Posts Tagged ‘layoffs’
“Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as the end.”
After reminding my daughter what is was like when I gave birth to her, with my wife smiling peculiarly in the background, I often remind her of what things were like when I was growing up. I regale her with stories of how we made do with so little compared to today. For instance, I don’t know how many times I have described how I used to carry my little sister to and from school on my back, while barefoot in the snow, uphill, both ways – – before breakfast. And how when my shoes got a little small, how we would cut off the toes (of the shoes), to make them last just a bit longer, or how we lived in a house so small, that you had to be careful not to break the window in the back when you put the key in the front door to unlock it. And after amusing ourselves just a bit with these tales, it tends to take on a more somber note as we realize just how lucky we really are.
When we were kids we had a much better standard of living than what our parents had and lived in much better circumstances, and if you go back one additional generation, circumstances and living conditions were truly awful. My mom’s parents had gotten as far as Ellis Island in the late 1910’s before being told that the quota was full. They were given a choice of Canada or Cuba and I guess Cuba sounded warmer. So my mom was born in Havana, Cuba, her first language was Spanish with a heavy dose of Yiddish, and Russian. Her dad started off manufacturing ties in the living room of their small rental apartment at night and then took to the streets during the day to sell his wares. For one of her birthdays she got a roller skate, just one, as her parents could not afford one for each foot, so she learned to skate using just one of those old fashioned skates with four wheels, one in each corner. When her shoes did wear out, with a hole in the bottom, her father would carefully cut newspapers to line the shoes so that they would last just a bit longer. And after that unexpected side trip and struggle in Cuba, twenty-some years later they finally made it to the USA, their dream, where my mom and her parents eventually became naturalized US citizens. She was introduced by a cousin to my dad, who was returning from WWII, after serving in the army in Europe, doing stints in England, France and Germany, and they soon fell in love and got married.
My dad, of course, had no end to the stories he could tell about what it was like growing up in Providence and Brooklyn. He was the oldest son of three, born in 1920, just a day after his parents landed in New York and that accident of timing made him an instant US citizen. He remembered how horse drawn carts would deliver milk and other goods to the various neighborhoods as he was growing up and how a Coke and hotdog was 5 cents. His father worked repairing radiators in the streets of the lower east side of New York (and was exposed to some nasty chemicals that likely finally killed him) and eventually saved up enough money to open a small candy shop in Brooklyn, and after that did not work out, became a furrier in the garment district. Two of my grandparents three sons fought for this country in WWII, one in the Pacific Theater (who slightly exaggerated his age at enlistment) served in the Navy and one in the European Theater in the Army. The third son was too young at the start of the war to serve. All three brothers now lay side-by-side in a cemetery just north of New York City.
The thing that is the most remarkable about these stories is that while the details of the events may be, the essence of the stories are not unique, with the vast majority of families in the USA today able to share similar stories of their own family’s struggles and tumults as they sought to gain a foothold in this great country. When you look at the bigger picture, we are a nation, by and large, of immigrants and we are all more similar than we are different. The drive and desire that the immigrants brought with them powered us to the heights that we have achieved. Yet there are those who tend to look for the differences between us rather than the similarities that bind us together. Differences can of course be found if you want, but we are better served by examining and building on our similarities. Most of us for instance, want a better future for our children than what we or our ancestors may have had or at least one similar to our own. All of us want to be treated with respect and dignity, our humanity being recognized and valued. We all want to be given a fair shake by society, an equal chance to succeed, as others have had. And we all want to be able to pursue our cherished dreams, our happiness that our constitution lists as a fundamental right.
The same holds true in the world of work, and no one should be surprised by that for the world of work is nothing more than a reflection of our society as a whole.
Utilitarian philosophy as described by John Stuart Mill and Jeremy Bentham is a worldview that societies should exist and decisions should get made in service of the greater good, majority rules. That logic can be used when laying off workers, the greater good of preserving the organization and jobs for the other employees being served. But it is not difficult to knock holes in the efficacy of this approach for every situation. For instance, say you were a doctor and had 5 very sick people in your office. Two needed kidneys, one a lung, one a heart, one a liver. In the next room you had one healthy patient. That one healthy patient, if sacrificed, could save the lives of the 5 other people and thereby increase the greater good, by donating the needed organs. Does that one person, representing a minority in that doctor’s office have rights to keep his organs, even though it would serve the greater good to give them up? Of course it becomes rather obvious that we don’t make decisions that way when it comes to such an example. But that argument was used by the advocates of Proposition 8 in California which barred non-heterosexual marriage, that simply because the majority (52%) of Californians voted for it, that homosexuals and lesbians were forfeit of their rights. What if the 5 sick patients in the doctor’s office voted to have the organs removed from the only healthy patient? Would that fly?
