Here are the top five layoff fallacies (according to author David Noer) along with critical managerial strategic responses:
1. Fallacy: There is a direct relationship between reducing “people costs” and organizational productivity. A layoff on a Friday will result in productivity gains on the following Monday.
Reality: The overwhelming consensus of downsizing research is that layoffs do not achieve their going in productivity goals. Survivors of most organisations are angry, depressed, anxious and fearful. They are not able or willing to take risks or focus on increasing customer service. At the very time organisations need them to be the most creative and energetic; they lie down in the trenches, absorbed in their own toxic survivor symptoms.
Strategic Response: Organisations need to move beyond layoff administration and planning into formulating strategies for layoff recovery. This involves re-recruiting demoralized employees and working to help them overcome debilitating survivor emotions.
2. Fallacy: Survivors will work hard because they will be grateful that they were lucky enough to keep their jobs.
Reality: Layoff survivors are not motivated by luck. In fact, evidence is clear that the opposite happens – they are demotivated by survivor guilt and its cousins: anxiety and depression.
Strategic Response: Managers need to examine and, if necessary, reframe their assumptions concerning survivor motivation. In order to return to productivity, survivors need coaching and empathy. Reminding layoff survivors that they should be grateful won’t motivate them; it will only make them feel deeper levels of survivor guilt.
3. Fallacy: Organisational leaders should not tolerate any whining and complaining.
Reality: Without the healthy externalisation of layoff induced anger, fear, and anxiety, employees will remain crippled by layoff survivor sickness. In fact, research shows their symptoms will get worse.
Strategic Response: Counter cultural though it may be, managers need to develop organisationally sanctioned processes that facilitate the venting of repressed feelings and emotions. Healthy venting is a necessary means to the end of moving employees back to productivity.
4. Fallacy: In tough times, the most effective managers “suck it up,” are tough minded, and don’t tolerate “touchy-feely” distractions.
Reality: “Sucking it up” is precisely the wrong strategy for dealing with downsising, change, and transition. It is a defense mechanism - a form of evasion that anchors behaviour in the past and prevents productive engagement and personal growth.
Strategic Response: Leadership in the post-layoff environment is a helping, not a controlling relationship, and requires reaching out, not closing down and hiding behind a facade of toughness and control. Organisations that have successfully helped employees rebound from the trauma of layoffs have required their managers to learn and apply basic helping skills.
5. Fallacy: Once things get back to normal, the epidemic of downsisings will stop and job security will return.
Reality: We are experiencing a fundamental shift in the psychological contract that connects employee to employer. When the economy becomes more positive, the frequency of mass layoffs will diminish, but long-term, lifetime employment with one organisation is a thing of the past.
Strategic Response: It is important that the wrong message not be communicated. Managers need to emphasize that employees will have to rely on maintaining transferable marketable skills and continually cultivate their professional network. That will provide the only true employment security in the brave new world of the new psychological employment contract.
Managers today are operating within a pandemic of layoffs. It is essential that they formulate strategies that help re-recruit organisational survivors. Confronting the fallacies concerning layoffs and formulating strategies to facilitate a return to organisational productivity and employee motivation will directly impact competitive advantage and sustainability.
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