Impact of Downsizing on Corporate Culture
Tracy Gibbons, Ph.D. and Randi S. Brenowitz
article appeared in Data Center Management, July/August 2001.
the luckiest businesses in any industry will survive their entire
lifecycles without experiencing the wrath of what is euphemistically
called corporate downsizing. Historically, the pre-, present and
post-downsizing environment are never envied, and emotions run
high. Regardless of the rung to which one has aspired, there's
really no safe zone during a corporate downsize of any kind.
senior management may be able to elude some layoffs, they are
the ones responsible for carrying out the process, thereby terminating
people who may have dedicated many years to the company. Clearly
an undesirable task. From another perspective, we must consider
the employee being laid off - the victim who is about to face
the psychological and emotional hurdles that come with this experience.
Finally, there are the survivors who are typically not considered
the aftermath of downsizing, the math is simple: fewer people
are left to do the same or increased amount of work. The organization,
once designed for and built around a greater number of people,
is now left in a state of imbalance. While survivors usually move
from denial to acceptance, with varying degrees of success, they
often struggle to get there. Since the data center is often considered
the heartbeat of most organizations, it must get back on track
quickly after a downsizing. The ongoing flow of information is
critical during downsizing and the data center holds the key to
much of it. Taking the necessary time in advance of layoffs, to
plan cautiously and communicate proactively, can increase a company's
likelihood for a successful outcome.
Downsizing: The Data Center Manager
the past five years, data centers have grown in both size and
complexity. Managing various hardware platforms, multiple operating
systems, numerous applications and a constant stream of information
is challenging, even when organizations are fully staffed. For
this reason, data center managers must approach the decision to
downsize the organization with caution and prudence. The department
they oversee is responsible for with the flow and control of vital
information. Staff in the data center work closely with virtually
all systems, and companies are ill advised to ignore their significance
during a time when changes in this flow are imminent.
Blair, editor of The Organization Development Practitioner (Journal
for National Organization Development Network), says we're currently
experiencing the second major wave of downsizing in corporate
America. "We have a lot more information available this time
about the ramifications of downsizing," Blair says. "Readying
the people who will be staying is as important as any piece of
the process." She notes that whether this is done in advance
of layoffs or as a linear process isn't nearly as important as
just making sure it is addressed.
resistance felt during most layoffs results largely from changing
all that was familiar to a company's employees, as well as from
the fear that they could be next. Few are motivated by such immediate
and unanticipated change, which presents management with a huge,
yet opportunistic challenge: operating the company using smarter,
less labor-intensive tactics. Meeting these challenges begins
and ends with the practice of open and honest communications.
This is essential for organizations to continue functioning during
no corporate downsizing can be made comfortable and easy, the
layoff process is not without its available options for easing
the tension. For example, practicing consistent, proactive communications.
Managers who are respectful of their employees make it a habit
to communicate the status of the company's operation at regular
intervals. They don't wait for the need to downsize before they
look at policies and how to implement them.
organizations that hit employees with layoffs unexpectedly, the
true impact is felt and the real costs begin to accumulate the
morning after D-day. It comes from not only those laid off, but
those who live day after day wondering when their numbers will
come up. Internal sabotage comes in many shapes and sizes, but
it is never so rampant as it is after a layoff, with data centers
running the highest risk. Computer operators know those machines
unlike any others. They know the passwords, and they know how
to spread the effects of a chain reaction from one end of the
system to the other. In data centers specifically, proactive communications
triggers the mutual respect necessary to assure data integrity
and uninterrupted access to certain files.
computer programmer, who worked on the payroll system for a large,
regional financial institution, was desperately seeking management's
support to modify the system as it had a weak user interface.
Ultimately the day came where his department was blamed by other
computer division managers for the growing inefficiencies. The
morning that he walked in and found that half of his department
had been laid off, he and a cohort planted a logic bomb in the
system. With access to all the right passwords, they were able
to enter the payroll program and write a new section that would
instruct the program to delete it the very next time it operated.
The result of the chain effect and the time necessary to fix it
was an overwhelming and costly task.
Survivors: A Lost Sense of Purpose
job of downsizing is brutal to those responsible for the actual
task of termination. Perhaps this is because, under normal circumstances,
all the pre-downsizing efforts are focused on who will be leaving,
rather than on those who will be needed to keep it all together.
of the survivors of a downsized company initially act out through
rebellious silence, which tends to evolve into interpersonal conflict.
Suddenly strangers are expected to work side-by-side, as though
they could pick up where old-timers and former colleagues left
off. Blair points out that the tendency of data departments is
to increase their staff during the good times, which causes the
whole organization to rely more heavily on their output. "Once
there's a downsizing, there is anger, in general, toward the data
center," Blair says. "And data center workers must not
take on this anger
they need to understand it, but they
must not take it on as guilt."
do survivors feel inspired about the task at hand, and those who
do seldom have a sense of direction or a set of guidelines from
which they can make decisions. In short, they lost the strong
sense of purpose and accomplishment they were enjoying only a
few days before. Production, quality control and customer service
screech to a halt as the organization reconfigures.
of the toughest jobs during a post-layoff is managing the survivors.
It's the reason companies spend millions of dollars each year
hiring specialists, consultants and/or psychologists to help motivate
the survivors and offer them a renewed sense of purpose.
a time when they're feeling the lowest, middle management must
perform their best. Although the company appears to be in a state
of chaos, managers must seem calm, confident and in control. It's
their job to begin allocating tasks, confirming work objectives,
making sure people stay focused on appropriate tasks, and pulling
together a new team. Clearly this is a time when employees need
specific directions and the resources to implement them. Having
this guidance lessens a survivor's typical focus on loss of job
security and begins the process of rebuilding their sense of purpose
many companies may not realize is that the design of an organization
cannot withstand such turbulence without some degree of consequence.
Senior management cannot assume to rebalance the company's design
by moving around a few boxes on the organizational chart. The
fact is that organization design goes beyond the company structure.
It addresses issues more systemic than the lines, boxes and arrangement
of people and functions.
includes such factors as information and reward systems, management
and decision making processes; mission, vision and values; business
strategy and people. It requires that these elements be considered
and weighed in relationship to each other, that trade-offs be
made and balanced, and that the best fit of all the elements are
determined. It acknowledges that the infrastructure of an organization
is a source of competitive advantage and that the failure to attend
to designing and sustaining an infrastructure that best supports
the business and human needs of the organization contributes significantly
to its dysfunction and decline.
a company establishes its primary strategy and purpose, it lays
the foundation for other elements such as structure, processes,
people and rewards. Post-downsizing efforts must include a revision
of this company strategy, answering the numerous questions that
will begin to restore order to an otherwise chaotic situation.
to Ask During Post-Downsizing
answers to these key questions often provide guidance and next
steps for organizations that need to re-build after a corporate