Layoffs worry remaining workers

As the laid-off -= referred to as “victims” by workplace psychologists — line up for unemployment checks, the remaining employees — “survivors” — are left picking up the slack and cowering in their cubicles asking, “Am I next?”

Acute job insecurity might spur harder work and productivity gains initially, researchers say, but in the longer run it breeds anxiety and timid conformity in the work force — at the very moment when creativity and new ideas are most needed.

It’s not pretty out there: In November, a half-million people lost their jobs, the biggest monthly loss in 34 years. The total number of unemployed Americans now stands at 10.3 million.

“The vast majority of effects” of layoffs on the residual work force “are negative,” said organizational psychologist Rainer Seitz, a consultant and a psychology instructor at Washington State University in Vancouver.

Some productivity gain can be seen initially as remaining workers feel the pinch of job insecurity, he said. Workers are “producing at a higher level because of increased stress and fear.”

However, as the survivors scramble to fill the void, they lose an often essential component of productivity — and even more so, success — namely, creativity, said Mitchell Marks, a professor of organizational psychology at San Francisco State University.

“People are much less likely to think outside the box at exactly the time when their company most needs them to do so,” Mr. Marks said.

By simply cutting the head count, the company looks better to Wall Street initially, but in the long run, nothing has changed except for the head count. The product and the way of doing business are the same. That usually is not enough of a turnaround to make the company successful, Mr. Marks said.

Fresh ideas are what downsizing companies need, but people lose their creativity during times of stress and fear because diverging from ordinary thinking inherently carries risk.

Simply put, people become averse to risk — not to mention deprived of time.

If a department slashes 50 percent of its work force, Mr. Marks said, who among the survivors has time to brainstorm about new and better ways to operate?

Stress also can cause workers to become sloppy, distracted and gloomy. Some employees who feel their jobs are at risk and want to better control their destinies may devise schemes to shine positive light on themselves — and dimmer views on colleagues.

“They will promote themselves by pointing out flaws in others’ work,” Mr. Marks said.

Contraction of the labor force during an economic slowdown is natural, economists say. In some cases, the survivors pick up the duties of those laid off, and the demand decreases enough that the need to refill an old position is eliminated.

However, the picture changes when the economy eventually accelerates and pressures on increased productivity mount, said Peter Morici, a University of Maryland economist.

“You can’t use [the survivors] at capacity forever,” Mr. Morici said. “It’s like a football team. They can only play at 150 percent for a short time” before they feel burnout.

One key to alleviating negative “survivor” effects lies in the manner the layoffs are conducted, workplace psychologists say.

In 2006, RadioShack Corp. became the poster child for how not to conduct layoffs when the electronics retailer notified hundreds of workers via e-mail.

Negative effects are diminished, Mr. Seitz said, when workers perceive that the layoffs are conducted respectfully, fairly, openly and with dignity.

The psychologists also say it helps to include the workers in the layoff and reorganization process, because the people on the ground can help identify tools for better work flow and product improvement.

It’s also crucial to show employees that management cares. Allow “survivors” to let off steam at venting meetings and emphasize that layoff-related anxiety is normal, Mr. Seitz said.

After the layoffs, employers can ease survivor stress by reducing weekly staff meetings and providing things such as flextime and free recreation.

“The company has a lot to gain by showing empathy for what their employees are going through,” Mr. Marks said.