Championing Change After Restructuring & Layoffs

I. Employee Reaction and Response

The Emotional Response to Restructuring
Let’s face it, corporate downsizing and restructuring is stressful on everyone involved, and the effects are registered on both those who remain employed as well as those who leave the company.  It’s ironic that companies frequently refer to staff members who retain their jobs as “unaffected” or “untouched” by the layoffs.  The fact is employees who remain employed after restructuring are far from unaffected.  They experience numerous and wide-ranging feelings of distress during and following periods of significant change.  Typical reactions include fear, grief, depression, resentment, diminished energy and motivation, difficulty concentrating, and even symptoms of physical illness.  These reactions are normal, but if left unaddressed can easily degrade short-term productivity and leave long-term scars that affect both individual and team performance.

People are not so much resistant to change per se, but rather have difficulty coping with change, particularly when it is totally out of their control.  This response is probably felt even more acutely in teams that normally enjoy a strong sense of alignment – where the culture is normally one of active involvement and participation in the change process.  Employees and teams with a strong sense of personal ownership and attachment to the company often feel a stronger sense of betrayal.  In these teams, re-establishing a sense of security and purpose after restructuring can be a challenging prospect requiring a thoughtful plan of action.

A 2006 study published in the Academy of Management Journal found that layoffs have the most negative effects on subsequent performance in what they identified to be “high involvement” workplaces. These are workplaces where employees have more decision-making authority and responsibility and greater emphasis is placed on the importance of human beings compared to traditional workplaces. As the study concludes, when members of an organization have been treated especially humanely, given substantial authority, and persistently told how much they are valued, layoffs violate the “psychological contract” between the organization and its people.

By contrast, organizations that have a history of treating employees in less humane ways and giving them less power, and then do involuntary layoffs, aren’t breaking any implicit or explicit psychological contract – employees don’t have as much reason to believe that such treatment is breaking any promises.

This may all sound like evidence that “no good deed goes unpunished.”  But the study did find that high involvement companies that stuck to their practices during downsizing rebounded more quickly than those companies that abandoned high involvement practices after implementing layoffs.[1]

On some level, everyone’s personal identity is tied to the company they work for, the position they hold, and the job they do.  Well aligned team members enjoy exceptionally deep attachments to their peers, their company, even their team culture.  When something disturbs the cultural foundation of the team (such as restructuring or layoffs), those who remain naturally go through an adjustment period.

Leaders have both a responsibility and opportunity here – the responsibility to make the transition as painless as possible, and the opportunity to strengthen the team and take it to new levels of effectiveness and success.

Effects of Transitioning Roles and Responsibilities
Following an organizational restructuring, daily routines are disrupted.  Some responsibilities are redefined, others are left untouched, and still others are completely orphaned and must be absorbed into existing roles.  Even well planned reorganizations can leave employees feeling a bit disoriented and overwhelmed during and following the transition.

We all have different internal mechanisms for coping with change, yet some are more productive than others.  I think it’s instinctual for people to want to get through the process and re-establish a new sense of personal order and routine – to “get back to normal” as quickly as possible.  However, the path through the transition can be bumpy with obstructions that will derail the effort if not monitored and managed effectively.

While some employees need to openly share their feelings about the changes confronting them, others completely withdraw into silence.  Some employees spend an inordinate amount of time talking about the changes to anyone who will listen.  Again, it’s important to remember that this is part of their healing process and necessary for them to move on.  At the same time, their energy should be directed appropriately (and constructively) so as not to unduly distract or undermine the healing of others.  Similarly, the needs of those who withdraw should also be respected, but they should never be abandoned.

Some people have difficulty accepting and adapting to new roles and responsibilities while others see the changes as a new career opportunity.  The simple fact is that some people, even high performers, are averse to change.  Change shakes them out of their groove and serves as a distraction.  Certain changes, in fact, may legitimately inhibit their ability to successfully perform at the level to which they are accustomed, at least temporarily.

It’s also worth considering that some employees have extended personal support groups outside of work while others have little or none.  Someone well established with a spouse, children, parents and other family members as well as a large group of friends may cope differently than a single person alone in the area.  Additionally, the jobs of some employees are simply more affected than others.

There are numerous factors that impact the degree to which change is felt and the ability of each individual and teams collectively to cope.  People respond differently to stressful situations and organizational upheaval.  To bring a team through the changes and re-establish a sense of common vision and purpose, it’s essential for leaders to plan strategically and implement situationally.

II. Recognizing & Responding to Organizational Change – A Leader’s Guide

Understanding the emotional effects of organizational restructuring on employees and the various ways people cope with change is obviously important.  Using this knowledge to help a team transition is crucial, certainly for its immediate short-term benefits, but more importantly, for the long-term efficacy of the team as a high performing entity.

