Surviving Employees after Job Termination - Essay Example

Surviving Termination Almost everyone that has worked in corporate America has been exposed to the bureaucratic downsizing process either as a victim or a survivor. The massive termination of a significant portion of the workforce of a company can leave behind surviving employees that have low morale and an uncertain prospect for their own future success with the company. When RadioShack, a major electronics retailer, was faced with the challenge of terminating 400 of its corporate headquarters employees, they took the unusual step of notifying the workers by e-mail (Musil, 2006). The termination of employees in difficult times is a challenge to the company and can be a traumatic event for all of the employees, whether fired or not. People's jobs are their livelihood, their sense of meaning, or, at the very least, a great way to occupy eight hours a day. The company needs to understand the ramifications of a workforce that has lost its job security, and should take special measures to make the process as painless as possible. Companies can be pro-active when faced with layoffs and help the surviving employees overcome low productivity, low morale, health problems, and an uncertain future. When an employee encounters the first rumors of an impending downsizing, their world is filled with uncertainty. The employee immediately loses the capacity to weigh the outcome of their actions, and creates questions about their future role with the company, opportunity for future advancement, and whether or not they will be ultimately fired (Paulsen et al., 2005, p.465). The situation where the workforce is notified by rumors presents an unwelcome situation for everyone involved. According to Cascio and Wynn (2004), "many employment downsizing efforts fail to involve employees in any decisions either about the process or the desired outcome. As a result, employees feel powerless and helpless, and there is massive uncertainty in the organization" (p.427). While manager or employee input may be able to smooth the process, they may see the decision as inevitable and be reluctant or unwilling to offer any input. This places the company in a position to act impersonally with aloofness and distance. It is in this scenario that the ill-advised e-mail used by Radio Shack becomes the corporate culture. Avoiding the pitfalls of the workforce being notified of looming terminations by rumor requires the company to be pro-active in their communication on the issue. To avert problems, either perceived or real, personal communication with the workforce needs to take place well in advance of the termination date (Brockner, 1992, p.11). Employees should be notified of the company's plans in an environment that generates trust. There is a risk that the period between alerting the workforce of the downsizing and the date of termination can be marred by a work slowdown or even sabotage. A meeting, or series of meetings at different levels, can be used to justify the reasons for the layoffs and assure the employees that it is a last resort alternative (Brockner, 1992, p.10). The corporate culture will also have a marked effect on this initial phase. A company that has practiced "honest, consistent, and regular communication efforts from the highest levels of executives on down" will be less prone to the negative effects of rumors and speculation (Cascio & Wynn, 2004, p.427). Good communication before, during, and after the layoffs is essential to the effective management of downsizing. One of the biggest effects that downsizing has is the impact it has on the perception of job security among the survivors. In many cases, downsizing takes place in an environment where a company is struggling to make a profit and job security is already at a minimum. Job insecurity can affect an employee's productivity, creativity, innovation, decision making, and personal health (Probst, Stewart, Gruys, & Tierney, 2004; Alam, Robinson, & Pacher, 2006; Kivimki, Vahtera, Pentti, & Ferrie, 2000). In addition, the stress of job insecurity spills over into the employee's personal life and further deteriorates their ability to work at full capacity. During the period of time when employees are notified of the layoffs, and well after the terminations, the company needs to place special emphasis on valuing both the victims and survivors, as well as insuring that the survivors have a sense of a meaningful future with the firm. Without job security, employees will not be motivated to pursue a meaningful career path with the company. Corporations often act out of their own economic self-interest within the philosophy that their main goal is to make a profit. In many cases, downsizing and employee layoffs are a result of economic cutbacks and is an effort to contain costs. It seems straightforward enough to reduce one of the largest budgetary items to cut costs. If all else was equal, the company would save money. There is some evidence that the threat of layoffs actually increases output as employees struggle to keep their job (Probst et al., 2007, P.482). However, during the period prior to termination, employees' anger and frustration may also lead to counter-productive results. Probst et al. (2007) reports that, "There is some evidence to support the idea that when job insecurity is high, employees might engage in higher levels of counterproductive work behaviour" (p.483). These include "verbal harassment, assault, and the spreading of rumours, as well as harmful acts directed against the company or its systems, such as sabotaging equipment, stealing, and wasting resources" (Probst et al., 2007, p.483). The counter-productive effects of job insecurity will remain after the layoff as the survivors "show reduced levels of work effort, job satisfaction and organizational commitment" (Paulsen et al., 2005, p.471). It is clearly in the economic self-interest of the corporation to maintain a high level of job security among the survivors. Maintaining a high level of job security in a firm that has a history of downsizing is one of business's biggest challenges. People will be more acceptable to an inevitable layoff if they have the perception that it is necessary and fair, rather than indiscriminate. According to Brockner (1992), "Survivors' perceptions of the fairness of the layoff are determined by their beliefs about why the layoff occurred as well as how the layoff was implemented" (p.10). Through the process from notification to layoff, the employees need to be regularly updated on the detailed reasons why the firm is downsizing. In addition, they need to be apprised of how the terminations were determined. "Thus, layoff managers who handle the process unfairly