Management Strategies For a Jobless Recovery

[Editor's Note: The latest in an occasional series that looks at unique strategies for navigating the jobless recovery.]

You're a manager for a mid-sized U.S. company that's been forced to slash its work force because of the global financial crisis. And you've just received a new assignment: You're to take over a key department that was hit harder than most by the layoffs.

Morale and productivity have plummeted. Your mandate: Fix it.

It's one of those assignments that can either be a career-maker - or a career-ender. You want to make sure it's the former, not the latter, and need to make all the right moves.

What do you do?

In an economy in which the unemployment rate just hit a 25-year high of 9.4% - and is expected to go higher - and that's seen 6 million workers lose their jobs since the U.S. recession started in December 2007, this situation is becoming more the norm than the exception. And with 14.5 million workers currently unemployed - and a "jobless recovery" in the offing - the population of U.S. managers who are asking the "what to do" question is going to spiral higher.

The report on the U.S. unemployment rate for June will be reported early today (Thursday).

No More "Business As Usual"

After a layoff, managers cannot go back to "business as usual" if they hope to have any control over workplace morale and productivity. In fact, managing for the survivors of layoffs should become a top priority for managers, personnel experts say.

Increasingly, "layoff-survivor syndrome" is becoming a common phrase, one that conveys the unpleasant reality that not being laid off is in some ways as tough as getting that pink slip, and that underscores that the people who remain on the job will have plenty of emotional challenges, much as do disaster survivors ("why him and not me?").

First, there's the guilt. As might be expected, a majority of workers said they had feelings of guilt, anger, and anxiety, according to a survey by Leadership IQ, a Washington-, D.C.-based research-and-training company.

But the guilt, anger and anxiety have a real effect on the company: Three-quarters of layoff survivors say their productivity has declined, while customer service has worsened, the survey found. It also found that 69% of the remaining workers believe the quality of their company's products or services has declined since the layoffs. According to the survey, 64% of surviving workers say the productivity of their colleagues has also declined and 81% of surviving workers say there's been a decline in the service the company's customers are receiving.

"There is a great myth that, following a layoff, the surviving employees will be so grateful that they still have a job that they'll work harder and be more productive," says Mark Murphy, chairman of Leadership IQ. "But as this study shows, the opposite is usually true."

Part of the problem is that - after the job cuts - employees face an implied "do-more-with-less" work edict. In other words, the survivors are being forced to be more productive as they find themselves having to do new tasks and duties. In a survey by, 47% of workers reported they have taken on more responsibility because of a layoff within their organization, while 37% said they are handling the work of two people. What's more, 30% are feeling burned out.

"Employees are feeling added pressure as they shoulder heavier workloads and strive to maintain productivity levels," says Rosemary Haefner, vice president of human resources at CareerBuilder LLC.

Robert Hosking, executive director of Menlo Park, Calif.-based staffing firm OfficeTeam, a unit of Robert Half International Inc. (NYSE: RHI), says that the period following a major work-force reduction is a good time to make sure that employee workloads reflect company priorities.

Key Moves to Make

Constant communication is the first big step. Make sure to speak with those who remain, underscoring their value to the company, while also being candid about just what's to come.

For instance, don't tell people 'no further layoffs are expected' unless you're sure that no one else will be laid off. Managers need to be in constant view of their front-line employees, and must be approachable. Employees need to be able to express their feelings - their concerns about the people who have been laid off, their concerns about their jobs and their concerns about the company's future.

"The number one way to prevent guilt is [through solid] communication," Jason P. Zickerman, president of The Alternative Board, a Denver-based executive-consulting firm, told BusinessWeek.

Leadership IQ's Murphy counsels managers that how a layoff is conducted is important, but the aftermath needs even-more-careful management.

"Managers need to be highly visible to their staff, approachable even when they don't have anything new to say, and candid about the state of things in order to build their trust and credibility," he says. "If your company has to conduct a layoff, it is imperative that you train your managers how to both manage that process and deal with the highly debilitating aftermath. Otherwise, you will waste any potential cost savings from the layoff on lost productivity, quality problems, and service breakdowns."

The discussion of the state of the business should include context about how that company's overall industry or sector is doing, says Janet C. Barnard, a management consultant and former associate professor of management at the Rochester Institute of Technology College of Business.

Going forward, part of that communication has to include detailed discussion of goals and expectations - for the individual workers, for the entire department and for the company, Barnard says.

"Goals are very important, particularly in a period of uncertainty," like the one U.S. workers face right now, Barnard says.

Goals give workers more of a feeling of control, allowing them to feel as if they have a role or say in their own destiny. That's crucial, because as the feeling of control increases, it reduces the feelings of powerlessness, fear and uncertainty, Barnard says.

Goals should be specific, measurable and attainable. And there should be periodic reviews, with feedback, so that the workers understand how they are doing, she says. Those reviews should be "information rich," meaning there should be context about how the company is doing overall - particularly if these efforts are propelling the department, or even the entire company, forward.

"If you give employees a feeling of some power [over their future], they feel less fearful," which makes them much more productive, Barnard says.

When facing a jobless recovery, these can add up to a winning formula for you as a manager, and for your company.

[Editor's Note: In future installments in this series, Money Morning will look at such jobless-recovery topics as career-management, managing your finances, planning for retirement, and promising sectors for employment. The first installment outlined an entire career-survival plan for those who've lost their jobs. And a sidebar to this story, which appears elsewhere in today's issue of Money Morning, details tips managers can use to reinvigorate an organization afflicted with layoff-survivor syndrome. To read that story, please click here.

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