Restoring Productivity after Layoffs
How today’s managers and leaders make the best of bad news…
Restoring Productivity and Morale after Layoffs
Is there a “right” way to downsize?
A major company decided to shut down an entire branch without coaching its managers in delivering the news. The CEO requested a meeting of all employees, but did not show up. Instead he sent the branch manager a FedEx box with termination packets and no instructions whatsoever. The manager opened the box and proclaimed “This is my last day with the company and I’m so selfish, I’m taking you all with me.” 
This story had been told widely in the marketplace as a way not to communicate layoffs. It was quoted in an article in aHarvardBusinessSchool publication with the footnote that the CEO’s reputation and trust were so damaged that it was difficult for his company to recover after the downsizing.
Is there a “right” way to downsize? As a member of a consulting firm specializing in organizational development and communications, I say empathetically “yes”. Our experience in working with over 1,500 companies in 30 years emphasizes six steps for the right way to downsize. Often business leaders strategize how those employees who leave will be assisted, but forget the morale impact on the “survivors.” This article concentrates on those who do not leave the company (i.e. the survivors) and how to restore productivity while rebuilding morale.
When layoffs are imminent, it is important for management to have a plan on how the layoff will be communicated and how it will assist the survivors. The best-managed companies develop this plan by reviewing prior changes, analyzing how the changes were made and making corrections based on their assessment. This plan should include: redefined tasks and responsibilities; strategies to assist managers in helping surviving employees adjust to organizational changes; communications on why changes are necessary and how roles will change; and plans on how to improve morale after the “grieving” period. One study shows that reduced commitment and diminished productivity can linger for up to a year after a layoff. Proper planning can help employees engage sooner.
2. Communicate concisely, clearly and frequently
For both managers and “survivors” layoffs are emotionally draining experiences. Like death, the loss of employees and peers requires a time of grief. It is often difficult for managers to know what to say and how to say it properly to those who are still with the corporation. Experts agree that it is better to communicate bad news when it is known than keep it waiting for a more appropriate time. Also don’t “sandwich” the news – i.e. good news – bad news – good news. Most employees know if the company is not doing well, and want to hear the news directly. However, at the same time the manager needs to communicate with the survivors how the organization plans to recover, the employees’ role in that recovery and why the changes are necessary.
The communication needs to be simple, explain the whys of decisions, and keep the communication two-way. Set up forums to answer questions, but always clarify the question behind the question. Acknowledge emotions. Take accountability. Ask yourself “what would I think if I were in this meeting?”
In our work with a major Fortune 100 company, the corporation used small group meetings to communicate news after the layoff in order to inform the “survivors”. They used consultants to assess the morale of the organization and provide advice on how to best deliver the right message.
3. Stay visible
As a manager staying visible is important after announcing layoffs. Don’t hunker down in your office to plan what to do next. Workers want leaders who are accessible. You need to be seen more on the factory floor, answering questions, go to where the workforce is versus bringing them to you for a meeting. Sit in on product meetings, be part of shift changes, drop by lunch groups – visibility is key!
4. Apply emphatic listening
Research shows that the person within the organization that has the most impact on an employee is the immediate manager. Often managers are required to console or counsel with survivors of downsized organizations. Managers with strong Emotional Quotient (EQ) may naturally be able to empathize with and console survivors. However, many managers may require some points on the importance of “listening emphatically”.
Listening is trying to understand the ideas and feelings expressed by others. Good listeners use silence effectively. They postpone judgment about the other person’s feelings, attitudes and concerns until after they have completely heard the person. Body language is also important since it sends a strong message of whether someone is listening. Maintain eye contact, nod as appropriate, and show people you are listening.
Some companies establish “feedback loops”, where a manager periodically discusses with all employees his or her perception of the department’s performance and future.
5. Maintain an environment of “trust”
In today’s environment less than 50% trust upper management (and rightfully so). However, most people trust their immediate manager. Because of this, the roles of manager and supervisor become more important to survival of the organization. Managers must reinforce the trust factor since many survivors may feel emotionally disappointed. Once trust is lost it is almost impossible to regain. Robert Bruce Shaw in his book Trust in the Balance, states that in today’s global business environment, trust is “the foundation on which high-performance organizations and teams are built.”
Shaw emphasizes three important elements of trust: achieving results, acting with integrity and demonstrating concern.
One study shows that reduced commitment and diminished productivity can linger for up to a year after a layoff.
Using Shaw’s formula, managers must not only demonstrate empathetic concern, but are responsible for achieving results. Employees must understand that the charge of the manager is to ensure the organization survives and must trust him to make and communicate the right decisions
6. Develop survivor’s skills
Many people, after they pass a period of missing their friends and colleagues, realize that their roles and responsibilities have changed. In some cases they pick up additional duties from others or are required to learn new skills. The effective manager proactively anticipates changes in roles and communicates these changes to the employees. Also, the manager must realize that surviving employees may require additional training (on-the-job or formal training) and there is a learning curve before the person is fully productive.
Our experience shows that effective managers understand what employees work for and know how to respond to their “wants”. There are instruments available that assist managers in understanding what motivates employees, but generally we say, “Ask them”. However, just understanding the “wants” is not enough. In a new downsized environment the manager must create an atmosphere of motivation. Thad Green and Merwyn Hayes, in the book The Belief System, states that employees need to believe: (1) they can do the job (confidence); (2) they believe management will reward their performance (trust), and (3) the outcomes will satisfy them (satisfaction). Managers who understand these three beliefs are better prepared to create an environment that can improve morale.
With any change, there is a period of adjustment. Research shows that with downsizing there is usually a sense of anguish brought about by heightened job insecurity and the loss of friends, a neutral stage (a sort of healing time), and a time when survivors become productive employees again. Effective managers realize that planning, communication/listening, visibility, trust, and employee development are necessary to move employees quickly through these stages and to do downsizing “right.”
To download this article as a PDF, click here.
 Robbins, S. “How to Communicate Layoffs” Harvard Management Communication Letter, July 2001
 See Time: Business & Tech at www.time.com
 For more information see: Shaw, R. (1997). Trust in the Balance:San Francisco: Jossey-Bass
 For more information see: Green, T. & Hayes, M. (1993) The Belief System: the Secret of Motivation and Improved Performance: Beechwood Press
 Boroson, W. & Burgess, L. (1992) “Survivor’s Syndrome” Across the Board Journal
Mike is President of The Hayes Group International, Inc. He has over 30 years consulting experience with Fortune 500 companies, government agencies, non-profits as well as smaller organizations in organizational and team development, leadership assessment and development (executive coaching), and training development and delivery. In his role as President he oversees the work of 28 senior-level consultants. Mike started his career at Andersen Consulting (Accenture)… Read more »