THE TABOO TOPIC: Downsizing and how to survive

THE TABOO TOPIC: Downsizing and how to survive

Layoffs, downsizing, restructuring, terminations – no matter what it’s called, nobody is happy when people lose their jobs. It is a traumatic event for all involved – whether it’s the affected employees, the managers who have to deliver the news or the workers who remain to pick up the pieces. It’s the latter who are often ignored after downsizing, to the detriment of the organization, and few companies have any strategies in place to help survivors.

This neglect often causes the organization to suffer, according to research from Franco Gandolfi (2008), director of the MBA/EMBA programs at Regent University. His research of numerous downsizing studies from the past 20 years found that most firms never realize the financial gains they were expecting from downsizing. In fact, firms that did not undergo downsizing outperformed downsized firms in both the short term and the long term.

Many of the problems that afflict organizations that have reduced their workforce can be traced back to remaining staff. Gandolfi found that survivors often suffer from guilt, fear, anger and insecurity, which leads to absenteeism, distrust, poor performance, lower morale, and disengagement. Remaining workers are also often faced with new roles and different responsibilities and have a difficult time adjusting.

It can be difficult to overcome resistance and redeploy the remaining workforce after a major restructuring. So much time and effort are spent on deciding who to let go, handling the terminations and avoiding legal trouble that survivors are often neglected and left to fend for themselves.

Managers can find themselves faced with a workforce that is confused, anxious and sometimes bitter. At the same time, these employees are often expected to take on new roles and responsibilities.
Not preparing a plan for managing remaining staff can have dire consequences for an organization that’s probably already in trouble. High-performing employees are the ones with the most opportunities available to them, so it stands to reason that companies risk losing the very people they are relying on to see them through the downturn. (prime headhunting targets)

Life after layoffs really begins prior to any downsizing initiative. Communication about the reasons behind the reduction and the path going forward must be clear, consistent and constant. Communication from the leader of an organization works best to improve overall employee morale after a downsizing event. The rumor mill is at its most powerful state when layoffs occur, so the key when cutting a workforce, can be summed up in one word: “transparency”.

Following the event, corporate leaders need to understand the various levels of motivation and resistance they are dealing with and take the lead in driving change. Managers should be able to execute the change strategy and be role models for motivating behavior, guiding employees into alignment. It is important that no one speak ill of departed employees, as it will only have a negative effect on those that remain. Instead, managers must remain positive in order to encourage surviving employees and maintain morale. Keeping staff informed of any success that laid-off employees have finding new work can go a long way toward allaying fears.

Many times following a restructuring or downsizing event, there are spots on the org chart that end up blank. These “orphans,” can create chaos when no one steps up to take responsibility for them. Unless an organization is ready to assign new roles or broaden job descriptions, things can begin to fall through the cracks.

Recommendation: While employees may be relieved that they were not part of the latest round of layoffs, this relief hardly breeds the kind of loyalty and engagement companies need to be successful. What remaining staff members really need is a clear vision forward, with goals to rally around. Importantly there is a need to educate leaders in how to deal with the concerns and questions survivors will undoubtedly have, informing people why they were kept and what role they play in the organization’s success going forward and involving survivors in developing organizational improvement, to retain these key people.

This is subject that we don’t like to discuss (not unlike planning your own funeral) and therefore a lot of companies do this very badly. I think it is worthwhile having a strategy in place should this need to happen at some time during your companies life.