Some managers fear “softness” and have an aversion to any employee whining and bitching.  They are wrong. Without the healthy externalization of layoff induced anger, fear, and anxiety, employees will remain crippled by layoff survivor sickness.  In fact, research shows their symptoms will get worse.

 It is essential that managers lead the way in establishing organizationally sanctioned processes that facilitate the venting of repressed feelings and emotions. Healthy venting is a necessary means to the end of moving employees back to productivity.

 Another common wrong strategy is the myth that, in tough times, the most effective managers “suck it up,” are tough minded, brutally honest, and don’t tolerate “touchy-feely” distractions. 

 “Sucking it up” is precisely the wrong strategy for dealing with downsizing, change, and transition.  It is a defense mechanism – a form of evasion that anchors behavior in the past and prevents productive engagement.

Management in the post-layoff environment is a helping, not a controlling relationship, and requires reaching out, not closing down and hiding behind a facade of toughness and control.  Honesty grounded in a helping orientation is an absolute necessity. Honesty grounded in “brutality” may help the manager vent his or her own anger, but it will ultimately harm the manager, the employee, and the organization.

I just returned from Las Vegas where I worked with a group of sales professionals and sales managers.  They work in a very competitive industry and their company culture values loyalty. 

 We had a very interesting discussion over my concept of “cautious loyalty.”  By that term I mean that no-one wants to work for or with a one dimensional mercenary who is loyal only to her or him self.  On the other hand, it is not a good financial or psychological decision to blindly trust that loyalty is always reciprocated by employment security.

 Unless an employee works continually to keep their skills honed and marketable and networks outside their employer they are setting themselves up for big problems because, in the new psychological contract, no employer can guarantee employment security.

 Some HR people and a few managers had difficulty with the concept.  They liked the loyalty idea but not the “cautious” adjective.  Difficult though it may be, organizations can’t have it both ways and it is not fair to ask employees for their trust and loyalty without also cautioning them to hedge their bets.

 Like other paradoxes, “cautious loyalty” requires the ability to keep two, seemingly contradictory ideas alive at the same time.  One way of looking at it is that you can be loyal to your job, your customers, and, to some extent, your career.  You, however, begin to run into trouble when you are loyal only to one firm because, in today’s environment, that is a very fragile and unpredictable relationship.

Wayne Turmel has a well known podcast show with the interesting title, “The Cranky Middle Manager.”  In my experience, middle managers today are very stressed and “cranky” is a mild adjective for their current state of mental health.  Wayne is a great interviewer and mixes humor with insight and useful content.

 My interview with Wayne just came out.  It covers a lot of what I’ve talked about in this blog in about 20 minutes.  Check it out Cranky Middle Manager Podcast  and pass it on to some of your own middle management friends.

There are two purposes for survivor team building: (1) to build camaraderie so that when things turn around, employees are bound by the group and (2) to keep morale up during difficult times.  These can be “traditional,” organized by the company and professionally facilitated. I have found that when they are spontaneously developed by surviving employees themselves they can be much more fun and effective. Here are two examples:

 A group of computer programmers formed “The Dead Career Society,” a take off of the film starring Robin Williams, “The Dead Poet Society.”  They had regular meetings, shared rumors, “war stories,” and productively vented their survivor emotions. They are a tight group and, unless one has an exceptional opportunity, they will probably stay in the same firm when things improve.

 A group of HR people in Minnesota who survived several rounds of layoffs found an old duckboat – they were, after all, in Minnesota. They took it to an offsite retreat, put it on the lawn of the conference center, and crammed six people at a time – all the boat would hold – inside.  The remainder sat in a circle outside the boat. They all engaged in a spirited and sometimes physical – trying to pull people out of the boat – discussion.  The result was a much stronger team and the birth of the “We are all in the same boat – don’t forget to ‘duck’” metaphor.  Again, the group felt better and the members were able to be more productive in difficult times, and were also “bonded” so that they were attracted to the organization by their group affiliation and were less likely to leave.

