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Leading and Managing Layoffs: A Multifaceted Story

By Diane L. Dixon, Managing Principal, D. Dixon & Associates, LLC  

Leaders are faced with difficult decisions as they navigate their organizations through the uncertainty of the economic crisis and financial turnaround process. For many organizations shrinking bottom lines have meant layoffs. While slashing jobs seems like the most expedient method to reduce costs in the short term, the long term impact may increase costs in ways often ignored in tough times. The human costs are hard to measure but can be staggering in terms of the psychological, emotional, and physical toll. There are multiple facets to the layoff story which include the most obvious—the impact on layoff victims and survivors. Effective leaders recognize that they must manage all sides of the story well to maintain the overall health of the organization and, most importantly, the people.

Anticipation of Layoffs Starts with Budget Cutting

When leaders start talking about income and revenue shortfalls and ask staff to recalibrate their budgets, the anticipation of layoffs begins. At this poit, fear heightens anxiety levels as people deal with the possibility that jobs will be cut. If that fear and anxiety are not managed, it can dominate the attention of everyone and become the central distraction that disables people’s ability to concentrate on their work. The result is doom and gloom with a loss in productivity. And, worse yet, the top talent may leave. So, before the layoff is actually announced the organization has already begun to incur the costs of lower morale, less productivity, and a talent drain. The leadership lesson here is to be conscious of the impact of budget cutting on the workplace culture. Leaders need to focus on constructive communication and engagement of the collective wisdom which can help lessen fear and anxiety. Here are a few tips on how to manage the process:

• Acknowledge and respect the emotional impact of budget cutting.

• Widen the circle of inclusion and seek help with the decision-making process.

• Communicate often. Transparency is essential.

• Engage staff in dialogue about the process. Create a safe space for staff to talk about their thoughts and feelings.

• Listen with empathy and provide support.

• Act with integrity.

Layoff Announcement Impacts Culture

The layoff announcement can have a significant impact on organizational culture. That communication sends a critical message about how the organization treats people. And, when the communication is not managed well, feelings of uncertainty and insecurity deepen the escalating stress. Multiply these feelings times the number of employees and what you get is a pretty stressed out work environment. So it is really important to reflect and think carefully about what, how, and when you announce the layoff.

Consider these suggestions. Communicate with empathy demonstrating sincere understanding that this is a highly emotional time and how difficult the message is to accept. Emails and text messages cannot do that effectively. When the message is serious and will have a personal impact, face-to face communication is best. Also, large group or mass meeting formats minimize the opportunity for people to ask questions and can be impersonal. Managers and supervisors of workgroups can be trained to deliver the message and/or follow-up on the organization-wide announcement from top leaders. Managing transitions and reactions to the announcement would be helpful to include in that training. Good communication needs to connect with hearts and minds. Remember the communication basics …

• Keep it simple

• Straightforward

• Honest

• Consistent

• Compassionate

Victims’ Stories Linger

The layoff victims’ stories linger for a long time in the organizational memory. You may have had them clean out their desks, taken away their keys, and escorted them out of the building, but the friendships and relationships do not end there. The spirit of the people leaving hangs on. So it is really important to treat them with dignity and respect. First and foremost, do it because it is the right thing to do. And, keep in mind, the entire process is being witnessed by people inside and outside of the organization. On the inside, coworkers and friends are grieving and observing how the layoff process is being managed. They are translating their observations into judgments about leaders and the organization. What gets translated gets transferred into the work environment. Outside of the organization, victims are telling their stories to everyone they know. The victims are now your public relations representatives.

Think about the stories that you want people to tell. A suggestion is to put yourself in the victim’s shoes. Imagine how you want to be treated. How do you want to be managed in this situation? Write down your thoughts. These reflections can serve as your guide for managing layoff victims with kindness.

Survivors Syndrome Looms Large

A business as usual attitude does not erase the damage and hurt that are caused by layoffs. In fact, that attitude can make a bad situation worse. Survivors are coping with the loss of friends, coworkers and business as “unusual”. David M. Noer, in Healing the Wounds labeled these reactions as “layoff survivor sickness”. After listening to many survivor stories, he learned that they feel anger, depression, fear, anxiety, and distrust. Lean and mean does not lead to gratitude or just being thankful to have a job. To the contrary, a recent study conducted by Leadership IQ, a Washington, DC based consulting and research firm, found that surviving workers shared similar feelings as those in Noer’s study--- guilt, anxiety, anger. In addition, research from the institute of Behavior Science at the University of Colorado- Boulder found that there was a relationship between job security, job demands, and role ambiguity and the physical and mental health effects of layoff survival. Given these findings, it is clear that layoff survivors need help to deal with their feelings. And if do not get it, there will likely be a negative impact on productivity, quality, service and the work environment.

It takes more than employee assistance program (EAP) services to deal with these issues. The EAP is important but can only go so far. These services are focused on individuals and can certainly help them cope with their feelings. However, revitalizing the organization after a layoff requires rebuilding the team and collective spirit. Consider doing the following:

• Facilitate processes that support grieving and provide a positive space for emotional release associated with loss.

• Tune up interpersonal skills and build positive relationships.

• Communicate honestly to rebuild trust.

• Create a shared vision for the future without making promises you may not be able to keep.

• Reenergize a mutual commitment to mission.

• Re-clarify roles and responsibilities to help minimize role ambiguity.

• Provide relief for increased job demands recognizing that doing too much with less will lead to burnout.

• Empower people by deepening their involvement in decisions that affect them.

Leadership Imperative

The leadership imperative is to balance achieving results with concern for people. Organizational survival depends on them. Financial turnarounds cannot be achieved when the people who are responsible for making that happen are suffering. Broken spirits do not produce targeted results in the long term. Reviving the organization requires compassionate transformational leadership that helps breathe new life and vitality into a difficult situation. This is accomplished by treating people well and engaging them in the change process. In the end, leadership creates the story.

Diane Dixon is the Managing Principal of D. Dixon & Associates, LLC. She is also a consultant, guest lecturer, and writer. Diane specializes in leadership development, change management, strategy development, and team building. She has more than 20 years of experience working with corporations and not-for-profit businesses of varying size, industry, and complexity. Diane’s articles have been published in a variety of practitioner journals on such topics as executive leadership in healthcare organizations, leadership and culture alignment in partnerships, leadership in mergers and acquisitions, and the field of human resource development. For article feedback, contact Diane at diane@ddixon.org


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