Magazine article Training & Development

The Care of the Un-Downsized

Magazine article Training & Development

The Care of the Un-Downsized

Article excerpt

Employees that survive a downsizing are a company's future. Here are some guidelines on how to treat survivors to ensure their well-being and the company's success.

By now, we all know the sad tale of downsizing:

* Apple Computer, down 1,300 jobs

* AT&T, down 78,000 managerial positions

* Kimberly Clark, down 2,700 jobs.

We could go on. Instead, let's ask whether layoffs are really needed to get organizations back on the right track. Maybe not.

According to a recent study by Watson Wyatt Worldwide, a pension and profit sharing company located in Washington, D.C., only 46 percent of the companies surveyed met their expense-reduction goals after downsizing, less than 33 percent met profit objectives, and only 21 percent enhanced shareholders' return-on-investment.

In another study, the American Management Association found that fewer than half of the firms downsized since 1988 had increased their profits after layoffs; only one-third reported an increase in productivity. Worse, the study revealed that downsizing seems to beget more downsizing. Two-thirds of firms that cut jobs do it again the next year.

Kim Cameron, a University of Michigan professor and an expert in downsizing, sees layoffs as a quick fix that usually doesn't work. Cameron studied 30 auto-industry companies' that had been through layoffs. "Only five or six had a marked increase in productivity," he says. "In all other cases, performance went down."

Downsizing, however, may not be the true culprit. The real problem is that many companies don't plan for downsizing. They just reduce head count, neglecting to figure out how they're going to move forward in their new "leaner and meaner" environments.

In such cases, the most important element of downsizing is ignored - the survivors. As downsizing analyst David Noer points out, "Survivors are left to fend for themselves, to somehow manage on their own."

From guilt to growth

Downsizing is a traumatic experience - not only for terminated employees, but also for those who remain. Joel Brockner - a professor of management at Columbia University and an expert in survivor guilt - says, "When people react negatively to change - such as downsizing - it shows up in reduced productivity and low morale. The real cause is that people's self-esteem is threatened."

Ironically, survivors are perhaps the most critical factor in determining the future success of a downsized company. They are expected to assume additional workloads, work more efficiently, and adapt quickly to the new work environment in order to attain company goals.

Managers must anticipate survivors' reactions to downsizing and help them grow in spite of the situation. Management must find ways to help survivors cope with concerns that they might lose their jobs, with guilt about the termination of co-workers, and with resentment and burnout because of pressure to work harder.

Though the steps below aren't a panacea, they can help management channel its energies and efforts in the right direction.

Lead by vision and values, not commands. In a downsized company, it's increasingly difficult for management to tell employees exactly what they should be doing to be most effective in their jobs. That's because their jobs - and their work environment - are changing so fast. In fact, in many cases, employees are in the best position to know how to solve problems or serve their customers because they are closest to the situations.

It is more important for management to help employees focus on a larger vision of what is needed, emphasizing the strategies and values that will help make the vision attainable. For example, instead of telling people what to do (and risk being wrong), management should encourage workers to take the initiative when appropriate. Managers should meet regularly with employees to map goals and to seek ideas on how they can work together to meet the goals. …

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