Today’s organizations are populated by angry, demoralized, and risk averse layoff survivors. The skills it takes to re-recruit and help these wounded survivors move back into productivity and help them focus on customer needs instead of their own survivor symptoms are not the traditional planning, directing, and organizing skills of the past. In order to be relevant to the needs of layoff survivors, managers need to move beyond the analytical and quantitative skills they learned in MBA programs and become proficient in helping skills.  Facilitating the acquisition of “soft” skills represents both an exciting opportunity and a significant challenge to training and development professionals.  The opportunity is that by helping managers develop intra-personal insight (self-awareness) and inter-personal competence (the ability to coach and form empathetic relationships), training professionals can directly contribute to organizational recovery and individual productivity.  The challenge is that moving managers into helping relationship in tough times is an against-the-grain activity with some significant cultural barriers.  Here are the top four.

Barrier of Macho, Controlling Cultures.    In many organizations, “real” (non-staff, line managers) did not reflect feelings, deal in empathetic dialogue, or ask for feedback. They made decisions, analyzed, and controlled. This was particularly true in financial service and marketing oriented organizations during the past boom.  Some – not all – HR and training specialist were culturally sanctioned and adept at using helping skills.  Even though these skills were clearly valuable, they were the tools of “staff types” and not found on the tickets that needed to be punched on the way to the top.

 Trainers need to make a direct connection between helping employees overcome layoff survivor symptoms and the bottom line. That perspective is supported by a growing body of research.  They then need to make a connection between managerial helping skills and the alleviation of survivor symptoms. I have found that once managers make this connection they embrace a skill set that will help move the organization forward.  

The Barrier of Left-Brain Bias  The right side of the brain controls our emotional and intuitive perceptions and behaviors. The left brain is involved in analytical, rational thought. In the United States and most other Western cultures, organizations have a strong left-brain bias that results in an overemphasis on formal logic, analysis, and rationality.  In most organizations, even with the increasing evidence of the utility of emotional intelligence, IQ trumps EQ and helping skills are much less valued than controlling and analyzing skills.

 Training interventions that help develop intra-personal insight are very helpful.  Whether it be a workshop built around an EQ or a 360 instrument or a refresher in basic helping skills, once managers understand that they can improve their effectiveness by changing their behavior, they are willing to move out of their comfort zone.  Training professionals can greatly reinforce these efforts by ongoing coaching and feedback. 

The Barrier of Management Science  This is not scientific management as defined by Frederick Taylor (people can be taught to work systematically and can be factored into the production equation similar to machines). Rather, it has to do with the inferiority complex felt by business schools and management training institutions in relation to scientists and their subsequent overreaction as they tried to be “scientific”  There was, and unfortunately still is in many institutions, the idea that you can study humans the same way you study rocks. Anything that was intuitive, feeling, or smacked of our unique human spirit was driven out of business education for fear that it would look weak and not seem scientific.

 In an era of downsizing, corporate training functions need to focus on equipping managers with helping, not controlling or evaluating skills.  Although it may smack of “bait and switch,” one very successful program that teaches helping skills is not labeled that way; it is called “performance improvement.”  The training director found that it attracted more participants and once they got there, they found the skills exceptionally valuable.   

The Barrier of Fear of Softness  At the zenith of the old paradigm there was a reaction to anything that was deemed “soft.” This included feelings, relationships, empathy, and anything that was “touchy-feely.” If you think about it, this is a strange norm, because being alive and human involves relationships, feelings, and connecting with others. However, the value was facts and figures—“hard” stuff! Even though such rock-ribbed disciplines as physics now report that facts are relative, the bias continues. Organizations still talk about human resources and training as the “soft” side of management. But not only are people issues as real as financial and production figures, they require just as much skill and strength. In addition, they require authenticity and the risk of self-disclosure. This is much “harder” than hiding behind a memo, a stack of figures, or a quantitative decision matrix.  

The current economic environment is helping with the realization that “soft” is “hard.”  The most effective managers are those who have the ability to engage in authentic helping relationships with their employees. This is not unnoticed by their peers and training professionals can reinforce the message both by their course offerings and their encouragement.

