Avoiding Post-Downsizing Voluntary Turnover

When an organization makes the difficult decision to downsize personnel, it is typically due to financial reasons. Even it is not necessarily due to economic hardships, without proper communication, internal and external publics often assume that it is. Naturally, survivors speculate on their personal future with the organization and wonder whether they have job stability or not. After all, if the organization decided to downsize, what is to stop them from doing another round of layoffs shortly after? The fear of being layoff victims themselves leave survivors to lose their loyalty their current employer and start looking for job stability in other organizations.

Management does not always know what is to come in the foreseeable future. In fact, it is quite possible that one round of layoffs can indeed lead to others down the road. How can employers retain employees with such uncertainty of the future? It would be unethical for employers to make false promises of stability to employees and difficult to give any definitive answers. The most effective ways that management can retain employees is to communicate any information in regards to the future of the organization honestly and frequently. Whether the news is good or bad, big or little, it is important for employees to be fully aware of what is to come so that they can appropriately plan for the future. Furthermore, organizations should invest in developing the existing employees' skills through training and seminars to increase their marketability. It shows appreciation and value to the employees, who in turn may remain loyal to the organization. The company ultimately benefits from staff development because it reduces turnover and improves skills, which leads to higher productivity.

Be a Transformational Leader

Successful management of employees is a challenging and dynamic task in any given situation. When companies go through organizational changes such as layoffs, it is especially difficult for managers to keep their employees focused and maintain productivity. Studies have shown that transformational leadership has an impact on cynicism about organizational change (CAOC). It helps to minimize resistance to change and negative emotions towards an organization during change.

So, what is transformational leadership and what does it entail? There are 6 dimensions or behaviors of TLB that are designed to help managers achieve successful leadership outcomes. The most important factor is identifying and articulating a clear vision to the employees. Regardless of whether an organization is going through change or not, it is important that employees are clear of what the company's vision is because it gives them insight on their future looks like with the organization. The second dimension is fostering the acceptance of group goals. Transformational leaders should promote cooperation among employees to encourage each other to work towards a common goal. This keeps them involved and reliant on each other to get through the change. The third behavior is the expectation of high performance from employees. Although the organization may be going through change, expecting high levels of quality and productivity builds confidence in employees and gives them a sense of accomplishment. Fourthly, transformational leaders should provide intellectual stimulation by encouraging employees to find creative ways of improving their performance. This should reduce cynicism because increased involvement helps enhance employees' perception of change. The fifth behavior, which is being a role model seems cliche but is extremely important. It is imperative for leaders to set behavioral examples that are consistent with the organization's goals and vision. This helps employees build a level of trust and commitment to the organization. Lastly, individualized support is key to transformational leadership. Employees are likely to respond to the initiatives of leaders who care about them as individuals and take the time to hear their input. Regardless of how busy each day is, it is crucial to set time aside to run pulse checks on employees in order to effectively lead them through change.

Honesty is the Best Policy

When employers make the difficult decision to conduct layoffs, it creates anxiety and tension for employees, mainly because they are unsure of their personal job security in the organization. Studies have shown that perceived threat of job loss is highly correlated with turnover intention. When employees feel that their jobs are in serious jeopardy, they inevitably start looking at other employment opportunities in which they can find stability. Feelings of uncertainty and intentions to leave the organization lead to unproductive behavior and ultimately affects business in a negative way. How can employers minimize the frenzy that goes on following the announcement of a layoff? 

Often times, employees act spontaneously based on assumptions and incorrect information from the rumor mill. If employers can engage in honest, clear communication with their employees, they can effectively diminish assumptions and eliminate unnecessary anxiety. Even when they have to deliver unfortunate news, it is beneficial to give employees a realistic idea of what is to come in the future so they can plan ahead and focus on necessary tasks. If there is no news to deliver, management should honestly state that there is no news but give a time frame of when employees can receive an update. It is important for management to create a communication schedule that consists of frequent communication to employees following the announcement of a layoff. In order to reach out to all of the employees, there should be mixed methods of communication including emails, phone calls, informational sessions, and even one-on-one meetings. 

