Here are the top five layoff fallacies along with critical managerial strategic responses   

1.  Fallacy: There is a direct relationship between reducing “people costs” and organizational productivity.  A layoff on a Friday will result in productivity gains on the following Monday.

Reality: 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. 

Strategic Response:  Organizations 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.  Fallacy: Survivors will work hard because they will be grateful that they were lucky enough to keep their jobs.

Reality: 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.

Strategic Response: Managers need to examine and, if necessary, reframe their assumptions concerning survivor motivation. In order to return to productivity, survivors need coaching and empathy.  Reminding layoff survivors that they should be grateful won’t motivate them; it will only make them feel deeper levels of survivor guilt. 

3.  Fallacy:  Organizational leaders should not tolerate any whining and complaining.

Reality: 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.

Strategic Response: Counter cultural though it may be, managers need to develop 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.  

4.  Fallacy: In tough times, the most effective managers “suck it up,” are tough minded, and don’t tolerate “touchy-feely” distractions. 

Reality: “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 and personal growth.

Strategic Response: Leadership 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.  Organizations that have successfully helped employees rebound from the trauma of layoffs have required their managers to learn and apply basic helping skills.

5.  Fallacy: Once things get back to normal, the epidemic of downsizings will stop and job security will return.

Reality:  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.

Strategic Response: It is important that the wrong message not be communicated. Managers need to emphasize that employees will have to rely on maintaining transferable marketable skills and continually cultivate their professional network.  That will provide the only true employment security in the brave new world of the new psychological employment contract.

1. The overwhelming consensus of research is that layoff survivors don’t work harder because they feel lucky to have a job; they are angry, risk averse, with much lowered productivity. They don’t automatically snap back and that’s where training can add significant value.
2. Training line managers in basic helping skills – empathetic listening, non-judgmental reflection of feelings, and coaching is enormously beneficial in facilitating a return to productivity. It has a dual benefit: it equips managers with the tools necessary to authentically communicate and re-recruit their employees, and it helps managers deal with their own layoff survivor symptoms. 
3. This is almost always a high leverage intervention. A one to two day workshop format with role plays, feedback, and facilitated practice has amazing “bang for the buck” both in providing managers with the requisite skills and in demonstrating the relevance of the training function.

Bank of America and Yahoo are two very different organizations but both suffer from layoff survivor sickness.  They are involved in massive downsizings and, after all this time, have still not learned the lessons of the new paradigm or what I call the new psychological employment contract. Tying employees in over the long haul was a central premise of this old paradigm. The unwritten, psychological contract was that as long as employees fit in, did their job, and conformed to organizational norms and standards, they could keep their jobs until retirement or until they made the decision to leave.  The new paradigm is much different.  It is somewhat similar to the professional athletic model that states that as long as you perform to our standards or we can afford you, you can stay; however by no means can you count on a job for your entire career.

 As a result of buying into the old paradigm efforts of organizations to tie them in over a total career, employees tended to define themselves in terms of where they worked – their organizational affiliation.  This organizational definition resulted in employee self-esteem being placed in a dependency relationship to an organizational affiliation.  A question I often ask is, “If who you are is where you work, what is at threat if your job is at threat?”  The answer is a lot more than a paycheck. 

 The lesson that many organizations need to learn is that they need to attract employees by the work, not a long term commitment.  The lessons that employees need to learn is that who they are is not where they work, and that putting all of their psychological eggs in the organizational basked is a very bad strategy because the basket can and will be dropped and the eggs will be broken.

Telling layoff survivors to “suck it up” and that they are lucky to have kept their job is the wrong strategy.   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. In many years of working with layoff survivors, I have yet to hear the “best” boss described as excelling in directing, controlling, or evaluating. The best bosses are almost always described as empathetic listeners, coaches, straight communicators, and helpers. Helping skills, not controlling skills are the currency of the leadership realm during organizational trauma. They are not “soft,” or “touchy-feely,” they are “hard.”  It is much easier to be cynical, controlling, and closed than to be open, facilitative, and optimistic.

Level 1  Managing the Process

Level 1 interventions deal with the process, the way layoffs take place from the survivors’ perspective.  Although these interventions occur at the tip of the layoff iceberg, they are tactically important.  They keep survivors from sinking too deeply into depression and guilt, helping them stay afloat until other, more permanent, interventions can be applied to pull them out. 

 A key level -1 intervention is facilitating communication.  It is important for managers to communicate everything that is going on.  It is often difficult for managers to stimulate and maintain the free flow of information.  Instead, they often begin to manage it, to control it.  Announcements are carefully crafted and scripted.  Comments made when walking around are rehearsed. They are also under some pressure not to tell the truth.  People want them to say, and they themselves want to say, “It is over.  Your job is safe.”  It is never over. 