Faced with circumstances which are at least for the moment out of their control, employees look to their leaders for guidance and reassurance (even when none exists).  These are times when the mettle of leadership is put to the test, when credibility and trust is either reaffirmed or destroyed.  Leaders have a tremendous opportunity to re-define the vision and sense of purpose of the team, introduce new objectives, strengthen alliances, and re-establish a culture of organizational alignment committed to the future, all in a relatively short period of time.

Make no mistake, during times of crisis, leaders are closely watched and their character and efficacy assessed. Everyone from subordinates to co-workers and even superiors look for and depend upon effective leadership.  Decisive, courageous, visionary leadership laced with empathy and sensitivity goes a long way toward re-establishing trust and re-building confidence, and helps assure that desired employee engagement and productivity levels are maintained through the change process.

Weakened teams cannot effectively heal under a “business as usual” approach.  There are numerous efforts that leaders should undertake to mitigate both the emotional and practical impact of restructuring on morale and productivity while championing the change initiative:

Treat Everyone With Dignity and Respect
This may sound like an obvious no-brainer, but at a minimum, everyone deserves to be treated with dignity and respect.  Those being laid off, or for that matter those who are terminated for performance issues throughout the year should always be treated with dignity and empathy.  Again, the rest of the team is always watching.  The co-workers of an ousted employee may very well have a very different relationship (and perception) of the individual than does management.  The manner in which terminated employees are treated can have a considerable impact on the morale of the team, and influence their view of the company and their personal sense of value.

Rebuild Trust
The fact is, in the wake of early retirements, layoffs, and restructuring, trust is weakened.  Despite the sensitivity with which changes are implemented, it is weakened due to the emotional response to circumstances beyond the employees’ control, and a perceived violation of the psychological contract and sense of security that management typically works so hard to establish.  Think about it… companies go out of their way to foster a sense of family and teamwork.  Senior management refers to it in global communications; we build it locally through departmental celebrations, holiday dinners, and team picnics; we even celebrate important milestones in employees’ personal lives.  We do all of these things and more to impart a sense of cultural connection, and to nurture relationships with our employees and their families.  Restructuring undermines this sense of security, belonging, and personal value.

Of course intellectually, everyone understands that sustaining the viability of the business entity is the highest priority, but it doesn’t diminish the feelings of betrayal when changes in the form of layoffs and reductions in force become necessary.  The loss of a co-worker and team-mate is painful, regardless of how fiscally prudent it might be.  Those who survive the reduction still suffer a range of emotions despite the legitimacy of the business need.  Their sense of confidence and security is understandably compromised.

The key to rebuilding trust is demonstrating a strong sense of integrity and equitability.  Integrity is built on honesty and the consistent, steadfast adherence to established principles and standards.  Trust itself is a product of character and integrity, and part of the foundation on which effective leadership is built.  Further, trust cannot be reestablished without demonstrating sensitivity to the needs of others.  Everyone needs encouragement and reinforcement when they struggle.  Leaders who are strong of character neither delight in, nor are they complacent with, the struggle of others; they are personally burdened by it.

Be Visible and Be Involved
Employees are not the only ones who are affected by restructuring.  Leaders are personally affected as well.  In the immediate aftermath when responsibilities need to be delegated, job descriptions re-written, and plans for the future redesigned, it’s easy to get caught up in the tasks that must be accomplished at a time when employees need their leaders for stability and guidance.  It’s tempting to put managerial tasks first, but doing so invariably sequesters leaders away in meetings and on conference calls behind closed doors, physically and psychologically separating them from the staff just when they are most needed.

Although they might not ever admit it, employees like having their leaders visible and accessible.  Particularly during times of high stress, it’s reassuring for them to be able to interact with their managers.  It’s really not unlike the relationship that parents have with children.  There is comfort in knowing our leaders are close by and available.  All the closed door meetings and phone calls send the message that there are more unknowns, more changes to yet to come.  It’s bound to be unsettling, even to the most secure staff member.

There is also tremendous practical value to being visible and involved.  It affords the opportunity for a leader to listen, respond, empathize constructively, address concerns, and dispel rumors.  This time can and should be used to re-emphasize goals and vision for the team and company, laying the cultural groundwork for future alignment.  It also provides an opportunity for leaders to publicly show appreciation for dedication, resilience, initiative, and achievements during the transition period.

Communicate Constantly and Honestly
Lack of timely and open communication is perhaps the single most significant contributing factor to the erosion of employee trust and confidence.  Fear of the unknown is a powerful and destructive force.  Left unchecked, it fosters speculation, becomes a breeding ground for gossip and rumors, and grows into a distraction that overwhelms productivity, bringing the business at hand to a crawl.

