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Surviving the Layoff Aftermath

March 28, 2001
Related Topics: Downsizing, Retention, Featured Article
When a company implements layoffs, it is essential that its planning andpreparation take the concerns and well-being of the surviving employees intoaccount. Since December, more than 133,000 U.S. employees have been laid off.

    Early response to the needs and concerns of surviving employees is essential,says Ian Doyle, the human resources manager for special projects at Galt GlobalRecruiting. "A 'do nothing' policy does more harm than good."

    Doyle's concern is that employees who are edgy about their work conditionswill flee if they realize that, apocalyptic news to the contrary, they stillhave other options. Employers tend to assume that business will continue asusual, not realizing that the surviving workers are dealing with the effects ofa reduced staff and also bracing themselves for another round of layoffs thatmay never occur.

    This logic is corroborated in a series of firsthand accounts in Salonmagazine that asks surviving employees how they're dealing with the dot-comcrash. The magazine presents stories of employees who actually tried to get laidoff, in order to collect unemployment benefits while they sought new work.

    A mismanaged layoff in this environment can result in a vicious circle.Companies downsize to cut costs, but then are quickly forced to make new hiresas surviving employees leave for what they perceive to be more stableenvironments. This turnover feeds a loss of production and lower quality of workthat likely began with the initial layoffs, which triggers another demand fornew hires. Since the cost of a single new hire is generally equivalent to oneyear's salary, any savings from the layoff are negated.

    As chairwoman of the Department of Management and Organization at SmealCollege of Business Administration at Pennsylvania State University, LindaTreviño studies the impact of layoffs. She agrees with Doyle about theimportance of attending to surviving employees. She says that survivors payclose attention to how the layoff was handled, viewing it as indicative of howthey themselves will likely be treated at a later date.

    As the layoffs are occurring, Treviño says, employees take careful note ofwhat procedures were used to make the layoff decisions, and whether theemployees were treated with respect. Openness, communication, and clarity canmake the difference between a successful layoff and one that seriously damagesthe company.

    The recent wave of layoffs was commonly seen as a reaction to a downturn inconsumer confidence and a rising employment cost index, which increased by 4.1percent while economic growth steadily declined. This was complicated by therapid creation of new jobs in nearly every sector, resulting in a meretwo-tenths of a percent increase in unemployment. The National Bureau of LaborStatistics predicts that 48.9 percent of the newly unemployed workforce willfind work in less than five weeks.

    If layoff survivors see their work environment as being destabilized bychanges, retention will become an issue. Doyle recommends several positiveactions that can be taken to avoid problems and reassure surviving employees atthe time of a layoff. Communicate the state of the company. Tell them what'shappening and why. Forecast whether or not their laid-off coworkers will be rehired, and if so, when. Upgrade training for the survivors wherepossible, and be realistic about redistributing workloads. "Failure to do so isnothing short of negligence."

Workforce, April 2001, pp.26-28 Subscribe Now!

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