Between December 2007, the official start of the current recession, and June 2009 more than 40,000 U.S. organizations held layoffs in an effort to reduce costs, increase profits, and improve shareholder value. Unfortunately, studies over the past two decades have shown that most of the time layoff initiatives rarely actually achieve those objectives. In fact, studies show that less than half of the companies that downsize see increases in profits whereas twenty-five percent actually see profits decline.
Why don’t layoffs produce the returns executives hope they will? It’s the people factor.Remaining staff are affected both emotionally and psychologically by a downsizing effort. Right at the time when it is key for remaining staff to be fully on board and productive, they instead are highly anxious, suspicious and disheartened. Those qualities are not what a company needs to be successful.
My colleague, Deanna Banks, Ph.D. and I spent the past six months studying what leaders can do to re-energize their workforce after layoffs. We found that some leaders were more successful than others at enabling their employees to bounce back after the upheaval caused by layoffs.
What Not to Do
As we interviewed employees from companies that had layoffs, we often heard stories of management teams that took action to stifle any expression of emotion. One company even forbade employees to “congregate” in hallways, offices, and coffee break areas. Rather than understanding and dealing with the outrage their people are feeling, some leaders simply want people to get over it, now. They say “Just accept it and move on.”
The truth is that when emotion grips people, they simply can’t move on. It is critical they are given the chance to mourn for a period, share their concerns and frustrations, and work through the confusing emotions they are experiencing. If management attempts to rush the employees through this mourning process, the employees will become even more frustrated, angry and bitter.
What To Do
Whenever a layoff takes place, everyone involved is forced into a state of disruptive change. However, people’s response to such change follows a fairly predictable pattern according to most experts in the field.
If people on your team are suffering through emotional reactions to layoffs, you can’t force them to skip ahead. You may be ready to charge the hill, but they won’t rally behind you. Rather than trying to get people to immediately move forward, your job is to help them progress through the normal cycle of change.
Interestingly, we discovered that the best strategy for helping employees recover from layoffs is one where the manager actually matches his or her actions to the emotions employees are experiencing. The objective isn’t to imitate the person’s emotion (e.g. respond to frustration with frustration). Rather, this means understanding what need is underlying the employee’s behavior and meeting that core need so the employee is able to move on.
In our research, we found that successful leaders:
1. Reduce shock by increasing communication.
2. Respond to anger by expressing concern.
3. Address anxiety by emphasizing clarity.
4. Reduce grief and hopelessness by using supporting behaviors.
Employees who are emotionally supported are likely to be able to refocus on their job and maintain commitment to it. Rather than being cautious and suspicious, they will trust you for future direction. Instead of stagnating in hopelessness, they will be much more likely to use their creativity and take risks.
While there’s no panacea for recovering from a layoff, how the layoff is approached, how employees who are let go are treated, and how the surviving workforce is supported go a long way to determining the organization’s future success and viability.
Wendy Mack is a professional advisor, trainer, and author with a focus in leading and communicating change. Contact Wendy at, or Download her free e-book, Transforming Anxiety into Energy at www.WendyMack.com