Organizations choose to downsize in order to reduce costs, increase profits, and improve shareholder value.  Ironically, research over past the twenty years indicates that most downsizings fail to achieve these objectives.  In fact, studies show that less than half of companies see increases in profits after downsizing whereas twenty-five percent actually see profits decline.

Why don’t layoffs produce the returns executives hope they will?  It’s the people factor.  Employees are emotionally and psychologically traumatized by layoffs.  At a time when it’s critical for employees to be engaged and productive, they are demoralized, afraid, and distrustful.  That doesn’t add up to a recipe for business success.

Dr. Deanna Banks and I have discovered a set of characteristics that are typical of many layoffs: 

• Little time is given to planning for the transition.
• Senior leaders withdraw; communication is guarded and focused externally.
• More weight is given to protecting the organization than to employee dignity and self-esteem.
• Workload increases for surviving employees.

While these characteristics are typical, they aren’t inevitable.  In fact, we’ve found that while there’s no panacea for recovering from a layoff, how the layoff is approached, how employees who are let go are treated, and how the surviving workforce is supported and re-energized will go a long way to determining the organization’s future success and viability.

In the coming weeks, we’ll be posting blogs and releasing an e-book about how to help your team and organization recover from layoffs. 

If you have horror stories, best practices, examples, or questions to share, I’d love to hear from you.