Hit the Road Jack
Sears workers in Sault deal with downsizing
by Charlie Angus
HighGrader Magazine September/October 1998
When Bill Robertson left college in the 1960s, taking a job at Sears looked like a wise move. The department store giant seemed to offer a long-term future for a willing employee. Bill had four years in with a store in Southern Ontario when Sears opened a new store in Sault Ste. Marie. Bill jumped at the chance to be part of the new operation. For 25 years he was a fixture at Sears in the Sault. People knew him. They came in to get his advice.
In 1994, Bill's wife Sharelle, who also worked at Sears, was downsized after 20 years of service. She had just turned 51. Then in May 1997, when Bill turned 51, he too was let go. He had 29 years of service and was just shy of his pension.
"I was told, `There's no job. Here's your severance package. Goodbye.' Not even thank you very much. Just good-bye."
Robertson says he initially took his termination as a fact of life. "When they downsized me I accepted it. Then three months later I heard that they replaced my job with a part time girl."
Robertson then wrote to Sears head office to find out what was going on. "I felt that after 29 years of service I deserved an explanation."
He never heard back. Robertson says that a second letter (written to then VP of Human Resources Patricia Baudion) was also not answered.
Penny Kitson, of Sears Public Relations in Toronto, maintains that Sears does try to respond to concerns of employees, past and present.
Robertson then took his complaint to a lawyer. "I was told I didn't have a leg to stand on. They call it downsizing and when it happens you don't have any recourse. I thought there must be other people in my situation and that we should do something about it."
Lea Ashick was one of those people. She had 21 years with the Sears store in the Sault. She was the Security Manager at the time Robertson was let go. "Bill Robertson was one of the most loved managers in the store. Every old guy in the Sault came into the store to talk to him. I know people who cut up their credit card when they found out what happened to him."
But Ashick's job wasn't any more secure than Robertson's. "Management called me in one day and told me I wasn't needed and then promptly replaced me within a week with someone else in my position."
Ashick says she called a lawyer but was told little could be done. "I wasn't fired. They couldn't fire me because there was nothing wrong with my work record. Downsizing is a legal way to get rid of employees."
Gord Running was downsized from his position as Receiving Supervisor at the Sault store. He had 21 years service and was within four years of retirement. Running believes his position was taken over by part time workers.
Evelyn Byrne worked 22 years in accounting and clerical. She was three years from early retirement when she was let go. "At the time I believed what they told me. I was not given the option of taking a part time position."
James Reid was the Visual Merchandise Manager. It was his responsibility to look after the visual impact of the store and the design set-up for different departments. It was a job Reid believes he was well-qualified to carry it out. Still, with the downsizing that was going on around him, he felt the need to continually prove his worth to Sears management.
"It gets to the point where you're expected to eat, sleep and drink the company. You put in a lot of extra hours. You think that your work is above and beyond the call of duty, and that you should feel pretty secure. But when it all comes crashing down on you, it's pretty hard to digest."
James Reid was let go the day before his 49th birthday. With 20 years experience he was five years shy of his benefits package.
"They just call you in out of the blue and you're expected to pick up the pieces. There was no one there to help me work through this. What do you do when you're 49 years of age and you have to go out and look for another job? Sure I went for computer retraining and all that but what company is going to put the effort into training an older worker?"
Penny Kitson maintains that Sears does not target older workers. "Sears tries to make adjustments as fairly as possible and we try to look for opportunities to place people before they are released."
At the time Robertson was terminated, however, Sears was on a hiring spree bringing its workforce up to 38,500 from 35,300 the year before.
Few retail stores are as much a part of Canadian life as Sears. With 110 department stores, 97 other outlets and 1,752 catalogue distribution centres, they are a retailing giant. This year, with high profits and strong revenues, the store expects to open 12 new stores.
All this is little comfort to Lea Ashick. "At the same time they were telling us there were no jobs, they were hiring people from outside the area. The store has been doing well for years, even if they used to always cry poor to us workers."

Fact of Life
Downsizing has become the central fact of life for workers in the 1990s. Even companies who are expanding often end up downsizing older workers while at the same time bringing in younger or part-time workers.
Unemployment among the 49 - 64 age group has skyrocketed over the last decade but very little attention has been paid to the plight of workers who are considered too old to work but too young to receive a pension. Their situation is made worse by the fact that few companies are willing to integrate an older worker into operations when it can hire a younger one.
MPP Tony Martin (NDP-Sault Ste. Marie) says the situation faced by the Sears workers in the Sault "opened my eyes like no situation I had seen before." Martin met with a dozen former employees of the Sears operation in the Sault and decided to take their case to the public. He is now working on a private members bill to give more rights to downsized older workers.
"It seems to me that in our economy older workers are being targetted. You call it downsizing, you call it restructuring, but its being done against workers who have given their lives to a company, who have learned the job and who have not quit or moved on when other opportunities presented themselves."
Under the Employment Standards Act a worker who has been let go is entitled to one weeks' pay for every year worked, up to a maximum of 26 weeks.
Bill Robertson feels this doesn't address the issue of downsizing as it is occurring today.
"The law was written to protect employees of a large industrial complex that goes into financial difficulty. Obviously in this situation the company isn't going to be able to pay much but the law is written with this slant to ensure the employees get something. The situation is very different, however, when a buoyant company with tons of money behind it decides to let people go."
Martin says that many older, white-collar workers who have been downsized are isolated and ashamed to come looking for help.
"Older workers who have been with a company for a long time still feel a sense of allegiance. They don't like to talk about it (being downsized) because deep down inside there's a feeling of not having lived up to people's expectations. You don't want people to know you were let go."
Martin feels that in addition, many downsized workers are worried that if they do speak out potential employers will look upon them as malcontents and trouble makers.
Bill Robertson agrees. "When we started to speak out and get some press it seemed to me that many people felt, `oh what's he whining about? Why doesn't he just go and find another job?'"

