Cut in haste, repent at leisure

Dec 17 2008 by Nic Paton Print This Article

As the toll of workers being let go mounts by the day, the emphasis for many firms right now is simply survival, come what may.

But managers also need to be careful in the tough decisions they are making, as new research has suggested that those who wield the axe too enthusiastically in the coming weeks and months could be storing up serious problems for the future.

Research by U.S recruitment firm Kenexa has found those left behind after a round of redundancies are generally more disenchanted and demotivated, and more inclined to view their boss in a negative light.

The Kenexa WorkTrends by the Kenexa Research Institute found employees working in organisations that had experienced layoffs in the past 12 months felt (perhaps unsurprisingly) much less confident about the future of their company.

They were also much more sceptical about their senior managers and leaders.

A little more than a third of the workforce whose companies had laid off workers in the past year felt confident in their senior leaders.

This compared with 45 per cent where there had been no layoffs. Nearly the same gap applied for employees who felt they had a promising future at the company.

The survey also found that, while the U.S and Europe were garnering many of the headlines when it came to redundancies and layoffs, in fact Brazil was getting rid of the most workers, with a tenth of companies polled reducing their headcount. Japan and Russia, on four per cent each, were reducing the least.

Unlike in many previous downturns where it has been blue-collar workers who have borne the brunt of the cuts, this time the largest percentages Ė 29 per cent and 22 per cent respectively Ė were coming from clerical and professional workers.

Workers aged between 25 and 34 were also the ones most in the firing line, the survey found.

"After the chaos of downsizing, it is imperative that leaders work hard to re-instil confidence in the viability of the organisation, as well as set up support systems for work stress," said Jack Wiley, executive director at Kenexa Research Institute.

"The aftermath of layoffs is messy, but unwavering leadership can heal their organisation more quickly by equipping employees to do more with less in their attempts to meet and exceed customer needs," he added.

It is clear, too, that even within the current jobs' maelstrom, some managers are becoming concerned that cuts are coming too fast and going too far.

A poll by the UK Chartered Management Institute has suggested more than a third of British managers are now worried about the cost of redundancies, along with the possible employment disputes they might bring.

A further four out of 10 were concerned about the long-term effect of all these cuts and whether they would simply create (equally expensive) labour shortages down the line.

The poll of more than 1,243 managers found a 12 per cent increase in the number of senior executives who were nervous about the year ahead.

Asked specifically about business prospects for their organisations, 26 per cent said they were "pessimistic" about 2009, compared with 14 per cent last year.

Those who were "uncertain" about what next year would bring had risen to 22 per cent, up from 20 per cent last year and 10 per cent in 2007.

More than half were also worried about rising energy costs and the continuing shortage of credit.

Nevertheless, it's not all doom and gloom, as nearly a fifth of the managers polled said they still planned to change jobs next year and five per cent expected to start their own business.

Last month the U.S research body Sirota Survey Intelligence added its voice to warnings to managers not to be too hasty in their cost cutting.

It urged managers not to forget the importance of properly managing the welfare, productivity and engagement of redundancy "survivors".

A poll of 500,000 workers in 2000 and again in 2002 found that, following the cut-backs in the wake of 9/11, employee confidence and attitudes had declined sharply in several key areas.