Impact of Downsizing on Corporate Culture
the luckiest businesses in any industry will survive their entire
lifecycles without experiencing the wrath of what is euphemistically
called corporate downsizing. Historically, the pre-, present and
post-downsizing environment are never envied, and emotions run high.
Regardless of the rung to which one has aspired, there's really
no safe zone during a corporate downsize of any kind.
senior management may be able to elude some layoffs, they are the
ones responsible for carrying out the process, thereby terminating
people who may have dedicated many years to the company. Clearly
an undesirable task. From another perspective, we must consider
the employee being laid off &emdash; the victim who is about
to face the psychological and emotional hurdles that come with this
experience. Finally, there are the survivors who are typically not
considered at all.
the aftermath of downsizing, the math is simple: fewer people are
left to do the same or increased amount of work. The organization,
once designed for and built around a greater number of people, is
now left in a state of imbalance. While survivors usually move from
denial to acceptance, with varying degrees of success, they often
struggle to get there. Since the data center is often considered
the heartbeat of most organizations, it must get back on track quickly
after a downsizing. The ongoing flow of information is critical
during downsizing and the data center holds the key to much of it.
Taking the necessary time in advance of layoffs, to plan cautiously
and communicate proactively, can increase a company's likelihood
for a successful outcome.
Downsizing: The Data Center Manager
the past five years, data centers have grown in both size and complexity.
Managing various hardware platforms, multiple operating systems,
numerous applications and a constant stream of information is challenging,
even when organizations are fully staffed. For this reason, data
center managers must approach the decision to downsize the organization
with caution and prudence. The department they oversee is responsible
for with the flow and control of vital information. Staff in the
data center work closely with virtually all systems, and companies
are ill advised to ignore their significance during a time when
changes in this flow are imminent.
Blair, editor of The Organization Development Practitioner (Journal
for National Organization Development Network), says we're currently
experiencing the second major wave of downsizing in corporate America.
"We have a lot more information available this time about the ramifications
of downsizing," Blair says. "Readying the people who will be staying
is as important as any piece of the process." She notes that whether
this is done in advance of layoffs or as a linear process isn't
nearly as important as just making sure it is addressed.
resistance felt during most layoffs results largely from changing
all that was familiar to a company's employees, as well as from
the fear that they could be next. Few are motivated by such immediate
and unanticipated change, which presents management with a huge,
yet opportunistic challenge: operating the company using smarter,
less labor-intensive tactics. Meeting these challenges begins and
ends with the practice of open and honest communications. This is
essential for organizations to continue functioning during layoffs.
no corporate downsizing can be made comfortable and easy, the layoff
process is not without its available options for easing the tension.
For example, practicing consistent, proactive communications. Managers
who are respectful of their employees make it a habit to communicate
the status of the company's operation at regular intervals. They
don't wait for the need to downsize before they look at policies
and how to implement them.
organizations that hit employees with layoffs unexpectedly, the
true impact is felt and the real costs begin to accumulate the morning
after D-day. It comes from not only those laid off, but those who
live day after day wondering when their numbers will come up. Internal
sabotage comes in many shapes and sizes, but it is never so rampant
as it is after a layoff, with data centers running the highest risk.
Computer operators know those machines unlike any others. They know
the passwords, and they know how to spread the effects of a chain
reaction from one end of the system to the other. In data centers
specifically, proactive communications triggers the mutual respect
necessary to assure data integrity and uninterrupted access to certain
computer programmer, who worked on the payroll system for a large,
regional financial institution, was desperately seeking management's
support to modify the system as it had a weak user interface. Ultimately
the day came where his department was blamed by other computer division
managers for the growing inefficiencies. The morning that he walked
in and found that half of his department had been laid off, he and
a cohort planted a logic bomb in the system. With access to all
the right passwords, they were able to enter the payroll program
and write a new section that would instruct the program to delete
it the very next time it operated. The result of the chain effect
and the time necessary to fix it was an overwhelming and costly
Survivors: A Lost Sense of Purpose
job of downsizing is brutal to those responsible for the actual
task of termination. Perhaps this is because, under normal circumstances,
all the pre-downsizing efforts are focused on who will be leaving,
rather than on those who will be needed to keep it all together.
of the survivors of a downsized company initially act out through
rebellious silence, which tends to evolve into interpersonal conflict.
