Lecture Art of Leadership and Motivation - Lecture 8

After this chapter the student should have acquired the following knowledge and skills: Recognize your followership style and take steps to become a more effective follower; understand the leader’s role in developing effective followers; apply the principles of effective followership, including responsibility, service, challenging authority, participating in change, and knowing when to leave;...

Prof Dr Mohammad Majid Mahmood

Art of Leadership & Motivation

HRM – 760 Lecture - 8

Role of Leaders in

Downsizing:

Who Goes and Who Stays?

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Faulty Assumptions

• Leaders will handle the downsizing just

fine because “they are leaders”

• Once we get past the downsizing, things will return to normal

• We only need to worry about what is

happening inside the organization walls

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The Tough Part of Downsizing:

How to say what you don’t want to say to

people who don’t want to hear it

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What is Downsizing?

• Downsizing - process of reducing the number of

employees within an organization by eliminating jobs.

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• Sharpen focus on core competencies of

the firm, and outsource nonessential

Downsizing Issues 2011 (EASNA Survey)

Financial Stress Legal Violence

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There is no perfect way to handle downsizing that “feels right” or

“goes well” for everyone involved.

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What happens to the

organization?

• Employees can turn into headcounts where there

is a decreased emphasis on understanding the

personal impact of downsizings and change

• Stress typically increases in response to

restructuring or increased workload

• The work environment is marked by fear of job

loss and paranoia (both real and imagined)

• The focus on employee engagement can change

to “just be glad you have a job”

• Resources shift away from “softer” people issues like diversity, learning, safety and instead focus on economic or business outcomes

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The impact on surviving

(2010 Journal of Occupational Health)

• Increased physical complaints, stress,

abuse, and domestic/social problems

• Crime, workplace theft, violence, and

suicide rates tend to increase

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Downsizing Effects: Overall

• Mixed effects on firm performance: some short-term costs savings, but long-term

profitability & assessment not strongly

affected

• Firm’s reputation as a good employer

suffers Example: Apple Computer’s

reputation as good employer declined after several layoffs in 1990s

• Downsizing forces re-thinking of

Employment Strategy Lifelong

employment policies not credible after a

downsizing

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Downsizing Effects: Employee

Morale

• Employee motivation disrupted:

increase in political behaviors, anger, fear

- which is likely to negatively impact

quality of work

• Violation of psychological contract,

leads to distrust, and lowered work

commitment

• “Survivors” experience more stress due

to longer work hours with re-designed

jobs, and increased uncertainty regarding future downsizings

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Downsizing Effects: Workforce

Quality

• Many senior employees leave due to

application of early retirement incentives:

result is loss of institutional memory.

• The use of voluntary workforce reductions

(buyouts) results in the most marketable

employees leaving.

• Early retirements & voluntary reductions

often result in too many people quitting,

and some are hired back as consultants at

Alternatives to Downsizing (Gomez-Mejia, Balkin & Cardy, 2011)

Employment 

Policies

Changes in  Job Design

Pay/Benefits  Policies

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Prepare for Downsizing

– Group meeting-individual meetings

– Individual meetings-group meeting

• Give facts

-• Determine where to hold the meeting

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Prepare for Downsizing

Meetings

• Know organization policies and benefits

• Determine if security should be present

• Determine who will give notice and when

– Consider notice given by higher level

manager

– Followed by meeting with immediate manager

• Determine when notice is to be given

– Late in the day so employee(s) can leave

– Early in the morning before employees arrive

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In the Process of Separation

• Use a private office

• Sit down one-on-one with the individual

• Be sure the employee hears about his or her

termination from a manager, not a colleague.

• Be clear

• Don’t leave room for confusion

• Put everything in writing

• Provide written explanation of separation benefits

• Allow no time for debate

• Tell the individual in the first sentence he or she is

terminated or laid off

• Complete a firing session within 15 minutes

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In the Process of Separation

• Maintain the integrity of all

• Don’t make personal comments; keep the

• Don’t fire employees when they are on vacation or have just returned

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What to say in Downsizing

• Get to the point quickly

• Avoid words like “fire” and “terminate”

• Do not argue

• Be prepared to listen sensitively but limit discussion-

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What to say in Downsizing

employee It may also be used as evidence if a wrongful dismissal suit is filed against the

employer

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What to say in Downsizing

• Be compassionate:

– Being laid off can be painful Show the

terminated employee some sympathy and

understanding

– If your company has the capability, provide

outplacement services or job counseling to

help cushion the blow

– Keep the employee's ego in mind - you can provide it by praising previous

accomplishments

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Completing the Downsizing

Meeting

• Listen and acknowledge concerns

• Remember this is not personal

• Stop giving unnecessary information- the employee is not hearing you

• Have tissues available

• Offer to end the meeting or give the

employee a moment to leave

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Completing the Downsizing

Meeting

• Listen intently by concentrating on what

the person is saying

• Don’t interrupt- focus on the employee

• Be patient – hear the employee out in the limited amount of time allotted

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Completing the Downsizing

Meeting

• Give employee(s) written materials

• Thank the employee for service and

commitment to the organization

• Discuss reference for future employment

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PREPARING FOR A WORSE CASE SCENARIO:

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Recognizing the Angry/Threatening

Employee

• Early identification is key

• Employees who may respond with potential violence are those who:

– Continually express discontent

– Display unmanageable incidents of anger

– Demonstrate verbal/non-verbal threats or

intimidation

– Verbalize plan to hurt self or others

– Show an inability to take criticism

– Express feelings of being victimized

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Responding to the Angry/Threatening Employee

• Have security available before the meeting

• Acknowledge the person’s feelings

• Establish ground rules if unreasonable behavior persists

• Use delaying tactics

– Leave the room

– Offer water

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Responding to the Angry/Threatening Employee

• Accept criticism of the organization or self

in a positive way

• Be an sympathetic listener

• Maintain a relaxed yet attentive posture

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Responding to the Angry/Threatening Employee

• Challenge or threaten the individual(s)

• Attempt to bargain with the threatening

individual(s)

• Make false statements or promises you

cannot keep

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Responding to the Survivors

• Communicate, communicate,

communicate

• Recognize, support and reward good

performance

• Inform about coming changes

• Provide a realistic picture of the

organization’s future

• Listen and show respect

• Acknowledge the right direction and right attitudes, do not wait until a project is

completed

• Celebrate small successes

• Make training/development opportunities available

• Offer survivors to share feelings, concerns about the past

• Encourage and coach

Responding to the Survivors

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Be calm and honest

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FACILITATOR