Layoffs Alone Can’t Save Your Business- Focus on the Remaining Staff

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. Ironically, research over past the twenty years indicates that most layoffs fail to achieve these 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 doesn’t downsizing result in the objectives senior management anticipated? In general, it is because of the effect that the layoffs have on the remaining employees. The downsizing effects them both psychologically and emotionally in very big ways. 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. That combination is deadly for the overall success of the company.

I, along with my colleague, Deanna Banks, Ph.D., have researched over the past 6 months various techniques available to leaders to invigorate their employees after a downsizing has occurred. We found that certain types of leaders are more successful than others at enabling staff to recuperate from the damage that layoffs cause.

What Not to Do

Many employees we interviewed told stories of managers attempting to extinguish any opportunities for the remaining staff to express their emotions resulting from a layoff. One example went as far as a ban on employee socialization at coffee breaks, or in hallways and offices. It is a common desire among senior management that their employees “get over it”, and the sooner the better, and they don’t understand or make any provisions to deal with the anger, frustration and fear their employees are feeling. Their solution is to move on and accept that it is what it is.

The truth is that when emotion grips people, they simply can’t move on. They need time and opportunities to vent their frustrations and process their emotions. The more management attempts to repress their employees’ concerns and rush them back to business as usual, the more angry and upset their employees will be.

What To Do

Disruptive change among all involved is the result of a layoff situation. However, people’s response to such change follows a fairly predictable pattern according to most experts in the field.

It is impossible to speed up the process and force people to skip ahead in the emotional healing process resulting from downsizing. You may be over it and ready to forge ahead, but your staff won’t support you in those efforts until they are ready. Rather than pushing people to move forward before they are ready, you should be focused on working with your staff to successfully move steadily through the normal cycle of change and progress.

It was interesting to discover that the best approach to help staff members recover from a downsizing is for the manager to adjust his actions to correspond to the emotions the employee is feeling. The objective isn’t to imitate the person’s emotion (e.g. respond to frustration with frustration). Instead, the manager should try to understand what emotional need the employee needs met based on their behavior, and attempting to meet that need so that the employee can continue the healing process.

In our research, we found that successful leaders:

1. Minimize panic by communicating often.

2. Respond to anger by expressing concern.

3. Address anxiety by emphasizing clarity.

4. Use supportive behaviors to minimize hopelessness and grief.

It will be much easier for emotionally supported employees to focus on the job at hand and remain committed to the organization. They will look to you as their manager for direction rather than feeling suspicious and sad. They will also be much more likely to take risks and work creatively rather than become stalled in the what-ifs that could take over their thinking.

It’s true that there is no magic cure to successfully survive a downsizing, however, the chance of a company’s ultimate success can be highly improved through the method in which the layoff is approached, how those staff members let go are treated, and how management supports the surviving workforce.

Wendy Mack is a professional consultant, mentor, 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.