Michael Tapia, Director of Leadership
McGladrey–Assurance, Tax & Consulting
Today, no firm is immune to the economic contagion that is affecting the global marketplace. Leaders everywhere are attempting to deal with the downturn in a variety of ways, including “resizing”1 their organizations. DeMeuse and Marks coined the term “resizing” as a more accurate reflection of the 21st century organization goal to become agile, flexible and proactive. Resizing is primarily strategic in nature (as opposed to financial), and is part of an ongoing organization transformation (as opposed to a one-time only event).
Since resizing impacts the lives and livelihoods of those who leave as well as those that stay in the organization, the way staff reductions are handled makes a difference not only to 
those who leave, but also to the people who remain, clients, and the future of the organization. Particularly in service-based businesses, we know that employee loyalty drives client loyalty which drives profitability.
To this end, it is important in these challenging times to recognize that the ones who remain after a resizing are ultimately the people we depend on to deliver to clients and drive the future. Taking a hit on employee loyalty can negatively impact client loyalty, profitability and the organization. To survive in the downturn and thrive in the upturn, it is important for us, as leaders, to take steps to re-engage and re-gain the commitment of our people to move forward. Minimizing the unintended consequences of a resizing, while maximizing the opportunities to build a new and better organization for the long haul is what will make the difference.
Unintended Consequences of Resizing
Rebuilding after a resizing begins with accepting that there are unintended human and organizational consequences. Some leaders believe that resizing survivors should be “grateful just to have a job in tough economic times and roll up their sleeves and get down to work.” According to DeMeuse & Marks, the real consequences, however, are very different. Those who remain experience a broad range of psychological and behavioral reactions that begin with rumors of impending events and continue through the weeks and months of transition planning and implementation, and linger long after the dust settles. The survivors of resizing are often like recovering casualties of a lost war—grateful to be alive, but uncertain of what they are living for. Some find opportunity amid the loss of departed colleagues, but others become deeply distrustful and fearful that they may be next.
According to Business Week, resizing often results in:
- Loss of confidence in management: 72 % of employees still on the job didn’t think the newly revamped company was a better place to work and 70% felt insecure about their future with the firm.
- Reduced loyalty and decreased morale: 70% of senior managers who remained in downsized firms reported a decline in morale and trust; 54% felt overworked; and 56% don’t have time to complete tasks.
As leaders, how do we address these employee issues and move forward as positively as possible?
10 Things Leaders Can Do to Re-engage People Following a Resizing
- Be visible & approachable.
- Be candid in conversation around business conditions.
- Recognize, rather than deny or ignore, the emotional realities of loss and allowing people some “hang time” to adapt. People may need time to move to the new reality.
- Be people empathetic—expect and accept signs of grieving and confusion. Conveying empathy to those closely affected by the transition can help individuals in dealing with and letting go of undesirable attitudes, perceptions and behaviors. Allow people to vent their frustration.
- Do not make promises you can’t keep.
- Refocus on a compelling vision and direction toward the future: Provide clarity about what really matters; clarify roles/expectations; and communicate how each can contribute or make a difference.
- Encourage people to identify and adopt new and better ways of doing things.
- Recognize extra efforts as well as results.
- Celebrate achievements, no matter how small.
- Cut people some slack. Before people can re-engage, they need to answer: “What’s in it for me to make it worth charging back up the hill?” Most people need emotional support to generate the energy needed to make a run at new opportunities.
1 Resizing the Organization: Managing Layoffs, Divestitures, and Closings, by Ken Demeuse and Mitchell Marks (2003)