I don’t know of anyone who would rather not know what’s happening behind closed doors.  And while answers are often slow coming to light, people appreciate consistent communication even if it’s for no other purpose than to offer reassurance or empathy.  Even when there is no new news, a staff meeting can serve as an opportunity to honestly explain the current state of affairs, describe the planning process taking place, focus on new objectives being designed, or simply discuss and respond to concerns.

Key to maintaining credibility and trust is to be as honest as possible.  As is appropriate, state what you know, concede what you don’t, and be truthful in all things.  Keep staff members engaged in the process and focused on the future of the team and company.  This is not the time to B.S. – be honest and genuine and give it to them straight.  Don’t sugar-coat the facts.  They may not like the message, but they’ll respect (and trust) the messenger.

In the aftermath of restructuring, keep talking.  Make sure everyone knows what prompted the changes, what alternatives were considered, and how conclusions were ultimately reached.  This message needs to reflect a rational decision process with consideration for all subsequent effects (on both the people and the business), and focus on the positive outlook for the future of the company.  Again, the message needs to be repeated over and over to rebuild the confidence and sense of personal security of the employees.

Reaffirm Personal Value and Contribution
In a recent team meeting following our own organizational realignment, I asked everyone present to take a moment and look around the room at their co-workers assembled.  I acknowledged that while some of our friends were no longer with us, this was the team that represented the future of our business.  I confirmed that the changes before us would necessitate flexibility and adaptability, and I asked for their patience as roles evolved and responsibilities shifted.  I reminded them of our strength as a team and the exciting opportunities afforded us to reshape our business and relationships, both with each other and our customers.

Ironically, the period just following a restructuring is when the absolute best is needed from remaining employees, yet this is the very time when they are most distracted and least inclined to give 100 percent.  Just about everyone’s sense of safety is compromised to some extent.  Employees are emotionally detached and motivation to put forth discretionary effort diminished.  The sense of job security is low, uncertainty over roles and responsibilities pervades, and even future reporting structure is often up in the air.

It’s important to provide a renewed sense of purpose – to specifically remind everyone just how valuable they are to the company and team, to detail what their role will be moving forward, and to engage them in the process of establishing new goals.  Focus on the new opportunities that the change presents rather than simply assigning the additional responsibilities that will be required.  The objective should be to involve them in the process and make everyone feel valuable and appreciated rather than victims of circumstance.

Create New Opportunities
Most people prefer to live and work within their zone of comfort.  Even the most ambitious people would, given the choice, prefer to adapt to change on their own terms.  Organizational change forces people to step outside of their box.  Some respond with enthusiasm over the chance to learn new skills or take on more responsibility, while others fret over the additional burden or worry that they may not be able to meet the new demands.

Smart leaders use this time of transition to meet with employees to discuss career development, identify individual goals, and develop a plan of action to take them to the next level.  It’s an excellent opportunity to reaffirm the value of the employee’s contribution, outline opportunities for growth, and personally engage them in the change process.

Champion the Vision, Values and Goals
Fundamentally, any organizational restructuring reflects the necessity for immediate and drastic change.  Despite attempts to the moderate the impact, company culture takes a hit on some level.  Priorities shift, even if only temporarily, and everyone’s sense of the future is suddenly diminished.  Individual separation, changes to team dynamics, shifting responsibilities, even changes to schedules disrupt the status quo.

As discussed earlier, teams with even the strongest culture of alignment are shocked by the reality of present and pressing business needs.  The team’s sense of purpose and direction must be reset, trust re-established, and sense of security reaffirmed.  People in these situations will generally rally around a common sense of purpose, and it’s up to the leader to define that purpose.

Again, this affords the leader an opportunity to spend time meeting with both individuals and teams to re-establish the vision of the company, values of the team, and goals for achieving success.  People are naturally inclined to seek comfort in the familiar.  An emphasis on building upon existing cultural strengths provides reassurance while establishing a foundation on which to build new goals for the future.  By providing a context for the team and its members to successfully implement the company’s plan for the future, and detailing each individual’s role in the process, cultural alignment and personal engagement can begin to restore.

Leverage Competitive Advantage
Winston Churchill once said, “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”  Opportunities always exist.  The challenge is often in knowing where to look, and more importantly, how to take advantage of them once identified.  Leveraging existing competitive advantages provides an opportunity to reaffirm a common vision and focus team efforts on the positive strengths of the organization.

Building upon and focusing on existing strengths should not be anything new to the team.  If anything, these are likely to be concepts with which employees are both familiar and comfortable.  These typically represent a source of pride for the team and can be used as unifiers in rebuilding confidence and a positive outlook.  Examples include:

  • Talent and Ability of Team Members
  • Industry Experience
  • Brand Strength
  • Client Relationships
  • Quality of Products and Services
  • Design Quality and Exclusivity
  • Breadth and/or depth of Products and Services

Additional Steps
The following are just a few additional steps that leaders can undertake to rebuild team unity and restore a culture of alignment.