 Even though there are significant barriers, the pain is defiantly worth the gain.  By helping managers develop the “right stuff” to deal with alienated survivors, training professionals can directly influence organizational recovery and individual productivity.  This is a double win.  The organization improves and, in a time of belt-tightening;  the training function demonstrates its relevance.

At the zenith of the old paradigm there was a reaction to anything that was deemed “soft.” This included feelings, relationships, empathy, and anything that was “touchy-feely.”  This is a strange norm, because being alive and human involves relationships, feelings, and connecting with others. However, the value was facts and figures—“hard” stuff! Even though such rock-ribbed disciplines as physics now report that facts are relative, the bias continues.

 Organizations still talk about human resources and training as the “soft” side of management. But not only are people issues as real as financial and production figures, they require just as much skill and strength. In addition, they require authenticity and the risk of self-disclosure. This is much more difficult than hiding behind a memo or stack of figures.

 The good news is that, despite all the reasons that organizations discount “soft” helping skills, there is a slow but steady revision in progress. Organizational leaders are finding that interpersonal competence is in high demand in the new paradigm, and as they make this discovery, they are not only picking up useful skills, they are realizing a new sense of personal relevance as they discover new behavioral options and plumb the depths of their own repressed capabilities

As I travel from organization to organization, I find it interesting that there are a number of ways to describe the involuntary termination of employees.  Here are some recent examples.  Let me know if you have some others.

                  Term                                                                         Meaning

Today’s critical leadership challenge. This is the second of a two-part posting on some of the academic and practitioner based research on the effects of layoffs and the need to heal the wounds and revitalize downsized organizations.  Here is the leadership challenge for organizations using downsizing as a strategy to deal with economic decline and uncertainty.  The research, both academic and practitioner based is overwhelmingly clear: those who remain, the survivors, do not automatically rebound, nor does productivity automatically increase.  Organizations continue to spend time and money helping those who leave. The 2008-2009 edition of Lee, Hecht, and Harrison’s Severance and Separation Benchmark Practices Survey of 1,072 firms indicates, despite current conditions, that 65 percent have maintained their severance policies and 19 percent actually increased them (American Society of Employees, 2009).  The percentage offering outplacement services to displaced exempt employees also increased to 55 percent. While the focus on those who leave is important from both a humanitarian and, to a degree for those who remain, much more strategic effort needs to be expended on a far more important – in terms of competitive advantage – population: those who remain.  Here are two very important activities that global leaders need to assure take place in order that downsizings have the intended results

Make certain those who leave are treated with dignity, fairness, and respect. The perception of the way people are treated on the way out has a lot to do with the commitment and productivity of those who remain.  In an extensive best practice study of the automotive industry (Cameron & Mishra, 1991) it was confirmed that the way downsizings were implemented had a direct impact on post-layoff productivity and quality.  Fredrick Herzberg (1964) developed a theory that divides motivational factors into those that truly motivate (such as recognition and satisfaction with the work itself) and those that simply keep employees from becoming demotivated (the perception of fair pay and working conditions).  He called the latter hygiene factors, and the way survivors perceive the treatment of those who leave – the process of downsizing – is just that: a hygiene factor.  It won’t automatically ameliorate survivor symptoms, but it will greatly facilitate the odds of recovery.  Organizational leaders can insure a double win by assuring that those who implement layoffs do so in a manner that maximizes survivor hygiene. The first win is ethical; treating those who leave with dignity and fairness is the right thing to do.  The second win is strategic; it will help the organization rebound more rapidly.

Avoid unintended consequences. There has been a substantial amount of research e.g. (Brockner, 1986) that connects the prognosis of layoff survivor recovery with the process of downsizing. The key variables are fairness (the selection criteria); equity (the degree to which layoffs are spread across a levels and functions); participation (opportunities for input and choice such as pay cuts, and job sharing); and caretaking (severance, prior notice, and respectful treatment).  In order to avoid untended consequences that could result in significant erosion of any layoff benefits, top executives need to exercise personal oversight over the process.  This will prevent, often well-intentioned, managers from causing irreparable harm by implementing processes such as giving no prior notice and escorting long term employees out of the building.

