Corporate Responsibility During a Downsizing

People who have been downsized never forget the experience, regardless of when it happened. They will recall with vivid detail and clarity how they were notified, by whom, how much notice they were given, and the manner in which they were treated during their departure. It is an experience that becomes indelibly etched in people's memories because of the profound impact it has on their lives.

So what ownership do companies take for creating this impact?

How did they get past the hurt, fear, anger, and even the humiliation of job loss?

Many will say that companies have a responsibility first and foremost to their shareholders to provide a good return on their investment. To that end they may have to restructure, downsize or merge with other organizations to remain competitive, strong and viable.

It can also be argued that they are equally responsible for treating people with dignity and respect as they displace them from their jobs. Sometimes that responsibility is monetary in nature, typically offered as:

• Severance packages
• Early retirement incentives
• Career counseling
• Seed money for starting a business

Sometimes that responsibility also extends to less tangible but still important things such as:

• Acknowledging people's contributions (publicly or privately) to the organization
• Thanking them for their service through letters of reference
• Holding retirement parties
• Allowing people to say goodbye in a manner that is respectful for those leaving and staying

And what about those who do stay - the "survivors"? Sometimes they are forgotten in the midst of all the changes that are occurring. The new term in the world of mergers and acquisitions is "survivor syndrome". Although they may feel they are secure in their positions for now, the survivors also have great trepidation for the added workload they will bear and uncertainty for what the future holds. We also can't underestimate the great sense of loss they experience for teammates or managers who were once part of a unique team culture and dynamic. These survivors are also intently observing how those departing are being treated and this can promote greater respect for the company or more cynicism, lack of loyalty and diminished commitment.

Progressive and sophisticated organizations understand basic human behavior and motivations and will handle downsizing staff with professionalism, kindness and compassion. They are repaid tenfold for this effort through continued productivity and good morale by those who stay. Even those who leave will speak well of how they were treated.

The less progressive companies will take the short cut when dealing with downsized staff but will pay dearly for it in the long run. They will slash and burn through the necessary cuts but leave people feeling damaged and humiliated.

We have all heard of people who have been escorted out of buildings denied even a moment to collect their personal belongings or people being brought into a large room and told indiscriminately who is staying and who is going, leaving shell-shocked employees to pick up the pieces. Some organizations even arrange for cabs to take people home soon after they are told they no longer have a job. The indignity of this type of treatment remains with people long after they have moved on to find new jobs or careers. Even when those who have been downsized and eventually receive financial remuneration are left feeling bitter and will live to tell the tale to anyone who will listen.

Reputations of organizations are soon known throughout the industry, not only from what customers, suppliers, and buyers say, but also from what staff has to say. This has a direct influence on the ability to attract and retain the best talent - especially in today's knowledge-based economy. The buzz will be out about the best companies to work for and those to avoid. This of course also has long term implications on any company's profitability and ROI.

Yes, organizations do have a responsibility to their shareholders. But they also have an equal responsibility to the employees (those remaining as well as those who leave), who have helped them deliver on these commitments to the shareholders.

Employees are well aware of the realities that cause downsizings and few believe they have long term job security. What they do expect is to be treated fairly and with dignity and respect when their jobs change or are no longer required. Organizations that take a long-term view of how they should invest in their greatest asset - people - will be the ones who will successfully ride the inevitable waves of change.

If your organization is experiencing or about to experience change due to restructuring or downsizing, Kor Capabilities Consulting specializes in helping manage the human side of change. Contact us to learn more about how we can support you.