John Locke, widely known as the father of liberalism, countered that approach by stating that man has certain inalienable rights, that even if the majority or the greater good is not served, that each individual has the right to life, liberty and property, which Thomas Jefferson broadened out later on to life, liberty and the pursuit of happiness. One major point of Locke and Jefferson is that majority rule could not simply erase the rights of an individual even if that individual was a minority of one; these inalienable rights were fundamental and as such could not be pushed aside by legislative decree. And building on that, Kant’s moral imperative can be summed up as not treating people as a means to achieving your own self-serving goals, but treating them in accordance to their humanity, as humanity is the end state which we all have in common.
Back to the world of work. Many organizations today benefit from their ability to promote their products as being “green”. One recent research study concluded that being green was not a passing fad, but that it is here to stay and those companies that operate in a green fashion are more likely to have greater increases in sales than those with similar products, but are not as green or green at all. So here is a question that I pose. Given what roles humans have in organizations, how do we create organizations that are “GREEN” when it comes to their PEOPLE and not just around their products and services? How do we employ people in a sustainable fashion? How to they treat people so that they support the notions of life, liberty and the pursuit of happiness and treat people for the sake of their humanity and not as a means to an organizational end? Are the rights of the individual forfeit when it comes to organizational or employee life? What are the obligations of organizations to operate in such a manner that reflect the greater values that we as a society have adopted?
I would expect, of course, a great diversity of thought.
© 2010 by OrgVitality, Jeffrey M. Saltzman. All rights reserved.
Visit OV: www.orgvitality.com
“When the tide goes out, you can see who’s been swimming naked.”
Warren Buffet on leadership in a recession.
How do employees react during a recessionary period? What happens to their attitudes about work and the work environment? What about their perceptions towards leadership? And most importantly do those attitudes, or shifts in attitudes actually affect organizational performance? The information that has been distributed on this topic over the last couple of years has been somewhat less than clear, or at the very least has been sending mixed interpretive messages. Some of the reported data has indicated that employees on a whole are less positive, less engaged or as some term it actively disengaged. That finding could represent a possible reaction to the somewhat harsh measures that some leaders adopted as they attempted to increase the odds of organizational survival during a deep recession.
Other reported findings strongly affirmed that employees are more positive now than prior to this recessionary period, possibly as a result of realizing how ugly things are on the outside, so the inside is looking pretty good. That would be a result underpinned by both frame of reference comparisons and the notions of cognitive dissonance, the need to resolve conflictual cognitive positions (e.g. even though I used to really hate it here, the place must not be so bad since I am staying). Categorical statements, that something is all one way or the other, black or white, raise my warning antennas and so one is left wondering, is it possible to look across the various reported results, many of them stated in a categorical fashion, and make some sense of it all? Scott Brooks, Walter Reichman and I did just that and here is a summary of some of what we found.
Methodological observations regarding the reviewed reports:
Some of the reports we reviewed1 are based on client data, meaning data that has been collected from clients during the course of a consulting firm running their employee surveys. Client data over the course of a few years can change, depending on which clients the consulting firm happens to have, what survey cycles clients are on etc. One industry for instance that may be well-represented in the norms during normal economic times like retail, and has been hard hit by the recession may cut costs by delaying or canceling their survey, and so their industry may be underrepresented in the data during a recessionary period if the norms are client based. So when examining client data over time you may not be looking at an apples-to-apples comparison even if the data is coming from a single source such as a consulting company.
Additionally, surveys of clients that occur during recessions may represent clients that are weathering the recessionary storm slightly better than most, since the budget for collecting the data has not been axed, or the data may be coming from organizations that are deep adherents (at least more so than others) to the notions of collecting and measuring certain aspects of employee attitudes, employee engagement being one of those. And of course the employees themselves who are being surveyed in client based norms are the survivors, those who have not been laid-off, which may also have an impact on their attitudes, especially when compared to the general population. One approach to correcting some of the issues with client-based research is the use of a standard basket of companies for tracking purposes, similar to the Dow Jones Industrial Average methodology. That could be achieved through a consortium of companies who agree to share their results. That would fix the problem of which companies are included (since it would be standardized) but not who from each company is included (during a recession we would still be surveying only survivors).
