With recent reports of continued imminent downsizing from such firms as Cisco ( CSCO), Harley-Davidson ( HOG), Boeing ( BA) and AT&T ( T), the leadership challenge of managing the environment after layoffs is greater than ever. While it is natural and admirable to focus a great deal of effort on ensuring that those who are leaving are treated fairly and with respect, it is often the lack of engagement and focus on the part of the remaining workforce that endangers the company as much as a loss of resources. Organizational psychologists call this phenomenon "layoff survival syndrome," while others refer to the employees left in the company after a layoff as "layoff refugees." No matter what you call it, the feelings and consequences of post-layoff stress in an organization are as real and damaging as any other business issue. These outcomes include: Anger: Leaders often assume that employees whose positions are not terminated will be grateful for their survival. This opinion actually fuels the discomfort that leads to employee anger because they are likely to be glad they still have their jobs, but they are not grateful about the changes that occurred nor the additional workload the changes created. In most cases, they didn't want the layoffs , so expecting some kind of thank-you in the end is unrealistic and patronizing. Illness: In a December 2008 MSNBC.com article "Guilt and Stress: Layoff Survivors Suffer Too," Jodi Prohofsky, senior vice-president for CIGNA Health Solutions says, "You'll get a lot of people that clearly identify that they're having more physical symptoms: stomach aches, colds, more illness. Their immune system is down."
More incidents of illness means less time at work. For the company this means the newly downsized workforce will be impacted by sickness, and fFor the employee, missing work adds to the stress of the situation. Fear: Fear breeds not only stress and illness, but hesitance, inactivity and poor client relations. A recent US/UK study sponsored by Ketchum Global Research Network indicated that post-layoff fears inhibit decision-making and directly impact customer service. The feeling of uncertainty that follows downsizing makes it difficult for employees and leaders alike to commit to a course of action. The frustration from the impact on the organization also makes it difficult for employees to recommend the company to prospective future employees or even current customers. Sadness: Whether you think the "soft stuff" in organizations is important or not, it is important to see organizations as complex social networks. When people have worked together for a long time, or even worked intensely together for a short time, the act of removing many of them from the firm's social fabric profoundly affects productivity. Employees feel cheated by the loss of friends and great energy is spent on the topic for a long time in the break room as the survivors become accustomed to the fact that certain faces will no longer be there. It is a tough time and it drains a great deal of energy from the organization. There are other potential negative organizational culture outcomes of layoffs such as a lack of trust in leaders, lack of belief in the company's mission or values and confusion about the objectives of the organization post-layoff. This is not just a "big company" problem. It also impacts smaller companies in a more challenging way at exactly the time when focused and engaged employees are needed most.
So what can leaders do? They should accept the concerns as legitimate. Communicating anything that sounds like "you should be happy"' will not only exacerbate the problem, it will show that they are truly disconnected. Regardless of recent debate on empathy in Supreme Court Justices, it's an important trait for leaders with employees that are left behind. Second, leaders need to open the communication channels. They shouldn't avoid speaking to employees because of fears that they are upset. They are upset. Now is the time for leaders to listen to their concerns and allow them opportunities to get beyond the loss. They should encourage all levels of management to have town halls or departmental meetings to hear what employees have to say. "Listening" is the key communication activity for now. Third, leaders should not overpromise. While they may believe that remaining employees are safe in their positions now, it is unlikely that they have enough control of the universe to make that promise. If they feel the layoffs are over, they should tell them. But they shouldn't promise that there will be no more hardships. They won't believe you anyway. Fourth, leaders need to get employees involved. They should explain the current challenges to employees and ask them for ideas regarding future solutions to avoid additional layoffs. Often, those who are closest to the product or the customer have very clear ideas as to what needs to be done next. They will not only respect leaders who ask them but they will give them input they desperately need to overcome the impact of downsizing and create the organization of the future.
Layoffs have a myriad of trickle down effects. Impacts on suppliers, customers and communities cannot always be addressed by company leadership. However, the impact of layoffs on employees can only be addressed in a partnership between leaders and their followers. Moving forward cannot be fully achieved until the employees are with leaders again so time spent in addressing the organizational issues after a layoff is time very well spent.