PRESERVING EMPLOYEE MORALE DURING DOWNSIZING

As companies continue to downsize, they need to consider how to mainta in their employees' morale in order to realize gains such as higher pr oductivity and more flexibility. Those who survive layoffs and the man agers who must implement those layoffs frequently exhibit reduced comm itment. Their trust in the company may be destroyed and they may feel powerless in the wake of top managements actions. Mishra et al. propos e a four-stage approach to downsizing, gleaned from interviews and sur veys, that will retain workers' trust and sense of empowerment. First, the company should consider its decision to downsize only as a last r esort, not to be taken lightly. Downsizing should be part of a clearly defined, long-term vision that fits into the company's overall strate gic plan. Second, the company should consider all stakeholders' needs - survivors, laid-off employees, the community, local and national pre ss, and any affected government agencies. The company should form a cr oss-functional team to represent all stakeholders' interests, hire out side experts far outplacement and counseling, ensure that managers kno w how to deal with all questions, and give employees full information on the company's finances. Third, at the announcement stage, senior ma nagers should explain why the downsizing is necessary and how it will help the firm in the long term. The fourth stage, implementation, is t he most important Management should communicate frequently and be open and honest. The company should do its best to ensure that laid-off em ployees are employed elsewhere and oiler them generous benefits packag es. It should seek remaining employees' ideas about restructuring work processes and provide training, particularly in new technologies, to work in the new environment. According to the authors, each stage, if well executed, will mitigate workers' mistrust and disempowerment and will help build a better company.