Employee Involvement is Key to Surviving the Downturn

It started slowly but surely. With the slump of the U.S. economy, companies started downsizing first by the dozens, then by the hundreds. Today, thousands of organizations across the country have in one way or another had to perform some kind of cost-cutting measure.

And as unemployment started to be a new reality for many people, the ones who made the cut had to deal with the anxiety and fear of losing their jobs. This state of being tense and apprehensive in the workplace after a downsizing event is what research and analysis firm The Conference Board [1] calls the “survivor syndrome”— a marked decrease in motivation, engagement, and productivity of employees that remain at the company as a result of downsizing and workforce reductions. It entails a series of complex psychological processes and subsequent behavioral responses.

“The issue is that whenever it comes times for downsizing, senior management believes it’s best to keep the news from the employees, because they don’t want to induce panic,” says Stephanie Creary, research associate in human capital at The Conference Board, and co-author, with Lara Rosner, of the report “Mission Accomplished? What Every Leader Should Know about Survivor Syndrome.”  “But our members have said that the consequences of hiding are worse, because of [the shock factor]. So the best approach is to have some level of transparency so that people can anticipate [some events].”

The level of communication, transparency and trust may influence whether a layoff survivor will perceive the downsizing as strategic (fair) or impulsive (unfair), and whether survivor syndrome will be perpetuated, according to the report. When these three variables—communication, transparency, and trust—are inadequate, rumors and gossip amongst employees frequently arise.

“Employee engagement is crucial—how much the senior team is explaining the company’s strategy, where it’s been, and where it’s going to be, in the good and bad times,” Creary explains. “So telling the employees, ‘Here’s what we need to do, and here’s what I’d like for you to do,’ is a good practice. The challenge is that in hard times, this [dialogue] doesn’t change.”

Downsizing also means more work to the remaining staff and many people tend to get overwhelmed with the added responsibilities and workload. In addition, getting back to work becomes a difficult task as the perceived employer loyalty is almost always shaken after people have been laid off. “As a result, job involvement tends to actually decrease over time following a downsizing, which supports the notion that waiting for time to ease the pain is simply not effective,” according to the report.

“The best practice when it comes to downsizing is sharing the good and the bad news, and going back to the employees and asking [for their help],” says Creary. “It’s about how top managers get the employees to lead in a small or big way, which is what we call employee engagement.”

However, as transparent or engaged top management may be, there will always be some distressing effect as a result of downsizing, as there will always be questions regarding what’s actually happening vs. the employees’ perception, Creary says. “But the majority of people respond well to transparency,” she adds.

And although measuring the effectiveness of employee engagement during downsizing is still a near impossible mission as human relationships involve many variables, employee-engaged companies are those companies that were less negatively affected by the downturn, Creary says.

“We have members who have told us that they feel that the situation would have been far worse if they hadn’t had a focus on connecting with their employees,” she says.