In the News

Morale, Performance Slump After Layoffs
Employers discover uneasy, stressed-out workers
aren't productive
By Stephanie Armour
USA TODAY, July 30, 2001

There’s a downside to all this downsizing. Mounting concerns over job cuts have managers grappling with a surge in job-performance problems.

  • Work quality is declining. Some employees are so concerned about layoffs that work is suffering. ComPsych, a Chicago-based employee-assistance provider, has seen a 20% jump in calls from employers wanting help with workers’ performance.
    “You’re seeing people whose performance is deterioration because of the stress of the economy and increased demands,” says Richard Chaifetz, CEO of ComPsych. “How do people deal with stress and the unknown? A lot of people retreat into a shell.”
  • Injury rates are up. Employees in an environment of job insecurity are less likely to follow safety rules and more apt to experience injuries, according to a new study in the Journal of Occupational Health Psychology.
    “If employees feel production is of primary concern, they’re going to focus on production and take safety risks, says Tahira Probst, assistant professor at Washing State University at Vancouver. “Their physical health is also affected. They’re more stressed about job insecurity and have more headaches, insomnia and ulcers.”
  • Workplace relationships are suffering.The recent economic downturn has led to an 11% decline in satisfaction with relationships between co-workers and supervisors, according to a study this year by Rutgers University and the University of Connecticut.
    “If you have a lull in customers, it can really de-motivate people,” says Rohan Mahadevan, CEO of Aftermind, a Fremont, Calif.-based provider of integrated technology and services solutions.

    • At PeopleSupport, a provider of Web-based customer care solutions, managers have seen some workers improve performance because of the uncertain financial outlook. BuT that’s not always the case.

    ”Some people get into analysis paralysis, where their work suffers because they’re so worried about what’s around the corner,” says Raul Birdseye, director of St. Louis operations.

    Experts say the morale, performance and other problems stemming from job cuts can have a bottom-line impact that employers often underestimate.

    ”Companies take these knee-jerk reactions and cut people, but they don’t expect the fallout,” says Perry Ludy, author of Profit Building: Cutting Costs Without Cutting People. “After a layoff, there’s survivor syndrome. Digging yourself out takes money and time.”

    Many managers feel they can’t let such problems slide, experts say, because productivity is at a premium now that companies are becoming leaner.

    ”Some people, when they feel vulnerable and stressed, don’t take charge. They feel they’re victims of the situation,” says Vivian Golub, an organizational consultant and president of San Jose, Calif.-based Ariel Consulting. “But companies are much more ready to deal with such performance issues.”

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