Inclusion of Employees During Downsizing

Downsizing in organizations inevitably lead to low morale among surviving employees. They often feel uncertain of their own fates in the organization, disengaged, and unmotivated to concentrate on productivity. Studies have shown that perceived control serves as an antidote to these types of negative effects of layoffs. While the remaining employees may not have much actual say in major financial and organizational decisions in the company, it is extremely important to include them in discussions on what is to come in the future. By inviting them to be a part of the change processes, employers are empowering them and giving them confidence that may lead to increases in both loyalty to the organization and work productivity. One way that employers can do this is by conducting open forums with two-way conversations where management shares information with the staff and vice versa. While it may not be feasible to consider everyone's input and concerns, it is a helpful way for the employees' voices to be heard and possibly make a difference. If it is uncomfortable to communicate in large crowds, management can run smaller focus groups that are a more comfortable environment for employees to openly and honestly share their opinions.

Pay for it Now or Later?

One of the issues that has emerged as a common and important factor in the study of layoffs is perceived fairness in an organization's practices.During a period of downsizing, employees are sensitive to the way that the organization approaches the matter and how those who will be let go are treated. Some areas of focus are on amount of notice given to employees, amount of information communicated, and amount of severance and extended benefits. Studies have shown that when survivors feel that their colleagues have been treated fairly, their levels of loyalty and productivity remain higher than when an organization mistreats or short-changes the layoff victims. Thus, it may be a good idea for organizations to start investing in longer benefit extensions and more competitive severance plans. Sure, the main reason that companies need to downsize are due to economic reasons, but these investments can lead to long term increases in productivity and employee dedication.

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Layoff Blues

In doing research on the topic of layoffs and how they affect the "survivors", I have come across some interesting literature on some of the key factors that negatively and positively influence their work productivity and overall opinion of the organization. In several articles, it was mentioned that the bonds survivors had with the employees that were laid off is one of the most influential factors of post-layoff productivity and morale. The closer the relationships that the survivors have with the victims of the layoff, the degree of negative impact on the organization increases. How then, can employers minimize the decline in morale and work productivity after a layoff or downsizing? It is not as if they have the power to dictate relationships and the bonds that naturally form in the work place. One article suggests that communication from management to help employees understand why certain events are happening is crucial in ensuring their commitment to the organization. Losing a close colleague can certainly be detrimental for employees, but assurance and support from management can certainly help ease some of the anxiety.

McDonald's Tweet: Ulterior Motives?

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This week’s ethics blog is based off an article by USA TODAY. The article speaks on the story about the Ohio kidnappings of the three female victims, who were imprisoned for 10 years but were rescued by the efforts of a man named Charles Ramsey, who lived across the street from the house where the victims were being held hostage. During an interview, Charles described how he was at “McDonalds” and was eating his “McDonalds”, when he heard a scream and noticed a young girl banging on a neighbor’s door. He had gone outside to see what was wrong and the young girl (Amanda Berry) told him that she had been locked up in this house for several years. This discovery led to the police raiding the house and uncovering the rest of the victims, as well as the perpetrators. However, a side story that has arisen from this country-wide event, stems from a “tweet” made by burger giant McDonald’s saying “we are hoping to do what thousands of people have urged it to do: a good deed for the McDonald’s-eating hero who helped free the Cleveland kidnap victims”. In the world of rapid social media, this tweet has seen a controversial blowback to McDonalds, accusing it of “news-jacking”, where they are taking advantage of a situation to help their brand.

McDonald’s strongly insisted that there was no intention to use Mr. Ramsey’s words as an opportunity to strengthen its brand. Spokeswoman Danya Proud said that thousands of people reached out to them expressing their sentiment to McDonald’s to do something for Charles Ramsey. On one hand, some Public Relations experts feel that McDonald’s had no choice but to voice their support, with all the media attention that was surrounding the issue. Others claim that it raised too many eyebrows and opened up a whole can of issues, thinking it was more fitting for a local restaurant chain than a multi-billion dollar corporation. This just shows the vast implications on public perception through social media and that one should really discern what is the right way to respond to the public without leading to serious blowbacks. There could have been a way to reward Mr. Ramsey, without making a huge public commotion about it. Either way, this presents a new wave of ethical issues surrounding social media and public relations of large multi-national companies that are yet to come.