handle the new scope.
Retaining High-Potentials: High-performing employees often have the most external opportunities and may leave if they perceive a lack of stability or opportunity.
Addressing Strategy: As Xerox focused on, HR must quickly implement targeted retention strategies for high-potential employees, such as enhanced development, career pathing, and recognition.
2. Why Technology, Retention, and Development were Key to HR's Strategic Role at Xerox
The three areas focused on by Anne Mulcahy—technology, employee retention, and HR development—were key because they directly addressed the need for efficiency, stability, and future capability that were essential for the company's survival and rebound.
A. Technology (Consolidated HR Service Center & Internet Systems)
Drove Efficiency and Cost Reduction: The primary goal of consolidation and Internet-based systems was to reduce administrative costs and free up HR staff. By automating routine administrative tasks (processing transactions), HR reduced its own operational burden.
Improved Manager/Employee Access: Internet-based systems made HR services more accessible and faster, allowing managers and employees to handle simple tasks themselves. This means HR staff could shift their time away from transactional work and focus on strategic issues like talent management and organizational design. This transformation is necessary for HR to earn a seat at the strategic table.