Worldwide, unemployment numbers are reflecting the need for cutbacks and employee layoffs.

Individuals who remain on the job after colleagues have been laid off can experience feelings of anxiety or disengagement. These feelings, in turn, can impact productivity or lead employees to look for other employment.

This negative impact may last for a long time. Author Chip Conley, writes in The Huffington Post “there's some evidence that shows that layoffs last in terms of the impact they have on a company's sustainable culture.”  Therefore, it is essential that steps are taken to reassure the employees who remain. Dr. Mary Key is quoted in an Institute for Corporate Productivity article as saying “nurturing and developing the ‘survivors’ in the company is often overlooked in times like these but is essential to the cultural and competitive success of the organization long term." 

How can employees be supported?

•       Some organizations may offer buyouts to employees as an alternative to layoffs. This option does limit an organization’s ability to control who stays and leaves, points out Conley. Furthermore, he suggests “often, workers who are best able to find another job are the ones who take a buyout,” leading to a loss of key talent.

•       Kelley Holland writes in The New York Times that Warren Bennis—professor of management—suggests leaders explain why the layoffs were necessary and listen to and empathize with employees concerns. Bennis also recommends that leaders be upfront about the organizations present and future plans and any other steps that have been taken to deal with economic challenges.

•       Perhaps most relevant to performance management, Bennis suggests that “articulating an organization’s goals is particularly important during layoffs." This allows employees to be involved in solutions. 

•        Similar advice can be found on the Edward Lowe Foundation website and includes making sure that communication between leaders and employees is direct and honest. The Foundation also advises that organizations plan ahead and “don't wait for problems to become a crisis before you start communicating.” Again, this allows employees to be involved in the process.

Other approaches can involve across the board pay cuts or similar measures. For example, Knowledge @ Wharton explains how “pay cuts are limited in India; job cuts are not even on the radar in most places.”

How does your organization reassure workers when layoffs and cutbacks are necessary?

References:
Conley, Chip. “It’s a Pink Christmas.” The Huffington Post [www.huffingtonpost.com]. December 15, 2008.

Holland, Kelley. “After a Downsizing, How to Motivate?” The New York Times [www.nytimes.com]. August 23, 2008.

India Knowledge@Wharton. Human Resources. “Job Cuts vs. Pay Cuts: In a Slowing Economy, What’s Better for India?” [http://knowledge.wharton.upenn.edu/india]. November 13, 2008.

Institute for Corporate Productivity. “Study: Holidays put the Humbug on Productivity” [www.i4cp.com]. December 16, 2008.

“Meltdown 101: Pros and cons of employee buyouts.” The Huffington Post [Associated Press] [www.huffingtonpost.com]. December 16, 2008.

Stettner, Morey. Maintaining Employee Morale During Layoffs. Edward Lowe Foundation [http://edwardlowe.org]. 2000.

Rugaber, Christopher S. “New Unemployment Claims Reach 26-Year High.” Time.com [Associated Press] [www.time.com]. December 11, 2008.