Managers have poor grip on the corporate ax
By John Burke • Bankrate.com

With recession dogging the economy and layoffs making headlines almost daily, more small-business owners could face the prospect of issuing pink slips. How would you handle the task? If you are like most corporate ax-wielders, not very adeptly, according to a recent survey commissioned by the professional services firm Andersen.

The most salient finding of the July 2001 survey conducted by Knowledge Systems & Research Management is that close to half (45 percent) of layoff survivors rated management's handling of job cuts as substandard. KS&R surveyed 759 online users who currently have jobs.

"Layoffs have a profound impact on a company regardless of how they are handled, but it is extremely dangerous to alienate the employees you want to retain as a result of poor communication," says Michael Lyman, an Andersen spokesman. "Companies are remiss if they don't keep the needs of employees at the forefront during such a disruptive cultural change."

A failure to communicate
The way companies communicated the layoff news led to dissatisfaction among downsizing survivors.

Half of the remaining employees learned about the layoffs via rumors or word of mouth, while 10 percent found out in the media or other external means. Only 43 percent were notified of impending layoffs through official company communications, such as direct contact with management or an internal memo.

Managers concerned about employee performance also must consider the firings' impact on survivors, who pick up the pieces and take on extra duties in the post-pink-slip corporate cube farm. The study found that continued poor communication exacerbates problems and significantly damages remaining employees' attitudes.

Almost half (46 percent) reported lower morale in the last six months. Just 34 percent of surviving employees said management appreciated their value to the company. Only slightly more than one-third (37 percent) rated management's honesty in regard to layoffs as good or excellent. And less than half (42 percent) felt that support for remaining staff was adequate.

"We advise our clients that open communication is paramount during change," Lyman says. "Without it, you risk not only losing the employee, but the goodwill of those employees that remain, and it is very difficult to rebuild their trust and loyalty after the fact."

Have you laid off employees in the past year? Are future layoffs on the horizon? If so, do you know how to handle layoffs without alienating the workers who keep their jobs?

Your bottom line could depend on it.

-- Posted: Aug. 29, 2001