Downsizing and redundancies are a fact of life, particularly in times of recession. But research from Cranfield School of Management shows that for the employees that remain in the organisation this does not necessarily have to be a bad experience.
Managing the impact on the “survivors” effectively is the key, says the author, Cranfield’s Kusum Sahdev. Taking a proactive and positive approach that fosters trust, commitment and motivation can result in resilient, happy and productive employees.
However, the challenge is how do organisations go about achieving this? What conditions need to be in place for employees to deal with change in a robust manner?
Four organisations in different sectors, facing different external pressures, were studied closely over four years as they dealt with downsizing in different ways. The methods found to be successful are summarised as follows:
Restructuring Restructuring strategies send clear messages about organisations’ priorities, which in turn have an impact on survivors’ perceptions. Restructuring strategies should have an overriding mission and ethos of recognising the value of people in the ‘heart’ of the organisation.
A matrix organisational system decreases the number of levels. The immediate impact is enhanced communication between teams and with middle managers.
The more closely the management team works with employees, the more trust is fostered. Companies could consider moving offices to be nearer the “shop floor” or other employees.
If outsourcing is utilised, employees should fully understand the culture of the partner organisation, and tangible benefits. Exchange of experiences with those who have made similar transitions can help.
Breaking down the organisation into smaller units means that people’s roles become more focused as they have more influence on results achieved. This enhances the performance culture.
Relationships with people: A continuous relationship with the leaders is important. If the appointment of new leaders is unavoidable, they should establish rapport and credibility. They should be seen to understand the organisation’s “grass-roots” and day-to-day challenges. Leaders cannot afford to hide behind glossy bulletins or closed doors, but must be physically present to the people they lead.
Knowledge and competence: During downsizing, organisations need to think carefully as to whom should be appointed to lead the various stages. Prior experience of managing large-scale change programmes is a critical core competence. They should have cumulative knowledge and understanding of the product, the market and the people in the organisation.
Credible Actions: Leaders must be aware that their actions are observed closely. Awarding themselves high pay rises, protecting their peers, and leading a luxurious life style at a time when survivors are facing difficult transitions can breed long-term cynicism and contempt. In order to reduce uncertainty after the announcement of downsizing, immediate action is required to demonstrate that the organisation can deal with the new business realities.
External focus: Focusing on the needs of the external customer helps to develop a unifying aim. Expressing external changes and competitive pressures through hard facts can engender a sense of realism.
Flexible style: This is important in both directive and supportive behaviours. Directive behaviours are when the leader confidently spells out what must be done and gives milestones and deadlines in the downsizing process. Also important is supportive behaviour in which the leader engages the people in dialogue, listening to their views, sharing decision-making, and offering praise, recognition, feedback and encouragement. It is always helpful for the leader to show humanity and to empathise with the emotions of the leavers or survivors.
Systems: Trust can be generated by having systems that enable easy access to information and ensuring that communications between union and management is not restricted. Managers should actively reduce rumours by confronting situations as they arise.
The management style at the operational level needs to be democratic, acknowledging that those who produce goods and deliver services are more important than the managers. Disruptions to day-to-day activities should be minimised.
Commitment and motivation; At organisational level, a common sense of direction, pride in belonging to a successful or leading edge organisation, and good terms and conditions, are the key characteristics for encouraging commitment. At personal level, taking responsibility for outcomes and feeling engaged with the change process are important.
Companies should be aware that downsizing sets an implicit expectation of greater contributions from the survivors. They need guidance in working “smarter not harder”. There should be significant investment in education and development, focusing on those who are delivering the goods and services. This boosts self-confidence and fulfilment and increases contribution.
Technology can become a powerful motivator particularly if it enables more efficient practices. Reward packages should be revitalised to take into account the changes in roles and responsibilities of the survivors.
Kusum Sahdev says: “The findings spell the need for corporate responsibility towards creating resilient employees. The research suggests that there are three key elements to building resilience: trust, commitment and motivation. But more fundamentally, trust is prerequisite to generating binding commitment and will to deliver the highest quality of goods and services to the customer. Where trust is low, organisations are reliant upon the goodwill of individuals to contribute to the overall goals. Thus commitment and motivation levels are fragmented. The organisation loses the cumulative creativity and vitality of the workforce as a whole. Hence before implementing changes in the HR systems and processes, such as introducing a new reward system or changing roles and responsibilities, the first step to creating resilience is to deal with the nebulous issue of trust.”
Research results are published in Creating a Resilient Workforce: Managing the Upside of Downsizing, Kusum Sahdev, Susan Vinnicombe, John Bank (FT/Cranfield Management Research Series) tel: 01279 623333, www.briefingzone.com
For further information or case study examples contact:
Penny Clewes, Press & PR Officer, Cranfield School of Management, Cranfield, Beds, MK43 0AL
Tel: 01234 754348, e-mail: [email protected]