Motivating Survivors of Layoffs

Posted by Mark Brousseau

An interesting and timely article from the New York Times:

After a Downsizing, How to Motivate?

By KELLEY HOLLAND

DOWNSIZING. Restructuring. Headcount reduction. Whatever they are called, layoffs instill dread, guilt or both in managers. The loss of a job is among life’s most traumatic events, and even many hard-nosed managers hate to force that experience on their colleagues.

Because of this, managers can become so consumed by the prospect of firing people that they fail to adequately reassure and remotivate the employees who remain.

But they make this mistake at their peril. Study after study has found that employers who eliminate jobs may not bolster productivity over the long run. Too often, their anxious and overworked remaining employees become risk-averse and unproductive, or leave for other jobs.

As companies hire new workers or turn to outside vendors to compensate, the short-term savings from layoffs can evaporate.

The wobbly economy is producing a steady stream of layoff announcements — the number of extended mass layoffs rose 8 percent in the second quarter, based on preliminary numbers, versus the period a year earlier. So it’s more important than ever for managers to understand how best to handle these downsizings, not just for those who lose their jobs, but also for those who are still working.

Some experts believe that workers have developed a certain amount of resiliency after decades of corporate firings and layoffs. That may be true for some of them, but others are still hit hard when co-workers lose their jobs, and managers need to let each employee process the cutback in a way that seems appropriate.

Warren Bennis, a professor of management at the University of Southern California and the author of “On Becoming a Leader,” laid out a core precept for managers dealing with layoffs.

“Respect is the key word,” Professor Bennis said. Too often, he said, “business today just seems to be so callous.”

He decried bureaucracies that “lay down edicts” about cutbacks and treat employees as if they were invisible or indistinguishable — the opposite, he said, of respecting them, which in essence means seeing them clearly and individually.

“It seems to me that the main job of any leader is to help define reality,” Professor Bennis said. Leaders who can help employees understand the reasons for layoffs, and also acknowledge the pain incurred, will have a better shot at rebuilding trust and motivating those who remain.

Employees need to hear right away where cutbacks are being made, and whether additional reductions are coming. Many employees wonder about the fairness of layoffs, and managers can go a long way toward re-establishing trust if they can describe sacrifices of their own, like pay cuts or forgone bonuses.

Managers also need to listen to employees’ reactions to layoffs. This can help employees move on and focus on new responsibilities and objectives.

For example, ComPsych, a provider of employee assistance programs, runs seminars at companies that have eliminated jobs; the first half of the program often consists of employees talking about their reactions to the layoffs, said Anita Madison, the company’s vice president for training and consulting.

Articulating an organization’s goals is particularly important during layoffs. Some managers solicit employee ideas about how to reach those goals. That can help with motivation — especially when employees are being asked to do more with less.

“Often the first casualty in a downsizing is employee morale,” said Wayne F. Cascio, a professor of management at the University of Colorado, Denver, who has studied the effect of layoffs on productivity. Employees who outlast a round of staff cuts, Professor Cascio said, “are looking for signals, and they want to know how they are going to be better off.”

“They want to know if they have a future,” he added.

Any organization can reach out to employees after layoffs, but sometimes the process can be simpler in smaller settings.

Reflexite, a maker of reflective safety products and films, laid off more than half of the 75 employees in one division in 2002, said Michael F. Foley, the president and chief executive. The division had lost its biggest customer, and the weak economy was impeding the search for replacements.

Mr. Foley recalled gathering the division’s remaining employees on the day of the layoffs.

“We got everyone together and said: ‘Here’s what we did, here’s why, and we don’t intend to do any more. And here is the expected outcome,’” he said. Managers also described the pay and other benefits that the laid-off workers received.

Employees had been involved in the discussions about the business, Mr. Foley said, so the layoffs were not a surprise.

In fact, he said, because Reflexite is employee-owned, everyone understood the financial issues, and “there was relief that it was over.”

“The general reaction was, ‘Thanks for trying all you could,’” he added.

The division in question has since rebounded, and Reflexite was even able to offer jobs to many former employees, Mr. Foley said. All but one of them came back.