Empower employees, train managers in helping skills. Researcher Mishra and several colleagues have engaged in multiple downsizing research projects with a number of manufacturing and service organizations over the past twenty years.  They have followed some individual organizations for more than a decade. In a recent update (Mishra, Mishra, & Spreitzer, 2009) they report that the most successful have focused on building trust and empowering their employees.  They point out the necessity of training front line managers in empowerment and communication skills. The Leadership IQ survey (Business Wire, 2008) reinforced this message, indicating that employees who rated their supervisors high in visibility, approachability and candor were 72 percent less likely to report a decrease in productivity. A study of downsized hospitals (Chadwick, Hunter & Walston, 2004) indicated a positive correlation between those hospitals where supervisors focused on surviving employees’ emotional needs and positive financial outcomes.  A study by Kenexa Research Institute (2008) found that key themes in reengaging layoff survivors were building confidence in leadership, helping mange stress, and instilling optimism. The message for global leaders from these studies is that first line management represents a key strategic tool for revitalizing layoff survivors. I have found that training managers in basic helping skills and requiring them to meet individually with their employees is an extremely high leverage intervention that helps both the manager and the employee. 

Adjust to the new psychological contract. As global downsizing continues as primary strategy for reducing costs and responding to economic uncertainty, leaders need to formulate specific plans and exercise ethical and operational oversight for dealing with those who remain.  The research is clear, without paying specific attention to survivors; organizations will not realize the benefits of downsizing.  Innovative, entrepreneurial organizations will have the ability to adjust to a new psychological employment contract that will allow them to compete in the fast moving, temporary business environment of the future.  Success in this new world requires both employees and managers to assume new, often risky roles.  Academics, consultants, and managers need to focus their efforts on helping organizations and individuals cope with the productivity hindering effects of layoffs.  The research is clear; layoffs do not achieve their initial goals and often boomerang and leave the organization worse off then before the reductions.  Since downsizing is an increasing global response to economic decline, those organizations that are most successful in re-recruiting layoff survivors and revitalizing downsized organizations will have a distinct competitive advantage.  I have included the references for this and the preceding posting.   

References

American Society of Employees, “Firms Focus on Severance Study Finds.” April, 2009. http://www.aseonline.org/2009/April/FirmsFocusedonSeveranceOutplacementStudyFi/tabid/6654/Default.aspx

 Bartash, J. “High Tech Layoffs Climb in First Quarter.” Physong, April 6, 2009.  http://www.physorg.com/news158261667.html

 Brockner, J., and others. “Layoffs, Equity Theory, and Work Performance: Further Evidence of Survivor Guilt.” Academy of Management Journal, 1986, 29, 373-384.

 Business Wire, “Leadership IQ Study: Don’t Expect Layoff Survivors to Be Grateful.” December 10, 2008. http://www.findarticles.com/particlesmi_m0EINis_2008_             Dec_16/ai_n31128154

 Cameron, K., & Mishra, A. “Best Practices in White-Collar Downsizing: Managing Contradictions.” Executive, 1991, 5(3), 57-72.

 Cascio, W. “Use and Management of Downsizing as a Corporate Strategy.” SHERM Foundation: Executive Briefing. September, 2009.

 Cascio, W. Responsible Restructuring: Creative and Profitable Alternatives to Layoffs. San Francisco: Berrett-Koehler, 2002.

 Chadwick, C., Hunter, L., & Walston, S. “Effects of Downsizing Practices on the Performance of Hospitals.” Strategic Management Journal, 2004, 25, 405-427.

 DeMuse, K., Bergman, T., & Vanderheiden, P. “New Evidence Regarding Organizational Downsizing and a Firm’s Financial Performance.” Journal of Managerial Issues, 2004 (16) 42-63.

 Dorfman, J. “Heard on the Street.” Wall Street Journal, Dec 10, 1991, pp. C1-C2.

 Ferris, G., Rosen, D., & Barnum, D. Handbook of Human Resources Management. Cambridge: Blackwell, 1996.

