Downsizing can be troubling for employees, employer

Being laid off is extremely stressful for those who have lost their jobs, but those left behind to pick up the pieces can find themselves fighting an emotional battle as well.

Barry Shore, professor of decision sciences at the University of New Hampshire, recently brought to light what he calls “Post-Downsizing Stress Syndrome,” a complex set of emotions felt by those workers who avoided being laid off but are now dealing with dramatically increased workloads, fear of being caught in the next round of staff cuts, and even guilt for being among the “lucky” ones.

“It focuses on the psychology of the consequences of being a survivor in an environment or company dominated by job loss,” said Shore. “They are left with more work to do with fewer people. They have their own job to take care of and now must take over what was done by the person furloughed.”

Shore said that the syndrome can take the form of decreased company morale, increased absenteeism, psychosomatic and real illnesses. “It can even exacerbate substance abuse,” he said.

Added to the mix is the possibility that a company’s managerial style can sometimes “devolve” into a “command-and-control” behavior under which motivation and collaboration can be reduced to barking out orders that must be followed with little input from other employees.

“The business environment doesn’t just recover [after a workforce reduction], it gets reset,” said Shore.

Shore said certain jobs within a company – such as a president and senior financial, operations and IT personnel – are essential and “aren’t as much in jeopardy.” However, senior executives often find themselves between the proverbial rock and a hard place.

“They are suddenly even more under the gun responding to stockholders so that responding to employees maybe becomes a last concern,” said Shore.

Dismal news reports about the recession also can have an effect on company morale, he said.

“Every time we hear of big layoffs, it can increase people’s anxiety,” Shore said. “The media isn’t going to talk about companies doing well. The emphasis in the tragedy of this recession tends to exacerbate feelings of fear.”

‘Hunkering down’

On the other hand, said Shore, “crises are great opportunities to transform an organization. Many are afraid to do it, however, because it requires bold steps.”

And a company that does “hunker down” is “less likely to create an outward-looking environment, and I’ll guarantee that others are,” said Shore.

According to Shore, some of the best restructuring practices involve being objective about current strategies and products.

“Decide what’s not likely to be needed when markets reset after the recession. Identify new projects that will take advantage over that company that’s hunkering down,” said Shore. “Everyone likes to do something new, but manage the collaborative environment very carefully. Engage in new products with an emphasis on the future, not the past.”

While a reduction in workforce is never easy, there are less painful ways of going about it in order to preserve company morale, said Shore.

“Harvard Business Review said that when managers are honest with employees and let them understand the situation, they can work together to help address the situation, such as cutting hours vs. cutting workforce,” said Shore. “That doesn’t mean companies have to do everything the employees want, but it does treat employees as engaged partners.”

But Shore said the reason some companies choose not to level with their employees is that they are “afraid to do it because acknowledging the situation makes them more vulnerable. Smart companies do. When things turn around and they are hiring back, those employees still felt good,” said Shore.

If layoffs are inevitable, said Betsy Black, executive coach and owner of Betsy Black Consulting LLC in Concord, companies should be “humane” about it.

She said that while most companies see their employees as their most valuable assets, they should look to see if there is a middle ground opportunity to shore up the bottom line before handing out pink slips.

“See if a pay cut would help,” she said. “Even ask for volunteers for early retirement. It never hurts to ask.”

When layoffs are inevitable, she said, “if possible, say to people that it isn’t about them or their performance,” said Black, adding that companies should consider offering free outplacement services of some type to those laid off.

Enjoy life

Black had one word of advice for workers who do find themselves unemployed: act.

“What happens when we are faced with a powerful emotion like sudden job loss is we tend to freeze up and become paralyzed,” she said. “If you were able to keep your job, think about why, your strengths, and work that to your advantage. If you lose your job, think about sharpening your skills. Sometimes it can cost nothing and it will make you more marketable.”

Many say that looking for a job should become a job in and of itself, and while Black agrees to some extent, she said creating some limits might be better.

Some people procrastinate or work too hard on finding a job, only to become less effective, she said.

“Work for two hours, then do something else. Create structure around your life,” said Black. “Make goals, such as making a certain number of calls or sending out a certain number of resumes.”

She said the same goes for all the sudden free time that lands in the laps of the unemployed.

“Volunteering is a great way to feel productive,” said Black. Like networking, volunteering can also open doors to new connections, she said.

Black said that looking for some freelancing or consulting work also can help both financially and emotionally.

“It’s cheaper for a company to pay you for a few hours than if you were on the payroll,” said Black. “It also ties into working your contacts.”

It’s also a good idea to take time to enjoy life, even in the midst of economic uncertainty.

“How many times have we said or heard someone say, ‘I wish I had time to do …’? Indulge in things that don’t cost money. If you have a hobby you didn’t have much time for, now you can spend some time on that. We all have things we haven’t gotten around to,” Black said. “It can open up whole new possibilities. It all goes back to ‘act.’ Where is your power? Your power is in acting.”

Cindy Kibbe can be reached at ckibbe@nhbr.com.