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More than 40,000 employees have been laid off by U.S. organizations between December, 2007 (the official start of our current recession) and June, 2009, in an attempt by companies to cut costs, improve profits, and shore up shareholder value. However, it is ironic that studies conducted over the past 20 years have repeatedly reported that layoffs do not usually produce those results. Instead, these studies have reported time and again that less than 50% of the companies using downsizing as a cost cutting and profit increasing measure actually achieve that objective; in fact approximately 25% actually realize a decline in their overall profitability.
Why don't layoffs produce the returns executives hope they will? It's the people factor. Employees are emotionally and psychologically traumatized by layoffs. At a time when it's critical for employees to be engaged and productive, they are demoralized, fearful, and distrustful. That doesn't add up to a recipe for business success.
My colleague, Deanna Banks, Ph.D. and I spent the past six months studying what leaders can do to re-energize their workforce after layoffs. We discovered that some leaders succeed more than others at helping employees recover from the trauma caused by downsizings.
What Not to Do
We heard many stories from the employees we interviewed of senior management teams attempting to squelch any discussion among employees as to how the layoff is affecting them emotionally. One employee even reported that the staff was forbidden from gathering in coffee break areas, hallways or offices. Many executives prefer their employees to get over it, preferably yesterday, rather than recognizing that employees will be angry and fearful and dealing with that situation. Instead, their solution is to bury the emotion and accept it and go on.
It is a fact that in highly emotional situations such as that caused by a layoff, people can't just shake it off and move on. It is critical they are given the chance to mourn for a period, share their concerns and frustrations, and work through the confusing emotions they are experiencing. If management tries to rush this process and stifle the concerns the employees are expressing, the situation will only become more turbulent.
What To Do
Whenever a layoff takes place, everyone involved is forced into a state of disruptive change. Most researchers agree that people's emotional responses to change follow a fairly predictable pattern.
You can't force your employees to move ahead in their cycle of healing faster than they are ready to. You may be over it and ready to move on, but until your employees are as well, you won't have a support system to help. Your job, rather than to push for progress sooner than they are able, is to help them progress at their own pace through the change process.
I found it interesting to learn that the best tactic a manager can take is to match his or her actions to the employee's emotions. However, this does not mean that the manager should respond to an employees emotion with the same emotion (e.g. resentment with resentment). Rather, the manager's goal is to distinguish the underlying need that the employee is communicating with their behavior, and do his best to meet that need, which will allow the employee to move on.
Our research found that strong leaders:
1. Reduce shock by increasing communication.
2. Express concern when faced with anger.
3. Answer anxiety by being clear and concise.
4. Use supportive behaviors to minimize hopelessness and grief.
Emotionally supported employees are better able to put the downsizing aside and re-commit to their job duties. Rather than being cautious and suspicious, they will trust you for future direction. Rather than ending up stalled creatively, they will be more able to take control of their emotions and begin producing and taking necessary risks.
While there's no magic antidote to the effects of a downsizing, how you approach the layoff, how you treat the laid off employees and how the remaining staff is supported will make a big difference in the ultimate success of the company.
Why don't layoffs produce the returns executives hope they will? It's the people factor. Employees are emotionally and psychologically traumatized by layoffs. At a time when it's critical for employees to be engaged and productive, they are demoralized, fearful, and distrustful. That doesn't add up to a recipe for business success.
My colleague, Deanna Banks, Ph.D. and I spent the past six months studying what leaders can do to re-energize their workforce after layoffs. We discovered that some leaders succeed more than others at helping employees recover from the trauma caused by downsizings.
What Not to Do
We heard many stories from the employees we interviewed of senior management teams attempting to squelch any discussion among employees as to how the layoff is affecting them emotionally. One employee even reported that the staff was forbidden from gathering in coffee break areas, hallways or offices. Many executives prefer their employees to get over it, preferably yesterday, rather than recognizing that employees will be angry and fearful and dealing with that situation. Instead, their solution is to bury the emotion and accept it and go on.
It is a fact that in highly emotional situations such as that caused by a layoff, people can't just shake it off and move on. It is critical they are given the chance to mourn for a period, share their concerns and frustrations, and work through the confusing emotions they are experiencing. If management tries to rush this process and stifle the concerns the employees are expressing, the situation will only become more turbulent.
What To Do
Whenever a layoff takes place, everyone involved is forced into a state of disruptive change. Most researchers agree that people's emotional responses to change follow a fairly predictable pattern.
You can't force your employees to move ahead in their cycle of healing faster than they are ready to. You may be over it and ready to move on, but until your employees are as well, you won't have a support system to help. Your job, rather than to push for progress sooner than they are able, is to help them progress at their own pace through the change process.
I found it interesting to learn that the best tactic a manager can take is to match his or her actions to the employee's emotions. However, this does not mean that the manager should respond to an employees emotion with the same emotion (e.g. resentment with resentment). Rather, the manager's goal is to distinguish the underlying need that the employee is communicating with their behavior, and do his best to meet that need, which will allow the employee to move on.
Our research found that strong leaders:
1. Reduce shock by increasing communication.
2. Express concern when faced with anger.
3. Answer anxiety by being clear and concise.
4. Use supportive behaviors to minimize hopelessness and grief.
Emotionally supported employees are better able to put the downsizing aside and re-commit to their job duties. Rather than being cautious and suspicious, they will trust you for future direction. Rather than ending up stalled creatively, they will be more able to take control of their emotions and begin producing and taking necessary risks.
While there's no magic antidote to the effects of a downsizing, how you approach the layoff, how you treat the laid off employees and how the remaining staff is supported will make a big difference in the ultimate success of the company.
About the Author:
Wendy Mack is a professional advisor, trainer, and author focusing on leading and communicating change. Contact Wendy at, or Download her free e-book, Transforming Anxiety into Energy at www.WendyMack.com.
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