 Herzberg, F. “The Motivation-Hygiene Concept and Problems of Manpower.” Personnel Administration, 1964, 27(1), 3-7.

 Kenexa Research Institute, “Priority Number One in the Aftermath of Layoffs: Reenergizing Employees.” Employee Insight Report, 2008, (35).

 Mishra, A., Mishra, K., & Spreitzer, G. “How to Downsize your Company without Downsizing Morale.” MIT Slone Management Review, April, 2009.

 Noer, D. Healing the Wounds: Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizations. San Francisco: Jossey-Bass, 2009. 

 Noer, D., & Bunker, K. (Eds.) “Best Practices in Leading Downsized Organizations.” Center for Creative Leadership Conference Proceedings, April, 1995, Greensboro: North Carolina.

 Prime CB, “Thirty Percent of Layoff Survivors Feel Burned-Out.” May, 28, 2009. http://www.primecb.com/30-percent-of-layoff-survivors-feel-burned-out/  

 Rugaber, C. “Mass Layoffs of 50 or more Workers.” AP World Stream, January 28, 2009. http://www.encyclopedia.com/doc/1A1-D960B3MO0.html

 Stjern, A. “Effects of Survivor Guilt Syndrome in the Workplace.” Associated Content, June 24, 2009.  http://www.associatedcontent.com/article/1877291/effects_of_survivor_guilt_syndrome_pg2_pg2.html?cat=55

Here is a summary of some of the recent research and studies that support the seriousness of the need to heal the wounds and re-recruit layoff survivors.   A future blog will summarize some of the research about actions individuals and organizations can take.

Organizations are experiencing a global pandemic of downsizing.  In order to successful lead organizations through the trauma of layoffs; leaders need new and innovative approaches to organizational revitalization.  Downsizing has become an increasingly popular strategic intervention to reduce costs and increase productivity.  Rugaber (2009) reports that, in the US alone, mass layoffs of 50 or more people totaled 21,137 in 2008, a year that also included the most job losses since World War II.  Layoffs in the technology sector increased 72 percent over 2007 and the trend is continuing, according to a report by Challenger, Gray & Christmas (Bartash, 2009).   

Downsizing has a negative effect on productivity. A study of 4,172 employees representing 318 companies who had kept their jobs after layoffs (Business Wire, 2008) yielded some attention-grabbing results. Key findings were that 74 percent of these survivors reported a decrease in their productivity; 81 percent stated that customer service had declined; and 77 percent saw more mistakes and errors being made.  The three most common words used to describe survivors’ feelings (62 percent of respondents) were guilt, anxiety, and anger. This study by Leadership IQ, is consistent with an ever-increasing stream of downsizing research that provides compelling evidence that leaders of downsized organizations need to pay very careful attention to those who remain.  Here are some highlights of that research.

There is a Tenuous Connection to Financial Performance. A longitudinal study (Dorfman, 1991) followed sixteen large restructurings for five years and found that stock performance in these firms trailed competitors by an average of 26 percent. Another (Casico, 2002) used ROI as an index and found no evidence that downsizing actually worked and that, in many cases, productivity actually decreased. In a pioneering study, DeMuse, Bergman & Vanderheiden (2004) tracked five financial indices of fortune 100 companies that went through downsizing– profit margin, return on assets, return on equity, asset efficiency, and market to book ratios – and compared the results, over a 12 year period, to companies that did not downsize.  The downsized companies generally reported lowered results during the first few years with improvement eventually returning to the level of the non-downsized firms. 