Suddenly strangers are expected to work side-by-side, as though
they could pick up where old-timers and former colleagues left off.
Blair points out that the tendency of data departments is to increase
their staff during the good times, which causes the whole organization
to rely more heavily on their output. "Once there's a downsizing,
there is anger, in general, toward the data center," Blair says.
"And data center workers must not take on this anger. they need
to understand it, but they must not take it on as guilt."
do survivors feel inspired about the task at hand, and those who
do seldom have a sense of direction or a set of guidelines from
which they can make decisions. In short, they lost the strong sense
of purpose and accomplishment they were enjoying only a few days
before. Production, quality control and customer service screech
to a halt as the organization reconfigures.
of the toughest jobs during a post-layoff is managing the survivors.
It's the reason companies spend millions of dollars each year hiring
specialists, consultants and/or psychologists to help motivate the
survivors and offer them a renewed sense of purpose.
a time when they're feeling the lowest, middle management must perform
their best. Although the company appears to be in a state of chaos,
managers must seem calm, confident and in control. It's their job
to begin allocating tasks, confirming work objectives, making sure
people stay focused on appropriate tasks, and pulling together a
new team. Clearly this is a time when employees need specific directions
and the resources to implement them. Having this guidance lessens
a survivor's typical focus on loss of job security and begins the
process of rebuilding their sense of purpose and worth.
many companies may not realize is that the design of an organization
cannot withstand such turbulence without some degree of consequence.
Senior management cannot assume to rebalance the company's design
by moving around a few boxes on the organizational chart. The fact
is that organization design goes beyond the company structure. It
addresses issues more systemic than the lines, boxes and arrangement
of people and functions.
includes such factors as information and reward systems, management
and decision making processes; mission, vision and values; business
strategy and people. It requires that these elements be considered
and weighed in relationship to each other, that trade-offs be made
and balanced, and that the best fit of all the elements are determined.
It acknowledges that the infrastructure of an organization is a
source of competitive advantage and that the failure to attend to
designing and sustaining an infrastructure that best supports the
business and human needs of the organization contributes significantly
to its dysfunction and decline.
a company establishes its primary strategy and purpose, it lays
the foundation for other elements such as structure, processes,
people and rewards. Post-downsizing efforts must include a revision
of this company strategy, answering the numerous questions that
will begin to restore order to an otherwise chaotic situation.
to Ask During Post-Downsizing
answers to these key questions often provide guidance and next steps
for organizations that need to re-build after a corporate downsizing.
How will downsizing affect the reason the organization exists and
its overarching objective?
How will downsizing change the organization's vision?
What is the desired future state of the organization and what
will be different as a result of this reduction in workforce?
Where are we headed now and how will the journey change from what
was familiar previously?
How will allocation of resources change based on new targets or
Is the organization still equipped with strong core competencies?
after downsizing, senior management must make significant changes
to the organization's purpose, outcomes, and/or functionality. What
is called for is a major, comprehensive redesign process. Each design
element must be modified as necessary to ensure the organization
will still operate in light of these new developments. Who is responsible
for redesigning the data center? Will employees report to different
supervisors? Will the reward system stay in tact? Has the company
are interdependent by nature, which is why changes in one part of
a system create corresponding effects in other parts. Sometimes
these secondary changes go undetected until they have caused unanticipated
and often adverse consequences, which is exactly what must be avoided
in a post-downsized environment.
downsizing continues to become an increasingly normal business practice,
managers need to find ways to improve their ability to manage the
change. This includes motivating traumatized employees and getting
operations back on track. It means addressing the drama of the situation,
not denying it. Can-do attitudes are badly needed and understandable
goals must be spelled out. Yet, nothing promises post-downsizing
success like the practice of open, honest communications.
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