Laurence J. Stybel,Ed.D. & Maryanne Peabody

Stybel Peabody, a Lincolnshire International Company 60 State Street, S. 700

Boston, MA 02109

Tel. 617 594 7627

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EXECUTIVE SUMMARY

This article reviews the literature on managing through hunker down times and presents a three stage model based on systems that underwent downsizings and managed to make recoveries. The key managerial concept is that most practitioners tend to view layoff management as a one step process. This one stage perspective will hamper the speed at which companies can regain operational strength once the economic cycle turns positive. A training implication is that watching an effective leadership role model for managing hunker downs is as easy as popping a DVD into your video system.

KEY WORDS: organization development, layoffs, terminations, firings, outplacement, leadership.

INTRODUCTION

Winston Churchill is reported to have said, that "when going through hell, the best thing to do is ....keep going." Downsizing is a special form of corporate hell. The focus of this article is to review the literature and to propose a model for team leadership post downsizing. We call it "managing through Hunker Downs." As Winston Churchill wisely observed, the idea is not to manage it as an end in itself but to manage it with a view of keeping going through it.

There is excellent literature by Joel Brockner of Columbia University and his colleagues on employee survivor behavior post downsizing. He and his team conducted a field study on the relationship between job insecurity associated with a layoff and the work effort of employees who survived. The relationship took the form of an inverted U. Work performance was highest under moderate conditions of threat: the perception that they or their employer would be a competent source of financial and outplacement assistance if they lost their jobs. Work performance was lowest under conditions when employees perceived no economic need for job search assistance or perceived that there their company would provide inadequate financial and outplacement assistance. (Brockner, 1992).

Brockner and other colleagues earlier found that survivors reacted most negatively when two conditions were met: they identified with the layoff victims and they perceived that victims had been inadequately compensated and provided inadequate outplacement services. (1987). The implications of these two studies revolve around the design and communications of severance benefits. These studies do not address managing the team post downsizing.

A Google Scholar search on variations of "post layoff management" yielded only seven articles and many of these articles were variations of Joel Brockner's research.

The purpose of this article is to extend the discussion around this important business and emotional issue.

The field research described in this report represents fifteen years of participatory observation as outplacement consultants with a variety of organizations ranging from $100 million dollars low tech manufacturing companies that are family businesses to Fortune 500 companies. In each case, there was a significant downsizing in response to external events and our firm was called in to assist management in the wake of the layoff. We are not addressing the layoff itself or the severance program. We are focusing only on post layoff management or what we call managing through hunker downs.

Leaders often assume Hunker Downs consist of one phase---downsizing. Seeing it as a one phase operation helps make morale worse and means it will take longer for companies to move into growth mode when the market turns favorable. One way to measure success in managing through hunker downs is time to full recovery when the economic cycle finally turns favorable. In companies that have managed this recovery well, we found not one phase but three phases of Hunker Down: downsizing, instilling Espirit de corps, and planning for the future before the future arrives.

PHASE ONE: DOWNSIZING

The first phase of Hunker Down focuses on downsizing the employee population, scrapping programs, tightening collections, centralizing functions, and examining inventory control. During this first phase, chief financial officers begin to sound like they are interviewing for jobs on the Weight Watchers Cheerleaders Squad: "We've Got to Become Lean!" and "We've Got to Get Rid of That Fat!"

The emergence of a trimmer organization only completes the first stage of Hunker Down. Given that no business leader has a crystal ball, no responsible person in a company would say "We are finished with downsizing." A pall of uncertainty always hangs over the surviving employee population.

PHASE TWO: Instilling Espirit de Corps.

In the wake of Phase One, we found most surviving employees are likely to report at least two of the following three complaints:

• High Stress Levels. Employees must perform their regular jobs; they must also perform the jobs of others who were let go. Performance demands feel that they have increased while resources have diminished. This stress will be even higher if the severance benefits paid to recently terminated employees is perceived to be stingy or the company is perceived to have treated them with respect. The perceived message surviving employees will get is, "We will work you hard and treat you with a lack of respect when he fire you. Don't forget to say good things about us in the marketplace!" This concept is idea with Brockner's research but extends his ideas. His focus was on work effort within the company. We have evidence that if laid off employees are treated poorly, the surviving employees begin to give out negative communication to the customer community.

• Lack of Confidence About the Future. Employees may be unclear about the wisdom of the company strategy or they may not buy it. They may believe management only has tactical plans to cope with the current Recession but lacks clear vision for the industry and the company's place in it once the Recession is over. They may be fearful that management keeps changing the plans.

• Personal Financial Concerns. Employees point to downward economic mobility for themselves and for their families. They have to recalculate retirement assumptions and aspirations for helping their children.