may run the risk of alienating the survivors they least wish to alienate" (Brockner, 1992, p.15). The survivors left at the company will form an idea about their own security based on how the firm handles the layoff. If the victims are treated unfairly, the survivors will assume that they may also be treated unjustly in the future. An aspect of treating the victims fairly is the support, both material and emotional, that they are afforded for their years of dedicated service. Generous severance pay can help persuade the survivors that in the event of a future layoff they will not be discarded and left to fend for themselves. The company can consider extending health and other benefits after the terminations. In addition, early notification can make it possible to implement job transition programs or retraining. Brockner (1992) contends that, "in general, survivors are more likely to view the layoff as fair if they see concrete evidence of the organization providing for those laid off" (p.14). In addition, the employees need to be treated with dignity and respect, and management should remain available to them to answer any questions or concerns that they may have through this period (University of California Irvine, 2004, p.6). Severance pay, extended benefits, and respect can help minimize the effects of job insecurity. Of paramount importance to the company is the physical health of the surviving workforce after the downsizing. The period of downsizing can be a stressful and traumatic experience for both the victims and the survivors. The survivors may face a change of roles in the workplace or an increased workload. In addition, the layoff event can negatively impact the emotional and mental state of the survivors. The correlation between downsizing and physical health has previously been reported in the literature, and absences due to illness have been found to be more that double after a major downsizing as compared to a minor one (Kivimki, 2000, p.972, 974). Once again, the impact of missed work is reflected in lower productivity. In addition, additional health problems will impact the already escalating costs of health care. Reducing the stress of downsizing is in the economic interest of the firm, and the personal interest of the survivors. To cope with the mounting health problems associated with downsizing, the company needs to be pro-active at eliminating the stress of the experience. One of the biggest challenges facing the laid off worker is finding a new job. As noted earlier in this paper, early notification can greatly reduce the problems associated with downsizing. If the uncertainty is allowed to linger, it will affect the survivors as well as the victims, and continue to influence their trust and motivation long after the downsizing (Paulsen et al., 2005, p.488). Management should allow for a more liberal time off policy, immediately after the notification, to give the employees ample opportunity to seek employment. In addition, companies could be even more pro-active and arrange job fairs or work in conjunction with a job placement service. This would help to instill a sense of fairness in the survivors and would lessen the effect of job insecurity. The real task of preparing and implementing a downsizing process begins well before downsizing is necessary and forms the basis of the company culture. The company should establish a history of open communications, trustworthiness, and a sense of fairness to its employees. If a company is an autocratic system where solutions are dictated from the top down, they may have more difficulty in establishing job security among the survivors. If the company uses networking and has a high degree of interaction, there may be a better opportunity to communicate with the employees who are at risk of being terminated. If the employees have trust and confidence in the company leadership, this trust can continue after the downsizing and lessen the job insecurity and its attendant effects. All of the programs that are recommended to help bridge the gap for the downsizing victim and build confidence in the survivors have an economic cost. When a company is downsizing, economic resources are usually scarce and there is a perception that every precaution must be taken to protect the corporation. However, the attempt to save money during this period may be counter-productive when it results in lower productivity that extends well beyond the downsizing. Corporations have an obligation to their shareholders, the community, their customers, and the workforce. The actions taken in regards to the workforce makes an impression on the other stakeholders. Consumers may be less likely to purchase Radio Shack products based on their notification system. Investors may be less likely to invest in a company where moral is low due to a history of inappropriately handled layoffs. In conclusion, losing a job is one of the most traumatic events that can happen to any individual. When the loss comes as the result of a major downsizing, victims and survivors both suffer the ill effects. Early notification is recommended to give the company ample time to explain the reasons for the action and the process that it takes. The employees that continue to work after the layoff need to feel that the company is just, truthful, and fair to reduce the job insecurity inevitably felt by the survivors. The company can help the victims transition into another job or career and further gain the trust of the survivors. Ample severance pay, extended benefits, and liberal time off can reduce the fear that the survivors have of being the next victim. As this paper has shown, all these factors impact productivity, the goal of the company. While many of these programs and policies have an associated financial cost, the cost is offset by the survivor's motivation, commitment, and loyalty to the firm. Companies would serve themselves well by creating a corporate culture based on trust, and extending this philosophy through the difficult times when the natural reaction is fear. References Alam, Q., Robinson, M., & Pacher, J. (2006). 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Job uncertainty and personal control during downsizing: A comparison of survivors and victims [Electronic version]. Human Relations, 58(4), 453-496. from Sage Publications. Probst, T. M., Stewart, S. M., Gruys, M. L., & Tierney, B. W. (2007). Productivity, counterproductivity and creativity: The ups and downs of job insecurity [Electronic version]. Journal of Occupational and Organizational Psychology, 80, 479-497. from Academic Search Premier. University of California Irvine. (2004). Best practices for managing layoffs. Irvine, CA: UCI Office of Human Resources. Read More