Downsizing and Managing Change
...ll be frayed nerves with the retained employees, this method will result in a greater sense of loyalty and trust. They will be more productive, work better in teams and be more empowered and motivated in their jobs (Byham, 1988). Management must be honest and open about the restructuring. Leaders must talk to the team about the changes facing the company. They must try to help employees understand that corporate reorganization is necessary for the company not only to survive but also to thrive. While the company will be reducing its workforce it is essential to communicate to retained employees that if the company is not successful all individuals will be displaced. To increase employee morale and organizational efficiency in a downsizing program management must try to retain the organization’s most valuable employees, reduce the level of job insecurity, and assist in improving employee’s job satisfaction (Johnson, 1998). They must explain to the retained associates why the downsizing must occur and the new direction of the organization. Management also must develop a plan to increase the confidence, loyalty, and morale of the retained employees. They must present a sense of confidence that the company will pull through and prosper (Nelson, 1994). If executed properly individuals will have a better understanding of the company’s position and hopefully maintain a level of trust. Recovery from a layoff is greatly improved if managers and employees are allowed to freely speak their minds regarding the changes. This can also be a great opportunity for the retained employees to pull together, renew ties and begin team building. When management refuses to acknowledge what has really taken place, it appears emphatically heartless, feeding the employees' sense of helplessness (Johnson, 1998). Individuals begin to wonder if perhaps management is hiding something else if they will not talk about the changes even after the fact. The importance of group dynamics and understanding how individuals often fail to deal with fear, resistance to change and hidden agendas must be acknowledged. Guiding associates through the change process is the responsibility of the company leaders (Flamholtz and Randle, 1987). To react to the ever-changing environment, the correct leadership style and culture must be in place in order for the organization to successfully respond to the changing environment and move to the next level. A transformational leadership style will produce the greatest benefit in a reorganization or downsizing. Transformational leaders have the ability to inspire, influence and motivate change within their team. They have a compelling, collective vision of the future and make it their priority to communicate their vision to the group. They are ethical and moral leaders who gain the trust and respect of their team. They empower and encourage individuals to challenge old assumptions and discover new, innovative methods to old problems. Most importantly, during a massive organizational change transitional leaders are compassionate and sensitive while truly understanding and responding to the needs and feelings of each person (Robbins, 2003). When individuals feel their leader cares about them and is really concerned about their personal welfare a bond is created. They are more likely to accept the changing circumstances and be supportive of the leader and the mission as a whole. An effective leader can minimize and diffuse emotions of violation or betrayal. When leaders are honest with what is happening in the company, individuals are more committed. Managers who show they care about each team member, treat them consistently with respect, and are honest, open and sensitive with the group are much more likely to get loyalty in return. Sharing as mush pertinent information as possible with employees can help them to make their own educated decisions about their future. According to Brown (1985), it is very important for managers to refrain from hinting at any long-term security with the company. While some positions are more secure than others it is unfair to lead employees to believe that any job is permanent. Leading an organization through a major change is not easy. Managers must have the necessary tools to lead others through difficult and uncertain times. They must be trained and prepared to handle a variety of emotions ranging from joy and laughter to anger and tears (Brown, 1985). Leaders must be able to communicate clearly but just as important they must be able to listen effectively, offer guidance and respond sensitively and empathetically. Employees want a leader they can rely on, that cares about them and helps to fulfill their personal needs. Only when these needs are met can an employee be free to confidently explore new opportunities and begin to have a positive attitude regarding change (Johnson, 1998). According to Hunsaker and Alessandra (1980), it is the responsibility of the organization to provide associates with training and resources to build their self-reliance and improve their skills, abilities and knowledge. Companies experiencing a major change may also benefit by aiding their employees in understanding the change process. Dealing with change is an issue that makes even the strongest of heart nervous and uncomfortable. Most individuals are afraid of change because they feel they have no control over what will happen to them. Understanding change takes the fear and anxiety out of managing the future. When companies educate employees in the change process they are better prepared to discover simple methods to successfully deal with changing times, develop tools to move ahead with their careers and live safe, effective, productive lives (Johnson, 1998). What may matter most is each individual’s attitude regarding change. Change can be a blessing or a curse depending on one’s perspective. The aftermath of a downsizing can be directly affected through positive leadership. While corporate downsizing is a reality, how the activities are carried out and