Here is the interesting article i found on HBR.
Please readby!
———————————————
Posted by Bob Sutton on July 31, 2007 11:32 PM in Harward Business Review
Over the last two weeks (1, 2), I’ve looked at some of the best ways to manage layoffs. A study by Christopher Zatzick and Rick Iverson of Simon Fraser University, published in the Academy of Management Journal last October, adds an interesting twist. They found that layoffs have the most negative effects on subsequent performance in “high involvement” workplaces. These are workplaces where employees have more decision-making authority and responsibility and greater emphasis is placed on the importance of human beings compared to traditional workplaces. As Zatzick and Iverson conclude, this finding makes sense, because when members of an organization have been treated especially humanely, given substantial authority, and persistently told how much they are valued, layoffs violate the “psychological contract” between the organization and its people. In contrast, organizations that have a history of treating employees in less humane ways and giving them less power, and then do involuntary layoffs, aren’t breaking any implicit or explicit psychological contract — employees don’t have as much reason to believe that such treatment is breaking any promises. This may all sound like evidence that “no good deed goes unpunished.” But Zatzick and Iverson did find that high involvement companies that stuck to their practices during downsizing rebounded more quickly than those companies that abandoned high involvement practices after implementing layoffs. So two lessons emerge from this research:1. If you run a “high involvement” or especially humane organization, layoffs will do more initial harm than if your organization uses more traditional practices. So it is especially essential to use layoffs as a last resort when you have a history of treating people well. 2. If you do feel forced to implement layoffs, stick with the high involvement work practices. Productivity will recover more quickly than if you abandon such practices. More generally, a large body of research (see Jeffrey Pfeffer’s book The Human Equation: Building Profits by Putting People First) suggests that when organizations treat their people well (in terms of pay, empowerment, respect, using layoffs as a last resort, and so on), they will consistently outperform competitors over the long haul. Such research suggests that when leaders see employees as replaceable cogs in the organizational machine, as little more than “units of production,” they are not only denying the humanity of their people, they are also are likely to cost their companies — and themselves — some serious money down the road. P.S. For more on this topic, I recommend reading The Disposable American: Layoffs and Their Consequences, by Louis Uchitelle.
HARVARD BUSINESS ONLINE RECOMMENDS:
Lead Change–Successfully, 3rd Edition (HBR Article Collection)
Winning Your Employees’ Trust (HBR Article Collection)
Managing Change (Interactive CD-ROM)
Business 2.0 