Downsizing ----In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff , with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people.
Righting downsizing in Asia
Although the global economic meltdown has roots in the United States, virtually every developed or developing economy across the globe is now caught up in this unprecedented crisis. While nauseated watchers of the NASDAQ, Hang Seng, BSE and other indexes experience the highs and lows of the daily tumult, the stakes are higher and more painful for employees who have been laid off or fear for their future prospects. For the Asian economies which have enjoyed rapid growth in recent years, particularly China and India, the crisis has been hard-felt. Today, nearly every industry has been affected in some way. Although specific details can be hard to come by, reasonable estimates indicate that literally thousands of Chinese factories have been closed, scattering displaced workers throughout the country. For many of those that remain open, layoffs are inevitable. In India, the fear of a global slowdown affecting India is worrying. People have not been exposed to an environment of global repercussions.
What does this mean to the employees that remain behind? If engaged workers are the key to a variety of important business outcomes, what sort of a toll do downsizings have on the morale of its survivors? We will take a look at layoff survivors in Asia to see how they view the workplace. What can organizations do to re-engage the survivors of layoffs, strengthening their workforce for the eventual but inevitable economic revival?
The walking wounded
Whether we use the term layoff, downsizing, or right-sizing, the outcome and the pain for workers is the same. Although still employed, employees who have survived layoffs could be described as the walking wounded. Survivors can carry a heavy burden, having to cover for lost friends and colleagues while wondering about their own security and possibly a loss of trust in senior leaders. Amidst this bleak scenario, managers must rally the remaining troops while dealing with similar issues.
To discover the effects of layoffs on employee engagement and turnover intent, and to identify the work characteristics most important to layoff survivors’ engagement with work, and to the organization—the most effective way to emerge from downsizing unscathed, the Kenexa Research Institute (KRI) utilized the WorkTrends™ data to explore employee opinions and engagement drivers in Asia, specifically Australia, China (including Hong Kong), and India. For the sake of data robustness, we combined the data for the countries, though we acknowledge that there are differences between countries in terms of the drivers of engagement and absolute magnitude of favorability scores.
The negative impact of downsizing
As the graph clearly shows, members of organizations that have undergone layoffs in the past 12 months are less positive on every WorkTrends dimension, most notably with regard to confidence and security (i.e. confidence in the organization’s future) by a difference of 16 percentage points. Perhaps this explains Trevor and Nyberg’s (2008) finding that voluntary turnover rates increase within the calendar year of, and 24 months following the downsizing event.
Maintaining engagement
Conventional wisdom maintains that initial layoffs target poor performers and redundant positions while subsequent events more often result in regrettable losses. Regardless of whether your organization is into the first or second round, WorkTrends can provide some insight into the key factors that promote engagement among layoff survivors. By focusing on these areas, organizations should be better positioned to rebound with the economy but perhaps more importantly, retain those key employees who will be so critical to your organization’s future.
A key driver analysis conducted on layoff survivors reveals the following as the key drivers of employee engagement:
* Confidence in the future of my company
* A promising future for me at my company
* All employees have equal opportunities for advancement, regardless of gender, ethnicity, religion, sexual orientation and culture
* Satisfaction with recognition for the work I do
* Excitement about my work
Taken together, these five items explain roughly 40% of the reasons for layoff survivors’ engagement, and therefore leaders can start here in their efforts to improve employee engagement and retain key personnel. While these are also drivers of engagement in organizations that have not downsized, they take on greater importance in the aftermath of layoffs. Scores on all of these items are significantly lower for layoff survivors than employees whose organization has not downsized, suggesting that the need to respond is much greater. In addition, the order of importance of the drivers is different for layoff survivors. For example, feeling that there is a promising future is much more important to layoff survivors suggesting that organizational efforts to improve confidence and the sense of security would be time well spent in a post-layoff environment; a finding which is substantiated by the 15-point difference on the confidence and security dimension between the groups.
Finally, the top drivers for layoff survivors show a greater preponderance of layoff survivors on employee-centric questions. In other words, items that have to do with “my experience” and “how I feel” move up in rank compared with employees in non-layoff organizations. Drivers of engagement in non-layoff organizations include items that ask about innovation, ethics, social responsibility. For layoff survivors, these issues are further down the list of engagement drivers and take a back-seat to the more personal matters.
Turning survive into thrive
If your organization has undergone trauma in the form of layoffs as a result of economic conditions or other reasons (e.g. M&A-induced redundancies), what should HR practitioners and organizational managers and leaders do? The WorkTrends results suggest a number of important steps that can be taken to enhance future levels of engagement and mitigate the potential of regrettable turnover.
---Confidence is key
---Recognition and opportunity
---Turn ‘me’ into ‘we’
---Prepare for the rebound
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