  • Enthusiastically reinforce the vision every single day.
  • Focus on achieving daily and weekly goals together, keeping everyone involved and engaged.
  • Provide rewards and recognition whenever appropriate.
  • Continue existing traditions and activities that the staff is used to enjoying.
  • Initiate team activities and new traditions such as periodic pot-luck lunches, team movie nights, afternoon ice cream “socials,” awards for attendance, service and contribution, or get the team involved in a philanthropic activity
  • Accentuate the positive, eliminate the negative, latch on to the affirmative, and don’t mess with mister in-between!

Finally, it’s important for leaders to accept and share in the grieving process after layoffs.  Employees need to see for themselves that their leaders share their pain and care about the effects of change.  However, while they appreciate empathy, they also look to their leaders for strength and direction.   Superior leaders always focus on objectives, not obstacles.  They are optimistic, enthusiastic, and inspire people to become better than they might on their own.  On the heels of a corporate restructuring, these leaders provide a clear vision of the successful future, leveraging both the strengths of the business and unique talents of the individuals who provide a face to the public.

III. Preparing for Future Changes

Mitigating Risk of Additional Turmoil
High involvement teams that normally enjoy a strong sense of cultural alignment, where employees enjoy more decision-making authority and responsibility and are involved and participate in the change process, are generally able to rebound quickly when continually engaged throughout the restructuring process.  While not immune to the emotional turmoil that accompanies significant change, they are better equipped to weather the storm long term than teams with lower cultural alignment.

Most of the same techniques leaders use to lead teams through the wake of restructuring should also dampen the impact of any subsequent layoffs or downsizings that become necessary.  The benefits are essentially the same.  Leaders should continually:

  • Build Trust
  • Be Visible and Be Involved
  • Communicate Constantly and Honestly
  • Value the Team and Members
  • Create New Opportunities
  • Champion the Vision, Values and Goals
  • Leverage Competitive Advantages
  • Continue to Promote a Sense of Team

[1] Sutton, Robert. The Last Word on Layoffs: Evidence on Costs and Implementation Practices. Harvard Business Publishing, 2007

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But… The Emperor Has No Clothes!

emperorRemember the Hans Christian Anderson story, The Emperor’s New Clothes?   A couple of swindlers take advantage of a vain emperor by promising to fashion a beautiful new suit.  The suit, however, was a nonexistent scam that was invisible to all, including the emperor himself.  No one had the courage to speak up and tell him the suit was invisible, so he paraded around naked until finally a child pointed out what was obvious to all.

How often does this same scenario replay itself in the world of corporate business?  Companies that stifle open and honest feedback (either unwittingly or by design) encourage just this sort of enabling behavior.  Unfortunately, it is not uncommon.  For any number of reasons, certain projects, initiatives, and decisions are considered political hot potatoes.  It might be due to a significant investment of time or capital, or simply because the initiative is the pet project of a politically powerful executive.  The justifications for wanting to hear only what they want to hear are both numerous and convincingly valid.  Convincing, that is, to the emperor who doesn’t want to be told that his “new suit” is transparent.  But by creating an environment in which feedback is reduced to self-serving affirmation, executives isolate themselves in their own fictional sphere of reality.

Companies (and people) have a bad habit of using the cost of an investment (be it a program, idea, or initiative) as justification for its ongoing implementation.  In reality, however, any unrecoverable cost is sunk once invested.  Regardless of whether the project is a success or failure, there’s no getting the investment back.  Therefore, the justification for the ongoing implementation of an initiative should be based solely on the viability and merits of the initiative itself, independent of the unrecoverable investment.  Otherwise, it’s like eating spoiled food (or wearing an invisible suit) just because you paid for it.  Similarly, any company initiative that is flawed should either be immediately fixed or killed, regardless of how much it originally cost.  You simply cannot justify the continued implementation of a flawed program based on its original cost.  And if speaking up to acknowledge or challenge the flaws is tantamount to career suicide, whose interest is being served?

Regardless of the reasons or circumstances, when a company allows its culture of communication and feedback to become constipated, so much so that acknowledging flaws in an initiative or decision is perceived as potentially career damaging, they do themselves a dangerous disservice.  No one will tell the emperor he is naked if he fears for his job or his standing in the company.

Perhaps even worse than a flawed initiative going unchallenged is the resulting sense of apathy that such closed-mindedness breeds.  Lower level management and staff eventually stop caring whether the emperor is naked or not.  And why shouldn’t they?  If the emperor only wants to hear how beautiful his suit appears, and any discussion of the fact that it’s actually invisible risks a figurative beheading, then why speak out?  Why take the risk?  Why care?