In the face of these three factors, the leadership task of creating Espirit de Corps truly seems both daunting and counterintuitive. On the other hand, the traditional approach of focusing on day-to-day survival while hoping that poor employee morale doesn't infect customers does not seem like a good plan.

In looking at instilling spirit de corps, we focus on a role model for team leadership plus the creative use of team

incentives.

• Colonel Potter as a Role Model for the Second Phase.

It would be ideal if the company has a positive leadership role model and other managers can be asked to copy the role model. We have not found a company where there is a role model worthy of being copied. Or if there is, that person does not want to get the public notice. We have found it useful to provide our corporate clients with copies of the television series M*A*S*H. There still are episodes on cable television. DVDs may be purchased by typing "M*A*S*H DVD" on an Internet search engine.

M*A*S*H stands for Mobile Army Surgical Hospital and the series takes place during the Korean War. The M*A*S*H physicians meet three criteria outlined earlier:

1.     Chronically undermanned and under resourced and yet they have to perform well.

2.     Concerned about the future. In the show, most of the doctors are draftees. They do not buy-into the war or see that the government has a way out of the war.

3.     Personal concerns. Pain, death, and disability are daily issues.

Colonel Sherman T. Potter (played by Harry Morgan) is a regular Army leader of this group. His mission is to insure operational effectiveness while keeping morale up. In other words, his focus is Espirit de Corps. What does Colonel Potter do that makes him such a great role model for Phase Two of a Hunker Down?

With His Troops. Colonel Potter is never accused by his physicians of "not knowing how difficult our conditions are." During times of crisis, he will conduct surgery. He is usually walking around and talking with his troops rather than sitting at his desk writing memos. Indeed he delegates all administrative tasks to his administrative assistant, Radar.

Low Status Images.  Beyond the mandatory insignia of rank, Colonel Potter managed to avoid images suggesting that he is better off than his fellow soldiers. When Colonel Potter speaks about recreation he speaks about simple things like fishing. The message is "we are all in this together."

Encourage Celebrations. The M*A*S*H unit was always looking for an excuse to party and Colonel Potter would be there to celebrate. Celebration of small success is critical during these times. People need frequent, concrete reminders that their team is moving in a positive direction. Colonel Potter would be there to celebrate.

Readily Expresses Appreciation. "I Really Appreciate What You Did" is a phrase Colonel Morgan utters over and over again. Observe how often he uses the names of subordinates in sentences. People need personalized, positive reinforcement.

Give Small Luxuries to the Team for Small Steps in the Right Direction. In addition to having the right leadership role model, stage two programs focus on creating team-based compensation for jobs well done. In the absence of ability to provide employees with significant financial rewards, take every opportunity to reward the team for small success. These opportunities could include the team being given movie tickets or a prepaid gas card, gift certificates for dinner, a night at a hotel, etc. Reward the team and not the individual. Focus the reward on small luxuries that people may have eliminated during their personal financial cost cutting.

PHASE THREE: PLAN FOR THE FUTURE BEFORE THE FUTURE ARRIVES.

Planning for the future before the future arrives when a company is in the middle of a recession can make as much sense as planning for a picnic next Spring when the snow is still on the ground and it is freezing. Focusing on a more positive future needs to compliment the day-to-day focus on getting through the day. Successful companies put together task forces to develop scenarios that link the company's current strategy to how the unit can make its biggest contribution on a corporate-wide within 30 days after the company once again goes on the offense. What plans need to be implemented immediately to help the unit quickly rebuild once the Recession is over? Can top management agree to allow for time to conduct informal meetings with potential employment candidates today that the company might want to rapidly hire in the future? Can the company spend more time with customers today to set them up for the future?

IF IT IS DONE RIGHT

It can take a mid to large cap R&D focused company 6-18 months to fully recover and move into growth. Effectively managing a Hunker Down means faster recovery. Effective management of hunker downs may not have as much gratification as managing high growth, but it is an important, practical leadership skill all serious business students need to master.

A training implication is that clips of the Colonel Potter character on M*A*S*H can be shown to stimulate conversation about the proper leadership model required to keep morale up during stark times. The Colonel Potter character is not charismatic. And yet, his very bright doctors galvanize around him. Is that just television fiction? We think not.

hWt

REFERENCES

Brockner, J. Grover, S., Reed, T.,Dewitt, R., O'Malley, M. (1987) "Survivors' reactions to layoffs: we get by with a little help for our friends." AD MINISTRATIVE SCIENCE QUARTERLY, 32,2, pp.526-541.

Brockner, J., Grover, S., Reed, R., and Dewitt, R. (1992) Layoffs, job security, and survivors' work effort: evidence of an inverted-U relationship. Academy of Management, 35 (2), pp.413-425.