Turning 'Survive' into 'Thrive": Managing Survivor Engagement in a Downsized Organization: Layoffs, Downsizing, Right-Sizing, Reduction-in-Force: To the Workforce They Add Up to Job Loss and a Great Deal of Stress for Employees and Their Loved Ones. Laid-Off Workers Are Left with Uncertainty, Often in a State of near Panic. in This Recession Those Numbers Are Large and Getting Larger

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But there is often more to the story. Although still employed, the survivors of reductions in force are often demoralized-left as walking wounded. Blindsided by the extrication of their friends and colleagues, the remaining employees question their own security. Mistrust in senior management festers as survivors struggle to understand why the layoffs were necessary, why certain people were chosen and what they need to do in order to be among the blessed that stay.

Amid this bleak scenario, senior managers are tasked to motivate the remaining workforce and lead the organization to recovery and beyond. Peter Drucker once pointed out, "Accept the fact that we have to treat almost anybody as a volunteer." Those remaining at the organization are choosing to be there, and it is up to management to reinvigorate the survivors.

To discover the most effective way to emerge from downsizing with an intact, energized workforce, the Kenexa Research Institute (KRI) used the WorkTrends[TM] data to explore the effects of layoffs on employee engagement and turnover intent, and to identify the work characteristics most important to layoff survivors' engagement with their work and the organization. Our findings translate into recommendations meant to enable executives and HR practitioners who are seeking to retain the talent they chose to keep.

The Outcomes of Downsizing

Downsizing, planned or unplanned, often accompanies attempts to reduce costs while improving efficiency and sustaining efforts devoted to meeting production and performance goals. Simplistically speaking, organizational leaders are looking to maintain or improve profit margins. In healthy times leaders seek a "lean-and-mean" organization by aligning with core strategy and reducing redundancies. When times are hard, leaders compensate for lower sales by reducing human capital-related operational costs. Some studies have argued that the impact of downsizing on profitability and shareholder value is actually quite limited (Lewin & Johnston, 2000, Cascio and Young, 2003; De Meuse, Bergmann, Vanderheiden, & Roraff, 2004).

"Survivor sickness" (Band & Tustin, 1995) and "survivor syndrome" (Kim, 2003) may very well work against potential returns. And layoffs can negatively affect the organizational culture, creating ramifications for employees and customers (Bastien, Hostager, & Miles, 1996; Shah, 2000). A review of survivor engagement in the 2007-2009 economic crisis provides some valuable insights.

The data used in this study demonstrated that U.S. workers' employee engagement, as measured by the Kenexa's Employee Engagement Index, was significantly lower (p < .001) if layoffs had occurred in the preceding 12 months. If no layoffs had occurred, U.S. employees scored a 71 percent on the Employee Engagement Index in 2009. Only an average of 57 percent of U.S. employees answered in the affirmative to the of the Index's four items (1) if a layoff event had taken place. In short, organizations may have cut operational costs, but they are more likely to have a portion of their workforce disengaged--fertile ground for the symptoms that accompany survivor sickness: anxiety, depression and low self-confidence (Kim, 2003) that may negatively affect the organization's competitiveness over the long term.

Conventional wisdom assumes that, in the context of high unemployment rates in an economic downturn, employees who made the cut and avoided layoffs stay at the organization, at least until the job market loosens. Not so, according to research by Trevor and Nyberg (2008): Voluntary turnover rates increase within the calendar year of, and 24 months following the downsizing event. It is difficult to say where employees go after leaving an organization after downsizing: Perhaps they choose to pursue educational opportunities or personal life goals. Presumably, marketable talents such as high-performance and a jack-of-all-trades capability are also valuable to competitors (despite the slowing of hiring rates) that some organizations are picking up top talent. …