how individuals are guided through the change process will determine the perception by both employees and the general public. Effective leadership is critical in today’s changing world. Leadership is much more than direction and delegation. It also includes mentoring, teaching, coaching and listening. An effective leader has the ability to guide their team in the right direction without coercion. They are aware of the responsibility that comes with their position and use that power wisely. Under positive leadership individuals want to do their jobs, without the threat of punishment or termination. They are motivated to complete their work and support their leaders (Robbins, 2003). The fast-paced changes now commonplace in business can leave companies unprepared to cope with various operational and emotional conflicts caused by mergers, restructuring or downsizing. If these conflicts are left unchecked, they can create enormous and unnecessary pressures undermining the team, sabotaging the transition, and costing companies in unproductive time (Johnson, 1998). If the conflicts are recognized and addressed the group will have a better understanding of the motivation behind the company’s changing environment and how they fit into the bigger picture. This will result in a much more positive work culture promoting trust, confidence and teamwork. The corporate world is getting increasingly competitive and constantly in a state of flux. The issues and challenges we are facing today are very different than those in past decades. Downsizing is a fact of life and dealing with the human dynamics of such a drastic change deserves a great deal of attention. When downsizing is inevitable leaders must be committed to making the transition as easy as possible. It must be a priority to maintain the dignity, pride and self-worth of the individuals they lead. They must communicate effectively, listen sincerely and provide the education, tools and resources to help their team members accept the change and productively move on with their lives. SURVEY ANALYSIS Two companies recently experienced a corporate downsizing and the subsequent events overwhelmingly support the hypothesis Team Leader Facilitation and The Change Process: Essential factors for managing human dynamics. I purposely asked people from two different companies that had experienced a downsizing to complete the survey. Both companies chose to inform the employees well in advance of the work force reduction but the results from each company were very different. One company (Company A) had a very positive culture with a foundation of trust and mutual respect firmly established. Company A would be closing one entire department. The other company (Company Z) was facing a similar challenge reducing its work force due to a corporate merger. Company Z was focused on production and profit but put very little effort into developing relationships with the people. The employee’s responses to the announcements, loyalty, levels of morale and productivity rates differed greatly between the two organizations. Company A had a very positive work culture with a transformational leadership style. The philosophy incorporated change management and taught the employees to embrace change. The leaders also motivated, inspired and directed the organization and its associates through the change process to obtain the desired result or vision. Management made it a top priority to lead by example, act as true role models and carefully consider the feeling, needs and aspirations of the employees. Company A was a very ethical company and made decisions after the moral and ethical consequences had been thoroughly analyzed. They had been successful in attaining the trust and respect of their associates. The culture and philosophy of Company A would turn out to be pivotal factors in the success of the downsizing and the subsequent employee reaction to the change. The leaders at Company A began planning well before the announcement of the downsizing was made to the group. They valued their employees and knew the information would be difficult to share and even harder for the employees to hear. It was management’s responsibility to make the transition as easy as possible and assist the individuals through the very trying times ahead. They carefully decided how it all would be unveiled. Management made a plan and decided to have a stand up meeting with the group. At the meeting they explained that the decision to downsize was based on business demands and that the people had done nothing wrong. They were an excellent group of individuals and were highly valued by the organization. Management thanked the group for all of their hard work. They went on to explain that increases in both technology and automation were the driving forces behind the workforce reduction, not the associate’s work performance. The affected individuals were given a date as to when the department would be closing its doors. Management explained they would be working closely with each individual, assisting them in finding employment in other areas of the company. In addition, the associates were assured that outplacement services would be provided as well as assistance with job training and resume preparation. The employees also learned the specifics of the severance package, which helped to calm some very frayed nerves. The news came as a quite a shock to the group. Some of the employees were speechless while others broke down in tears. It was a very difficult afternoon for everyone involved. The management at Company A immediately began a vigorous refresher-training program on change management. Understanding change takes the fear and anxiety out of managing the future and shows people a simple way to successfully deal with the changing times. It also provides individuals with a method to move ahead with their work and live safely and effectively. The employees learned that change is an inevitable part of life. To be proactive, people in general need to understand that change is a reality and they should anticipate