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The Delicate Bonds of Loyalty

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In a recent column in business week, Bill Conaty, a former senior vice president for human resources at General Electric, talked about the “delicate bonds of loyalty that tie employees to their employers.” He talks about all the negative things that employees have been living through like downsizing, salary freezes, restructurings, and other cost saving initiatives. He worries about the cumulative impact of these negative actions on how employees feel about the hand that feeds them. “People have long memories… And they will judge their employer by how equitably they feel they were treated during the downmarket.”

His solution is a little alarming, because he suggests that companies should go “deeper than you might want staff reductions, rather than nibbling around the edges”. He says he doesn’t believe in the “share the pain” strategies where employees are asked to share the pain. He claims this simply demoralizes “100% of your workforce…versus the 10% to 20% whom you really can’t afford.”

So, what is wrong with this approach? It simply ignores current research on how employees respond to large layoffs. The research spells out how the survivors are responding — which is typically combination of guilt and angst around the fact that they did survive, and feeling badly about those who did not. The fact is, cutting deeper into an organization would simply enhance this response, not relieve it. Studies have shown that an approach where the pain is shared, for example all employees working fewer hours in order to prevent layoffs, leave employees feeling better. When talking about the bonds that an employee has with their employer, there is no greater threat to that bond than the knowledge that the company will fire employees as a first course of action rather than exploring other ways to keep the family together.

But that is the only item I quibble with, because the rest of the column offers great advice, namely:

  • The need to deal with those who were fired both “financially and emotionally.”
  • Lots of attention and recognition for those who survived because their workloads just increase.
  • The rewards don’t have to be financial simply giving some good old-fashioned recognition and appreciation goes a long way.
  • Executives need to remain open rather than clamming up, communicate more rather than less.

He offers some particularly good advice when he’s says, “employees who get to see and hear their leaders are far more likely to buy into a future beyond the crisis.”

At Engagient, we see the world through the lens of attachment theory, one of the most rigorously studied frameworks tools for understanding a person’s felt sense of well-being. When it comes to layoffs, there is a lot more at stake than simply dealing compassionately with those losing their jobs. We will talk more about this in subsequent blog posts.

BEST PRACTICE TIP — downsizing is tough on everyone, including the senior leadership team. Consider a few options:

  • Ask employees (i.e., vie employee designated representatives on a committee) how they want to deal with the economic reality; fire staff or share the pain. Act on their preferences and they will now be a part of the solution
  • Share your emotions; be straight forward on how hard it is to take these actions. We all wish the economy was in bette shape, but in order to protect everyone’s job we have to make some tough choices…
  • Compensate them in new ways with free lunches, movie passes, gift cards, and more frequent opportunities for recognition and praise

[Source: BusinessWeek January 11, 2010 p. 68]

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