How to Bounce Back from Extreme Downsizing

What’s your biggest concern in the next six months? WorldatWork recently reported the results of ComPsych Corp. survey asking just this question of HR managers. The answer itself is not surprising: “Maintaining employee productivity and morale” (31%). I do have to admit, however, that I was surprised that this outranked “Dealing with health-care costs and new legislation” (26%). Admittedly, I listen to my US colleagues and follow the US healthcare debate through the lens of my own lifetime experience with the Irish healthcare system, but it’s clear to me that these changes are of serious concern to employees, HR Pros and company leaders alike.

And yet, employee morale and productivity remains the greater concern. Why is this? The obvious answer is the fallout from actions taken during the recession. US National Public Radio (NPR) recently commented on research out of the University of Colorado, Denver, which found:

“With extreme downsizes (in workforce) in the long term, companies really do suffer relative to competitors in the same industry facing the same sets of economic conditions. Extreme downsizers are companies that cut their workforce by more than 20 percent. … Most of them lag their industry for as long as nine years after a recession.”

The obvious findings from the research? “Cutting a workforce so deeply can have a negative impact on the morale of employees who remain.”

More importantly, what’s this mean in the workplace? Even for those still employed, the atmosphere itself is toxic. An ex-employee of Alcoa, a producer of aluminum, noted:

“Anxious workers can create problems. Especially if your job is in a dangerous workplace. … Your mind’s not going to be totally committed to focusing on what you’re doing, when in the back of your head you’re thinking, ‘Man, am I getting laid off?’”

And don’t think you can rest easy if your workplace managed to keep layoffs to a minimum (or avoided layoffs altogether) in the last couple of years. Your employees are well aware of the actions taken elsewhere and now the threat of a “double-dip” recession. Their fears are still impacting their work.

So, considering this very real atmosphere of fear in many workplaces, what are you doing to reassure employees and help them stay focused on the job at hand? The most effective, most positive action you can take is to reassure employees of their value to your organization by recognizing their efforts that are contributing to your objectives.