Read Application 17.3 regarding Menlo Park, California and answer the following questions at the bottom of the case:

Downsizing in Menlo Park, California

"Menlo Park is a modest-sized city of around 32,000 residents located in the San Francisco Bay area. Like many California municipalities, Menlo Park experienced challenging fiscal problems well before the global economic crisis erupted in 2008. In 2004-2005, the city had an operating budget of $29.2 million and 230 full time equivalent (FTE) employees. Over the previous four years, Menlo Park was forced to reduce spending in line with declining revenues. Sales-tax revenue had dropped about 50 percent in two years (from $12 million to $6 million) and the state of California had diverted local government revenue to help balance its budget. Worse yet, the city's costs had been rising significantly primarily because of retiree benefit expenses.

According to Audrey Seymour, the assistant city manager at the time, Menlo Park moved strategically to remedy these fiscal problems. It trimmed more than $4 million from its annual operating budget and reduced its workforce by about 13 percent, the equivalent of 30 FTEs. To minimize the negative impact of these changes on the city and its employees, Menlo Park's elected officials and administrators implemented the following downsizing initiatives:

- Involve employees early and often. All-employee forums were used to communicate to members and to listen to their reactions and suggestions. These meetings helped everyone clearly understand the magnitude and causes of the city's fiscal problem. Then, action teams were formed in each city department comprised of employees from all levels. The teams were given guidelines and support and asked to devise plans to streamline operations, cut costs, and enhance revenues. The city also used suggestion boxes and the intranet to solicit ideas from employees. To keep everyone abreast of what was occurring, the city manager used both personal and electronic forms of communication, frequently holding employee briefings and sending e-mails. After cuts were implemented, informal debriefing sessions were held and counselors from the city's employee assistance program helped employees deal with the impacts of the changes on their lives.

- Work with unions to achieve common goals. Cost cutting started with reducing expenses and eliminating vacant positions, and then moved to filled positions. The city worked closely with union representatives to find ways to avoid layoffs while still reducing the size of the workforce. The union offered several ideas and worked with the city to develop a voluntary separation process that offered employees in service areas targeted for reduction early retirement, enhanced severance, or shorter hours.

-Seek community input. Because the downsizing efforts would adversely affect city services, Menlo Park started an initiative called "YourCity/YourDecision." This program included sending a survey to community households asking residents to rank order the importance of city services. From a total of 15,500 households, more than 1,000 surveys were returned. As a follow-up to the survey, interactive community workshops were conducted across the city to gain further input into specific ideas residents would recommend to balance the budget in line with the priorities identified in the survey. In addition, each of the city's commissions was asked for suggestions to simplify policies and procedures to save money. The feedback from all of these outreach efforts helped the City Council make tough choices about which services to fund and at what level. The information also guided city staff in developing budget-balancing strategies.

-Keep elected officials in the loop. City administrators held a half-day retreat and a series of meetings with City Council members to discuss the details of the fiscal problems and to get guidance about high-priority service areas and possible cost reductions. Council members were asked to rate city services and these data, along with the community survey results, were used to determine service-area cuts. Council members also spent time discussing which criteria were most important to consider when weighing potential budget cuts. Follow up activities included periodic phone calls to Council members to update them on the downsizing process and to answer any questions. This kept members informed in case they had to respond to questions from employees, union leaders, or the press. The city also brought in a panel of experts to give projections on the regional economy, thus providing information about what the fiscal future might hold for Menlo Park. All of these activities made the difficult decision-making process and the adoption of the city budget easier.

Because of these downsizing initiatives, Menlo Park was able to bring its operations and spending in line with tough fiscal realities. It did this in a way that mitigated damage to community services and to workplace morale. The city was better able to prioritize community services and to allocate funds accordingly. Because the downsizing process had wide involvement from the union, City Council, the community, and employees, the city gained the necessary guidance and commitment from these stakeholders to make tough decisions and to continue to deliver on core community priorities. In the end, Menlo Park could reduce the size of its workforce without having to make any layoffs. It trimmed its operating budget without having to reduce essential community services." (Cummings & Worley, 2020).

1.) What was the motive for downsizing at Melo's park?

2.) What initiatives did they use and which did they not? Was this successful?

3.) Based on the interventions, what can the company expect as an outcome?