 Level 2: Facilitating Grieving

Level – 2 interventions help unblock repressed feelings.  Even in the best handled layoffs, survivors feel violated.  Since organizations often have strong norms against employees’ even admitting the presence of survivor emotions, let alone sharing and dealing with them, interventions must tease out repressed emotions.  Although some survivors have support systems that allow them to sort out their feelings, the majority of layoff survivors have no personal or organizationally sanctioned outlet for anger and fear.

 The bad news is that repressed anger and other emotions are widespread.  The good news is that an intervention process is not difficult to start, and once it is started the feelings do come out.  Although individual counseling is useful, I have found group-work the most effective and efficient method of bringing survivor emotions to the surface.

 Level 3: Breaking Organizational Codependency

If your sense of self-esteem and value is based on keeping your job, pleasing the boss, or keeping the old-paradigm system in tact, you are susceptible to organizational codependency. To break organizational codependency individuals must maintain internal control, keep their personal power, and love themselves without making this love conditional on organizational approval

 Level 4:  Building a New System

Organizations operating under the old contract assumed employees would be there for the long haul.  They rewarded tenure with strategies ranging from giving out tie bars and wall plaques in recognition for extended service to providing employees with recreational services and benefit plans that tied them in over time.  This is not a good system. Many employees are locked into organizations that do not want them and where the employees do not wish to remain. 

 Organizations typically do not like to think of themselves as paternalistic, but the reality is that most past cultures too pride in “taking care” of their employees.  Employee catering was a central part of the old employment contract.  It is difficult to reverse but it is no longer beneficial to either party.  On the one hand, it creates dependent employees who do not develop the skills necessary to be mobile in the marketplace, and on the other hand, employers are finding it impossible to hold up their end of the bargain.  Organizations must facilitate the new employment contract such as letting employees plan their own careers.  Individuals must work to break codependency and resist putting all of their social and emotional capital in the organizational vault.

With the looming cutbacks in government organizations, journalists have once again made the specter of layoffs visible to the public.  And, again, they concentrate on the plight of those who leave and ignore the impact on those who remain.

 Those who stay, the survivors, are subject to the trite and impossible mantra of “doing more with less.”  They are angry, overworked, often depressed, and tend not to take risks or poke their heads out of the trenches of safe conformity. 

 These are the people we are relying on to be more productive and turn things around.  Until organizational leaders take action to “heal the wounds” both sides lose:  those who have lost their jobs and those who remain. 

 It would be helpful if the press understood the need to help survivors and spend some of their efforts getting the word out instead of only dealing with one side of the issue.

There has been a resurgence in what is now known as “brain science.”  It is particularly relevant to organizations looking for ways to motivate post-layoff workforces.  Recently, a friend sent me an article on the subject that seemed to turn the clock back to a time (about 75 years ago) when the operant paradigm in psychology was that “man is a pleasure seeking, pain avoiding animal” which led to stimulus response motivational concepts that lead to behaviorism.

More recently OD and humanistic psychology moved began to embrace “soft” motivational concepts such as self-actualization, personal growth, and transformation.

If you buy into the reward and punishment – stimulus response – model, then individual values, and free will become irrelevant.  We can condition people using behavioral conditioning into doing anything that leads to reward and reduces punishment.  A really good book that scares humanists like me is one by B.F. Skinner called “Beyond Freedom and Dignity” It is scary because it demonstrates the dehumanizing power of conditioning.

My take on some of the brain science research is that it is old wine in a new bottle.  Not that it is bad – old wine is good as long as it has not turned sour.  If, however, brain science simply comes down to making motivation an outcome of setting up the right contingent reward, punishment, reinforcement, and extinction processes – it, I think, overlooks the power of emotion, free-will, and much of the new research on emotional intelligence.  My experience in helping organizations respond to the trauma of layoffs is that feelings and emotions are part of both the problem and the solution.  Perhaps a merger of brain science and emotional intelligence will provide a better, hybrid model.

Organization Development is an umbrella term for the processes I use to help organizations recover from the ill effects of downsizing.  I recently responded to a question on the IO psychology site on LinkedIn.  The question was “What is OD anyway?”  It asked how it differed from OE and OI.  Here is the answer I posted.

 Like all labels, Organization Development, Organizational Transformation, Organizational Effectiveness, Organizational Improvement, and Organizational Behavior, are subject to a number of interpretations and perceptions.  There are some basic differences.  Organizational Behavior is an academic discipline and usually a course taught in MBA programs.  OI and OE usually have a measurement and objective productivity improvement orientation.  OT (organizational transformation) was somewhat of a flash in the pan in the late 70’s and early 80’s.

 Organization Development – it is “organization” not “organizational” development, reached its peak popularity in the sixties and seventies.   It involves using an “intervention” to change an organizational system.  One common definition is “planned change.”   The classic reference is a 1970 a book by Chris Argyris called “Intervention Theory and Method: A Behavioral Science View” Argyris also laid the foundation for most of the concepts of what is now called organizational learning as more popularly articulated by Peter Senge.