Backlash
The situation facing the Sears workers in the Sault is perhaps indicative of the changing trend of downsizing. In the early 1990s, many corporations seemed to caught up in a mania of bloodletting. Sears Roebuck in the United States, for instance, fired almost 50,000 workers. Such large scale firings often backfired on the companies (see attached article Feathering the Bed) and led to bad press.
Downsizing today tends to be done on a much quieter scale. Bill Robertson feels this has made it harder for downsized workers to get public attention. "When they let one go here and one go there, nobody thinks too much about it. If Algoma Steel announced it was laying off 600 workers everybody would be up in arms. But when they let people go one at a time you don't tend to notice it."
And yet, whether it is done on a large scale or one at a time, downsizing is having a profound effect on the nature of management/worker relations, particularly when it comes to white-collar workers. Traditionally white-collar workers have sided with management against the more unionized blue collar workers. White-collar workers have trusted in the unwritten covenant that has governed managerial relations for the last century that if you do a good job and you are loyal to the company, then your position will be secure.
Tony Martin says that downsizing is showing such workers that the alliance between white-collar workers and the company is a thing of the past.
"It hard for people who have been loyal to a company to accept getting the shaft. I hope that out of this people begin to realize that nothing is ever handed to you just for being a good employee. These things had to be fought for. The standard of living in this country has risen because unionized workplaces became the benchmark for the larger community."
Economists have noted a distinct change in notions of company loyalty as insecurity and contracting out undermines the position of union and non-unionized employees alike. It raises the spectre of a new labour militancy reaching into sectors of the workforce that were previously considered "safe" by management.
Lea Ashick expresses the disillusionment many downsized workers feel. "We didn't negotiate for any long-term security in our job. If I had known what was going to happen I would have been encouraging people to bring in a union a long time ago."
Ashick says she has learnt a hard lesson after 20 years working for Sears.
"I have changed my shopping habits totally. I don't deal with corporate businesses. I either take my money to small businesses or I shop in the United States. I used to be a big proponent of supporting Canadian stores but now I have the same loyalty to them that they show to their employees none."
Insert Box

Feathering the Bed
Study on downsizing points finger at CEOs
There is nothing new about lay offs and restructuring. Since the 1980s, many troubled companies have been forced to lower their workforce to compete with a quickly changing market. In the early 1990s, however, a new trend emerged. Profitable companies were firing workers at the same time they were expanding operations. This downsizing phenomenon occurred at time of low inflation, when the economy was strong and the Gross National Product was rising. And yet, it was a time when worker confidence had never been lower.
John Lurie conducted a major study on downsizing for Princeton University. He says the downsizing trend in the 1990s has contradicted all the basic elements of economic theory.
"If you took a business course at university, the standard thing you'd learn is that if a business was doing good, you should be hiring new workers to upgrade your capacity for orders. But we were seeing the opposite happening."
Lurie's study revealed a correlation between the stock compensation packages offered CEOs and the tendency to boost short term stock prices by downsizing.
"Downsizing was not linked to how much business the company was doing it was linked to a method of boosting the stock price. If you're a CEO and you're getting paid in stock then its in your interest to raise the value of the stock."
Lurie explains that there are two ways to increase stock values, one is by raising sales and the other is by cutting costs and the cost of labour is one of the major costs on which a CEO can have an influence on
"One way to raise stock prices is to reduce the salaries paid out. It's a subtle link but one that many companies started to notice."
The move to pay CEOs in stock options began in the 1980s as an incentive to boost the company's value. "Everybody thought it was a wonderful idea to align the incentive of the CEO to the stock price of the company. One of the problems, which no one thought about at the time, is the problem of downsizing. If CEOs have an incentive to raise stock prices, they have an incentive to downsize even when it's bad for the company."
Lurie says the effect of firing people at a time when the economy was expanding created serious problems for many companies who underwent large downsizing.
"You have the CEOs making decisions that are good for their wallets but are bad for the long term health of the company."
Some companies who downsized at a time of growth in the market, found themselves critically short of trained and loyal employees when they were needed. Bottlenecks arose, customer satisfaction dropped and employee morale plummeted.
"Downsizing as it was implemented was done horribly, especially in the beginning when no one really knew what they were doing. Some companies made huge mistakes in whom they let go. They really shot themselves in the foot."
Dr. Marc Mentzer of the University of Saskatchewan. recently completed a study of downsizing among 250 of the largest Canadian firms. He concluded that "downsized companies are no more likely to be profitable than companies that do not downsize."
Calling downsizing "a sick fad" Mentzer found that "even profitable companies are laying off employees simply because everybody else is doing it."
Lurie believes that downsizing will have a lasting impact on labour attitudes. "The decrease in job security has given the worker a lot less of an incentive to make a commitment to improving the long-term value of the company. If you think, `well, I'm going to be fired anyway,' or `In three months I won't be here,' then what incentive do you have to improve your performance or to innovate?"
Recently, the business media has raised the issue of whether the downsizing "fad" has run its course. The recent firing of downsizing guru "Chainsaw" Al Dunlop from Sunbeam Corporation has been taken as a sign that the kinder, gentler corporation is returning.
John Lurie isn't convinced.
"The trend doesn't seem to be disappearing. It now seems to come in clumps. There was a lot in 1994 and then it started to slow down but its going back up again as the stock market continues to rise. CEOs see this trend in the market and they're going to go back to their old habits."

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