it happening. Change either happens to an individual or by an individual, what matters most is the attitude people have about it. Change can be positive or negative depending on a person’s perspective. Most people are fearful of change because the do not believe the have any control over how or when it will happen to them. Understanding change and what you can do to accept the change makes the future a bit brighter. When management is open and honest about the change many of these fears can be diffused. The employees felt a sense of belonging and unity at Company. Realizing it was all about to end brought about feelings of loss. Working at Company A had become part of their identity. Their friends were more than mere co-workers they were family. The employees felt valued and when they left for the day they were fulfilled knowing they had contributed to the goals of the company. They grew to enjoy the sense of fulfillment and belonging. Now it was all changing and the lives they had known before were ending. Company A’s leaders also developed a strategic plan to maintain and even possibly increase the morale and productivity of the group. They implemented incentive programs and gave away awards for meeting production targets. They threw celebration parties to acknowledge exemplary behavior and solid teamwork. Many of these rituals were not new to Company A. They had prided themselves on having fun at work for years. Now was the time to really put their positive work culture and strong value system into action. The foundation of trust and respect of management at Company A had already been established well before the downsizing news was announced. The people viewed their management as open-minded and honest. Their leaders routinely offered guidance and allowed their associates the freedom to make their own educated decisions. This guidance and counseling continued until the doors at Company Z were closed. Management acknowledged the feelings and emotions of their employees and reacted quickly to help them through the difficult time. The individuals from Company A had seen first hand the benefits of true leadership during a time of crisis. The associates were accustomed to receiving respect from management. Their leaders had always been focused on the goals and vision of the organization, offered praise for a job well done and privately counseled and mentored when improvement was necessary. Management was trusted and highly respected by the people surveyed. The vision of the corporation was clearly communicated to the employees regularly. The leaders at Company A had clearly explained why the downsizing was necessary. The emphasis on the downsizing resulting from business reasons rather than personal reasons took the sting away from the unfortunate news. The employees were able to hang their heads high knowing they had not done anything wrong to bring upon the layoffs. The leaders at Company A communicated the facts clearly with compassion and empathy. They were focused on treating each person with kindness, respect and dignity. While few people are ever happy about a downsizing it helps people to better understand and cope with the reality when they have the facts and are able to ask questions. Dealing with change is an issue that makes most everyone nervous and uncomfortable. People need to discuss their feelings and have them validated. Company A had been successful, so to speak, with the downsizing because they maintained each person’s dignity, listened to the group, offered guidance and provided educated on how to best handle change. Company A hit their production goals, maintained employee morale and experienced positive attendance until the very end. On the last day there were many tears but each person ended the day knowing they were valued and left with their dignity. The attitudes and feelings from the associates at Company Z were quite different. The employees were not heart broken that they would no longer be employed by the company. They were however devastated that they were losing their paycheck. It was painfully honest that the people had very little trust of management and the associates had little, if any, attachment to the company. Because the employees from Company Z were never made to feel part of the organization they had no real attachment and they did not feel personally affected. Working at Company Z served to provide a paycheck but little else. From the displaced employees point of view they now needed to find a new job but were not distraught over leaving Company Z. Working for the company had not become part of their identity; it was viewed merely as a job. Company Z operated with a truly authoritative management style and philosophy. The employees were accustomed to working under direct command with little empowerment and rare opportunities to work independently. They were told what to do and how to do it with little concern for employee’s thoughts or opinions. The associates felt their opinions were of little interest to management and they did not have the freedom to try new ideas. Needless to say there was significant lack of trust and respect of management and the culture at Company Z was negative. According to the survey, the overall consensus was that the company did not care about the associates’ well being at all. The people’s goals and values were of little importance and they felt emotionally drained. The method of communication Company Z chose was a grave decision. They announced the workforce reduction in a letter attached to the associate’s paycheck. The letter stated that another organization had acquired Company Z and as a result the person receiving the letter would be losing their job on the date specified. The employee would receive additional information shortly. The management team did not take the time to explain the causes of the downsizing. The employees did not have an opportunity to discuss how they felt or express any concerns they had about the information. Almost immediately signs of frustration and hostility were displayed. The as...