OD in its pure form is based on a set of core values.  Words like collaborative, non-hierarchical, open, democratic, and humanistic, have been used to describe these values.  Interventions usually take the form of team-building, survey-feedback, processes, appreciative inquiry, and many other techniques.  Where OD differs from OI and OE is in its humanistic and value base.   In the early years a core technique was sensitivity training.

 As in all disciplines, there are various schools of OD.  Some remain grounded in the 60’s mantra of love, trust, openness, and collaboration.  There is a school of large systems intervention which involves getting many people and many perspectives aligned into a total systems change effort.  Recently, there is a cult of measurement that really blends into some of the OE and OI stuff. 

 There are Masters and Doctoral programs in OD and, they too, vary in their focus.  There are more than a few clinical psychologists in the field and there is some debate as to where OD (systems approach) and psychology (individual approach) compliment or cancel each other out.  Recently, many OD consultants have moved into executive coaching, both because they can make money doing it, and because it often compliments system-wide approaches.

 A large number of past OD consultants operated outside formal organizations, usually as individual practitioners or as a part of small groups.  There are now many internal OD consultants, but there is debate as to whether an internal can be as effective as an external and how someone can change a system of which they are a part.  The best practice seems to be a blend of internal and external practitioners

 Although OD has been criticized as “soft” and  too “touchy-feely,” most people who have experienced the work of a quality practitioner see their intervention as an extremely powerful and meaningful part of their lives.  OD, done well, is very powerful.  When working with organizations to help layoff survivors return to productive and meaningful work, I use OD techniques.  

 Many practitioners don’t use the term OD when they contract with clients.  This is because the term carries too much baggage from cynical managers and from non-professional practitioners.  I have both a Master’s and a doctorate in the field and very seldom use the term in my work.

Many organizations forget that people in supervisory roles are also employees and not immune to survivor issues simply because they manage others.  “Physician, heal thyself,” is the rule and for those in leadership roles, the first priority is to deal with their own survivor issues. The next thing they need to do is help their employees.

 Leadership in a time of paradigm change is more of a helping relationship than of command and control management. Leaders in many organizations find themselves in a bind. The only way to deal with the emotional blockage that constitutes survivor sickness is to get employees to talk about their feelings, yet this necessary catharsis is seen by many organizations as disloyal or coddling employee complaining. 

 To be effective a boss needs to have the courage to take a risk.  In some organizations this has taken the form of group meetings that stimulate frank discussions of feelings and emotions.  Others have required supervisors to have one-on-one meetings with employees and listen to their feelings.  In my experience the most difficult activity is listening and not getting defensive.  In many situations, managers need to be trained in basic listening, empathy, and reflection skills.  This training has a dual effect:  it helps the boss to deal with his issues and equips her to help her employees. 

 Sponsoring special programs that help leaders develop the skills and perspectives to lead downsized organizations is a unique opportunity for both HR professionals and top managers.  Managers of all levels are employees too, and because of their key role in helping the organization recover, special attention needs to be paid to their own recovery from survivor sickness.

Gunnysacking is a term for storing up hurt feelings, anger, affronts, and unresolved conflicts, and, when the weight of the psychological gunnysack becomes too heavy to bear, unloading it, often to an inappropriate degree in an inappropriate context.  We all gunnysack to some extent but, most psychologically healthy people find ways to keep their bags relatively light.  Unfortunately, organizational leaders are not immune to gunnysacking. 

I have discovered that a surprising number operate for many years under the oppressive burden of a heavy bag and use a crisis mode of operation as an authorization to unleash long repressed feelings of anger and frustration by figuratively beating their fellow employees about the head with their overloaded gunnysacks.  In layoffs this takes the form of those in power “getting” both functions and people that frustrated them in the past but were protected by a more tolerant organizational culture.  A newly promoted general manager, for example, used the downsizing culture as a way to “get” some long term rivals in the marketing function. 

 Gunnysacking is unhealthy for both the leaders who practice it and for the prognosis of organizational survival.  Leaders who see it happening need to move quickly and stop it. They need to help those wielding those heavy bags find better ways to lighten them. If that won’t work, they need to carefully consider the costs in terms of productivity and morale, of retaining people who are more concerned with pursuing a personal vendetta than helping the organization recover.  If, in the heat of the battle for organizational survival, you are tempted to form a coalition to “get” a person or a function for the wrong reasons, resist it. It won’t help you, the person you are targeting, or, most importantly, the organization.  If you find yourself the victim of gunnysacking, don’t try to get even; that only compounds the problem.  Try to discover what past event lies unresolved in the other person’s bag and muster up the courage to directly confront the issue.  Gunnysacking is alive and well in today’s downsized organizations.  Effective leaders need to move rapidly to confront it and personally refuse to succumb to its temptations.