Some of the reports that have attempted to shed light on the state of employee attitudes during this recession are based on random sample surveys or stratified random samples (meaning you make sure certain demographic categories, such as senior managers, or females etc. are adequately represented). These data are not client based, but rather are gathered from people who have agreed to complete surveys, usually for some kind of incentive, for instance, a chance to be entered into a lottery for each survey they complete. These surveys include a cross section of people, some employed, some under or unemployed but if sampled correctly are representative of the population as a whole, not necessarily the employed population, or the population from companies that care enough about employee attitudes to be out there measuring it. Depending on how the sample is drawn they may come from private and public sector organizations, government as well as not-for profit. It may include those working full-time as well as part-time. One issue of course here is the motivation that these individuals have for completing the survey. Many of them, we have to assume, are not doing it for the sake of the research, but rather in a fashion to maximize their ability to achieve whatever incentive is being offered. (That is why it is called an incentive.) That creates a question in many minds of just how these people will respond, and will they take the survey seriously.
One conclusion from looking at all of the data that gets put out is that unless it is clearly stated in the report, and often times it is not, and the methodology explicit, you really don’t know who is included in either client-based or in random sample survey reports and hence the conclusions from one report are not all that easily compared against another.
Some broad trends we saw:
- “Engagement” during this recession has not declined. With an eyeball meta-analysis, the actual change may be slight improvement, perhaps 2-4 percentage points over the last year. This “surfs across” potentially meaningful differences in sampling, methodology and varied definitions of how you measure engagement. But those institutions that describe engagement as declining are in the minority.
- Not all employee opinions act the same way, moving up or down in lockstep.
- Stress is increasing.
- Opinions about leaders have fluctuated.
- US Employee Confidence hit a low 1Q09 and has not returned to the 2Q08 baseline.
- One conclusion is that “engagement” may not be the best indicator of the strain of the recession on the employee population and hence organizational performance.
- There is no “overall” recession impact across all survey topics
- There is evidence of polarization within some organizations. While different across different studies, there seem to be segments (levels, functions, etc.) within the organization showing divergent trends:
- Perhaps while engagement goes up, there is a growing core of actively disengaged employees.
- Executives and middle management respond differently, though exactly which layer feels the squeeze most keenly is not clear from the reports (and they likely differ organization-by-organization… as is clear in some cases among our own clients).
- Increasing frustrations (driven by increasing workload and lowered rewards/benefits) among high performers/high-potentials put them more at-risk for eventual voluntary turnover.
Some More Detail:
One concept created a good number of years ago called Employee Confidence© has been tracked quarterly since June 20083, by asking employees about attitudes towards their company’s internal as well as external performance (organizational performance). Internal covers such areas as business processes and leadership and external covers the attractiveness and value of products and services offered to the market as well as competitive positioning. Also tracked has been people’s perception of their personal situation, again both internally and externally. The internal situation deals with perceptions of job security and future prospects at current employers, and the external with being able to land on their feet elsewhere if necessary by finding another job. (To be part of this tracking study, which cut across the 12 largest economies globally, you needed to be: an over 18, full-time employee in the private sector, in a company with at least 100 employees. Data was collected quarterly on random samples of 5000 in the USA and 1000 in each of the other countries, with the exception of Russia where the number was 500. Incentives were used. The data was compared to known demographic characteristics of the working population in each of those countries.) Taking a step back from all the data, both from this Employee Confidence sample and from client based data, and drawing some insights and overall conclusions, or at least observations what we see as highlights include:
About Employee Engagement:
In 2008/2009 you generally did not see declining employee engagement scores at organizations (there was the occasional exception). The scores were flat at worst but most were actually rising with many hitting heights not seen within the organization prior. This was in spite of the general concern among clients that engagement would decline during the recession. Some of this can be attributed to good management taking action on important issues and some is environmental, a response to the concern that people have about losing their jobs. One notable study had a client with 7 point rise in their employee engagement score across about 25,000 people. A determination was made that 2-3 points of that rise was likely due to management actions and 4-5 points was due to the environment. (Drop me a note if you want to know how that was done firstname.lastname@example.org).
