November 2008 Archives

November 11, 2008

After the Layoffs

According to the Labor Department, the unemployment rate rose to 6.5% last month, the highest in 14 years. In the first ten months of this year, 1.2 million jobs have been lost in the U.S., more than half of them in the last three months. More than 10 million Americans are unemployed, and another 6.7 million are involuntarily underemployed -- working part time when they'd rather be working full time. (Check the grim data for yourself here.)

Lots of good information is out there for companies that have to conduct layoffs and employees faced with layoffs. And certainly, people who've lost their jobs deserve most of the attention, sympathy, and assistance.

But what about the employees who are left after the layoffs -- those who are expected to do the same amount of work (or more) with fewer resources and less help; who are anxious, sad, perhaps even angry about who was laid off or how it was handled; who may have had to make sacrifices of their own, such as pay cuts or loss of benefits; and who may be torn between their loyalties to the company and their need for job security? A great article in the most recent issue of HR Magazine (published by the Society for Human Resource Management) gives employers tips on how to help these employees -- and how to convince the best of them to stay the course. (SHRM members can find it here.)

The article explains that employees who are not laid off are likely to become more risk averse, concerned that failure could lead them to be next on the chopping block. This understandable concern leads to a more conservative approach to the development of new products, markets, and customers -- not the best outcome for a company in the throes of a downturn. The article also discusses the "survivor guilt" that can overcome remaining employees, as well as the long-term stress on employees who have to do more work to make up for missing colleagues. Statistics presented in the piece indicate that turnover -- in the form of employees leaving voluntarily -- increases dramatically at companies that have laid workers off. On average, companies that laid off .5% of their workforces sustained a 2.5% increase in turnover, which means that these companies lost five employees for every one they laid off.

So what can companies do? The article presents a number of valuable tips, including being honest and "overcommunicating" with employees who remain, making sure layoff and restructuring decisions are perceived as fair, allowing employees to vent, and giving remaining employees a reason to stay -- preferably with plausible details, such as careful plans to turn things around and timelines for improvement.  

Lisa Guerin