Report summary: Employee Morale During Downsizing
The â€˜downsizingâ€™ of employing organisations has become widespread. The experience of living with the possibility of redundancy, and watching others leave, has become part of the working experience of many UK employees. How can organisations hope to maintain staff morale in such circumstances?
IES, supported by its Research Club, examined this issue with the help of major employing organisations, through workshops, and structured discussions. The outcome is a report which examines the nature of the concern about maintaining morale during downsizing, and how organisations are addressing this concern.
Why morale matters
Of course employees will feel unsettled during downsizing. However, just accepting loss of morale as an inevitable consequence may undermine the very productivity gains intended by the change. So employers should seek to minimise the unwanted impact of downsizing. They also need to recognise the extent to which the manner of managing such change affects how employees feel about the change, and their future relationship with the company.
Downsizing can threaten employeesâ€™ sense of wellbeing in several ways. They may see the company as having behaved unjustly or unfairly. They obviously feel less secure. They may also lose the belief that their contribution to the business will be rewarded in future.
These responses may easily threaten business performance. Survivors of downsizing can become unduly risk averse and narrowly focused, and therefore less creative and open to change.
But â€˜moraleâ€™ is not a simple concept. It consists of many facets and may be manifest in many outcomes. These outcomes include:
- whether employees stay with the organisation
- whether they achieve organisational or personal goals
- whether they are able to adopt new working practices and learn new skills
- how they respond to customers
It is a useful start to identify specific outcomes of morale which the organisation wishes to address.
The organisations involved in the study suggested three common strands to a strategy for influencing morale. They were the ability to:
- anticipate likely employee response
- identify interventions to impact morale
- monitor and evaluate morale and the impact of actions taken.
Anticipating employee response
A number of â€˜risk factorsâ€™ were identified as indicating circumstances in which downsizing was most likely to hit morale. They included:
- failure to convince the workforce that job reductions were necessary
- apparent lack of clarity or unfairness in deciding on individual redundancies
- lack of care over redundant staff
- lack of alternative career development options if promotion becomes unlikely
- changes which leave survivors unclear of what is expected of them, or how they will acquire the new skills they may need
- managers who are unwilling or unable to provide adequate time and support to individuals.
Anticipating impact also means understanding that individuals in different job groups or career stages may respond differently to downsizing. Although it is often difficult to address interventions to particular workforce groups, they can sometimes be tailored with varying needs in mind.
Interventions to build morale
It is difficult to target interventions with any precision to influence morale. However, the participating organisations identified several broad kinds of action which they saw as particularly relevant.
Communicating with employees during downsizing is vital. Conveying the reasons for such a painful change is central. Employees need to understand the business reason for reducing headcount, and how the change will be managed. Breaks in communication are seen as sinister, and lead to rumours. Attempts to deny the reality of the painful aspects of the change are seen as insensitive. So communication has to be honest in dealing with the negative feelings of employees. It is important to communicate throughout the period of change, not just at the beginning.
Giving direct support to the â€˜survivorsâ€™ as well as the â€˜victimsâ€™ of downsizing leads to other types of intervention. They may address such areas as Stress Management and Careers Counselling.
Organisation Development initiatives may be used to try and improve the effectiveness of the emergent organisation. They may include work to rebuild relationships between and within groups and departments, often through team building activities. Enhanced access to training and work experience may be needed to help staff adjust to new job demands.
Performance Management often needs attention to ensure that staff feel that the new demands are realistic in terms of the reduced staff resource. They also need to be clear what is expected of them in the new organisation. Reward strategies may also need realigning, but there is a lack of clarity at present about the link between alternative reward strategies and morale.
The employeeâ€™s relationship with their line manager may have a significant effect on how well they cope with downsizing. For line managers to support staff effectively at a time of difficult change, they in turn have to feel as though they know how to handle queries and problems. It can help for managers to share their concerns with their peers and discuss how to deal with staff issues. Some companies use regular forums for managers to do this throughout the change period, and avoid them feeling isolated.
Monitoring and evaluation
Evaluating the success of attempts to influence morale during downsizing is not easy. There is a natural tendency not to want to ask people how they are feeling when you expect negative responses. Also we know relatively little about cause and effect in the area of morale. Ownership of the issue may be difficult to establish â€” senior management itself often being in a state of flux during periods of downsizing.
Many managers believe â€” or like to believe â€” that the general level of staff morale is outside their control. There are indeed many limitations to controlling morale including the variation in individual response, the impact on individuals of what they see happening to other employees, and the variation in response over time. Separating the impact of different interventions can be difficult, and downsizing is seldom the only organisational change going on.
In spite of the difficulties of evaluating the impact of specific responses on morale, organisations are using a range of measures to monitor some of the outcomes of morale.
For example, staff turnover, absence from work and performance indicators (eg customer service) are often monitored numerically.
â€˜Softerâ€™ measures of attitudes and perceptions of employees are obtained through the increasing use of employee attitude surveys. These can be used both to identify variations in response within the workforce, and track changing perceptions over time. Managers need to understand how employees are feeling in their part of the organisation as well as in aggregate.
Upward feedback is another way of collecting information on employee morale and response to initiatives. It can also be used as a starting point for improving relationships within teams in the wake of downsizing.
This report has started to examine some of the ways in which organisations are seeking to combat the more detrimental effects of staff reductions on the morale of those who remain. There are inherent limitations to controlling morale, and to our understanding of cause and effect in this area. However, the practical experience of the organisations involved in this study points to some ways of structuring thinking and actions.