There is No Significant Increase in Productivity and Risk Taking Declines. A survey of 1,468 downsized firms by the Society for Human Resource Management (Ferris, Rosen & Barnum, 1996) reported that employee productivity did not increase and often worsened.  In a recent study (Prime, 2009)  indicated that a survey by CareerBuilders reported that 47 percent of layoff survivors had taken on additional work and 30 percent felt burned out. Cascio (2009) indicated that 58 percent of human resource professionals reported a deterioration of morale and a decrease in loyalty after layoffs.  My own research (Noer, 2009) found that, at the very time organizations needed employees to take risks and increase innovation, survivors tended to do the opposite: keep their heads down and hunker down in the trenches.   Another danger of downsizing is that turnover of those employees organizations want to retain will increase. Stjern (2009) reports that a two year study by of firms wishing to be included in Fortune Magazine’s list of the 100 best companies to work for, found that those with layoffs experienced 2.6 percent more voluntary turnover than those with no layoffs

1. Re-recruit the survivors.  The overwhelming consensus of downsizing research is that layoffs do not achieve their “going in” productivity goals.  Survivors of most organizations are angry, depressed, anxious and fearful.  They are not able or willing to take risks or focus on increasing customer service.  At the very time organizations need them to be the most creative and energetic; they hunker down in the trenches, absorbed in their own toxic survivor symptoms.  Although managers are, rightfully, caught up in cutting costs, they need to be reminded that people are not “things” to be added or deleted to the production equation with mathematical sterility.  Managers need to move beyond layoff administration and planning into formulating strategies for layoff recovery. This involves re-recruiting demoralized employees and working to help them overcome debilitating survivor emotions.  

2.  Facilitate venting.  This goes against the culture of some organizations that managers should not tolerate any whining and complaining. The reality is that without the healthy externalization of layoff induced anger, fear, and anxiety, employees will remain crippled by layoff survivor sickness.  In fact, research shows their symptoms will get worse. It is essential that managers lead the way in establishing organizationally sanctioned processes that facilitate the venting of repressed feelings and emotions.  Many successful organizations do this in groups with the help of a facilitator; others require managers to meet individually with employees.  This is sometimes a counter-cultural activity but organizations with the courage and tenacity to facilitate venting have been amazed with the results and found that healthy venting is a necessary means to the end of moving employees back to productivity.  

3. Communicate with truth and authenticity.  It is a myth that, in troubled times, managerial communication needs to be clear, planned, objective, and structured.  It is a fallacy that expressing uncertainly, ambiguity, or dealing in feelings and emotions is not useful. Surviving employees are attempting to deal with a toxic brew of productivity hindering emotions and need to feel authorized to talk about them. Employees would much rather have managers tell them that they don’t know something as opposed to having them not say anything or make something up.  It is also important that managers understand and communicate the truth about employment security. We are experiencing a fundamental shift in the psychological contract that connects employee to employer.  When the economy becomes more positive, the frequency of mass layoffs will diminish, but long-term, lifetime employment with one organization is a thing of the past. Managers need to emphasize that employees will have to rely on maintaining transferable marketable skills and continually cultivate their professional networks. 

4. Brush up on helping skills and lighten up on controlling skills. Don’t be afraid of feelings and emotions; they are the currency of the realm for helping survivors move back to productivity.  Telling survivors to “suck it up” and that they are lucky to have kept their job is the wrong strategy.   Layoff survivors are not motivated by luck. In fact, evidence is clear that the opposite happens – they are demotivated by survivor guilt and its cousins: anxiety and depression.  Managers who have been most successful in helping survivors overcome the trauma of layoffs have formed helping relationships with their employees. This requires managers to practice and, often, re-learn basic helping skills such as active listening, reflecting feelings and emotions, and giving and receiving non-evaluative feedback.  For many managers this initially feels like an against the grain activity in a time of economic crisis. It, however, has been proven to be an invaluable tool in helping employees overcome the symptoms of layoff survivor sickness and move back into productivity and creativity.       

5. Attract employees by nutritious work. The best strategy for organizational survival in the new reality will be to attract employees because of the work. The most talented employees will have options; they will choose their employers because they want to be there, not because they have to be there.  Employees will be loyal to their profession and motivated more by the work itself rather than the organization where they perform that work.  Successful organizations will help employees self-motivate by finding nutritious work and an inner sense of purpose rather than relying on contrived external motivational techniques.  Paradoxically, employees who are working in congruence with their unique gifts and purpose will be much more productive and increase the probability of their job security. Successful managers will be much more collaborative and have the ability to lead empowered employees not tied in by benefits, services, and social systems that reward fitting in and conformity and motivated by fear of job loss.