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Tuesday, October 18, 2011

Surviving downsizing...



There’s a lot of attention in the media on job loss and unemployment these days, but very little attention is being paid to the people who “survive” downsizing, the workers who remain on the job after a lay-off. Over the years, I’ve done numerous studies in corporate America, focused on family policies in the workplace. In some cases, massive layoffs were taking place as I was conducting my research. I was even hired by one company to find out why people were leaving their jobs, and then they laid off thousands of workers.

Life before, during and after a lay-off is no picnic. Researcher Joel Brockner says that workers who survive downsizing are likely to experience more stress and less organizational commitment and motivation. In fact, while victims of downsizing lose their jobs, survivors of downsizing experience a loss of control over their jobs. They worry they might be next, and that feeling of uncertainty permeates the entire work environment.

In one study, I investigated the impact of flexible work policies in six large corporations. Five had significant “reductions in force” during the course of the study. In effect, I ended up studying the family policies in the context of downsizing, as it affected the remaining workers and the organization.


Brockner says that corporations can mitigate the negative reactions from survivors of downsizing, particularly if they are perceived as operating fairly, in terms of the criteria or procedures they use to lay off their workers (1995). Other researchers say that companies can avoid the wrath of their surviving employees if they subsequently create employee empowerment and job enrichment initiatives after the layoffs (Niehoff, Moorman, Blakely and Fuller, 2001; Spreitzer and Mishra, 2002). But in my experience, companies are very inconsistent about what the provide for workers after a major downsizing. Some make an effort to maintain the morale of the “survivors; and others tighten up and demand more from their workers.

Tension in the workplace
After a lay-off, the surviving workers are often burdened with doing the same amount of work with fewer workers. Moreover, opportunities for advancement are curtailed, which creates increased competition among the survivors for any opportunities that do arise. What develops is a “mentality of scarcity”, which produces more tension in the work environment, and more competition for special assignments. One worker told me:

"What I find is that my coworkers don’t share information as freely as they used to. They’re just more protective about information. I don’t feel like I can trust them like I used to. It’s because people are scared. Their future is up in the air, and there are no positions, so people get kind of competitive and kind of closed".

In one company, I observed that this tension was also a set-up to exacerbate tensions around race, gender and work life issues. A substantial percentage of white males reported that they had experienced reverse discrimination, saying that they felt they had been passed over for jobs that were filled by women or African-Americans. Some even complained that mothers were given preferences for certain job assignments over them. These kinds of biases – likely unexpressed in the best of times – are more likely to manifest in subtle ways when there is economic stress. Because people don't tend to express these negative feelings openly, where they could possibly be addressed (possibly...), they fester silently and affect the workplace climate.

Moreover, in a downsizing environment, people are afraid to speak out about problems in the workplace. Self-censorship is more likely; dissonance is less likely, and innovation may be discouraged.

Trust in senior management broken down
Some of the workers I have interviewed said they perceived downsizing as a breach of the psychological contract between the employer and employee, hoping – and perhaps expecting – that they had job security and opportunities for development. According to researchers Morrison and Robinson (1997), this belief that a psychological contract has been breached can lead to feelings of injustice, deception or betrayal among employees.

In some cases, I found that prior to a lay-off, companies doled out information irregularly, promising there wouldn’t be lay-offs or buy-outs. Some employees described an elaborate process of how they found out about an impending lay-off. First they heard the promise that nothing would happen, then the “news” that there would be lay-offs, but with no date, and then a manager would post a new organizational chart, with no details. That would be followed by a promise of more information. Later they were given some criteria for who would be laid off, with no names. At that point, people would be scrambling to figure out if they were on the list. Finally, after all of this time, some workers were given the news, and told they had to leave in a couple of weeks, or maybe a month or two.

In one department of a company that had major lay-offs, nearly every employee I interviewed “confessed” that he or she was taking Prozac and seeing a psychiatrist. None of them were talking to one another about how they felt. In another company, workers found out about a major downsizing through a video from the company president, which they all had to watch simultaneously. You can imagine the morale of the workers, including those who lost their jobs and those who would remain. Another company pulled all of its middle managers into a special, private meeting, and they had to sit with the information for many months before they could share it with their colleagues. One worker told me:

”With all these policy changes that are being made, people just feel like something big is coming. Even if they say it’s not going to happen, nobody believes them anymore.”

The job lost its meaning
For some survivors, the loss of co-workers and their fear of losing their own jobs is only part of the picture. Downsizing affects how work is done, and impacts individuals and teams. Often the work itself feels less meaningful, as workers recognize that they have less control over the product and the process. One worker told me:

“The entire process feels like paper pushing now. People feel like they’re just going through the motions instead of doing a quality job. The job satisfaction is just not there. People do not feel challenged. They just do not feel like they’re making a difference anymore.”

Jobs Policy
As politicians battle over the best way to stimulate the economy, the priority of creating new jobs is imperative. We need to generate revenue to pay for new jobs, and I would suggest that the first place to start is creating a fair and equitable tax policy, in which the weathliest of Americans and corporations pay their fair share. Our political leadership should be looking back at the New Deal for how to create an interim jobs program; and forward to create a solid infrastructure that produces jobs that are well-paid and secure. Our government needs to increase incentives to the private sector to build jobs at home, rather than in search of cheaper labor elsewhere around the globe. And if we are to reduce poverty, we need to ensure that our education system and the social safety net are fully funded. 

Listen to Senator Bernie Sanders’ perspective on a progressive jobs policy:







6 comments:

  1. really great post, Mindy. I'm in the middle of reading Bait and Switch by Barbara Ehrenreich, and this captures a similar process. Little transparency in the process of job acquistion or loss, and individualized responses to the resulting emotional (and financial) distress. Thanks for this great work.

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  2. Mindy, this is good start for your "new book" ;)

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  3. Good piece Mindy!

    Five million small businesses committed to hiring at least one (1) new employee in 2012 (on average. That is 5,000,000 new jobs. The big corporations just aren't going to do it! We as small business owners can put America back to work through - Education, Innovation and Invention. Tell Congress this is how America will get the job done. If Washington is going to invest in job programs let them know that small business growth is the way to go. Five million entrepreneurs have the solutions! GS@EII-USA.COM

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  4. Thanks for the comments, Christina, Pueblo, and "Anonymous". To Anonymous (G!) - I totally agree that the labor market cannot be revived only by corporate America, nor should it. Jobs need to be created in many sectors, including small business - as you point out - as well as in the public sector.

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  5. Great blog! I remember listening to an NPR piece several years ago about the impact of downsizing on workers and productivity of the companies affected. The data was quite understandable and continues to be. This needs to be known! Keep writing! Lorrie

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  6. Great piece as usual!! I'm glad your blog has come alive again! So informative, well-researched and as always great insight. Hope to start reading more posts again from you ; )
    Afshan

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