About Employee Satisfaction:
In many cases however, items that were markers of the employee’s current state of satisfaction with their situation declined. By way of explanation, a person can be very unhappy with increased workload and stress, with their 401k losing substantial value, with no company match, no raises, friends being laid off, increased concern about their own job security, perhaps seeing management taking care of themselves before the rank and file, but that person can still be engaged in their work. As an example, a person can be very engaged at their employer making buggy whips as Henry Ford is in the next building figuring out how to mass produce cars. They are engaged, working diligently to produce the best buggy whips in the world, but their level of engagement does not stop the world from changing nor does it assuage increased concern at seeing the world changing with perhaps the employer not changing or not changing fast enough to keep up. A corollary to this is the false notion that employees who complain are not engaged. They in fact may be the most engaged as they are trying to communicate to the organization information to head off a potential disaster as they see it.
While some people/organizations measure satisfaction and engagement with the same items, they are clearly different constructs. (Of course there is no agreed upon set of items in use to measure engagement within the employee survey industry which may account for some of the reported differences).
About Job Prospects and Job Security:
Being able to find other employment if necessary, which is normally very favorably rated, began to decline and has remained at or near the bottom of all the items tracked. Most normal people by nature tend to rate their skill sets highly and see value (beyond what others may see) in what they can do. This makes them normally very confident in their ability to find another job should the need arise. The precipitous decline in this dimension is a fundamental shift in people’s confidence (it has rocked their world and how they self-perceive) and affects all sorts of behavior including buying patterns and a willingness to tolerate intolerable conditions at an employer. As this score recovers we will see people who had been staying with an employer because of a lack of opportunity elsewhere move on with a corresponding increase in voluntary turnover. This may be starting already as for the last 3 months voluntary quits has surpassed layoffs as why people leave jobs and for the 15 months prior to that layoffs surpassed quits.4 This finding is perhaps giving an inkling of what is to come.
Perceptions of job security at the beginning of the recession when all the layoffs started were understandably in steep decline. This lasted through the first quarter of 2009 and roughly corresponded to when a massive bulge of layoffs occurred with 3979 mass layoff events occurring in 1Q09, a record high affecting 705,000 people5. This also corresponded to the lowest Employee Confidence scores recorded. However, once that bottom was hit there was a rather sharp rebound later in the year. One possible interpretation is that employees felt that the organizations had cut to the bone and could not cut any more. Employees felt that they had survived so far and so where likely to weather the storm. Exceptions to this pattern of decline and then rebound occurred in industries that were weathering the recessionary storm rather well including healthcare, education, government and food service. They did not see nearly as much of a decline. Females were more positive about job security than males, not because they were females, but because of an over-representation in industries that were doing ok. The gap between males and females disappeared when the rebound occurred, possibly due to the males feeling that all the cutting that was to be done had been carried out.
About Business Process:
During this recession it was pretty clear in the data that the majority of employers were trying to cut their way to profitability, rather than innovating with new attractive offerings or by moving into new markets. They were revamping internal processes, laying off people, cutting budgets and benefits. They were looking inward rather than outward to find solutions to their performance problems. And while it is always healthy to improve internal organizational performance, in this case it is a rather risk adverse approach compared to modifying the products and/or services being offered. It is more of a sure thing to cut back on costs rather than create products that people find attractive, even in a recession, as a way to protect margins in the short term. Not every company took that path however and historically companies that have been started in recessionary periods included: HP, GE, Burger King, Fedex, Microsoft, CNN, Trader Joes, and our own OrgVitality. Each one creating a path to success based on offering attractive and valued products and services to the marketplace that were relevant to the economic time period in which they found themselves. In this recession Autodesk, Nucor, Colgate Palmolive, Apple, Coca Cola, Target, McDonalds, Dunkin Donuts, and Google among others for instance have done quite well by developing new and innovative products and by moving into new markets.2
About Organizational Effectiveness and Leadership:
At the beginning of the recession, the back-half of 2008, management was given the benefit of the doubt and was given stable or slightly increasing scores from the rank and file regarding their job performance. Of course you need to keep in mind that the rank and file during this period are the survivors, those who had not yet lost their jobs. As it appeared that the recession was going to get really ugly in the first quarter of 2009, the rank and file lost a lot of confidence in management and performance ratings on management plummeted. The realization hit that there was no magic bullet that the recession was going to be painful and deep and of a long duration and the blame, at least partially, was laid at management’s feet.
Ratings of leadership over the last year and a half or so have been very volatile with some organizations reporting extremely favorable ratings on leadership while at the same time others are reporting the poorest scores of recent memory. There has also been more divergent trends within organizations, often with vital groups perhaps feeling more stress than others (e.g., VP levels) declining dramatically while other levels are able to maintain or improve. A sharp recovery was noted in the perceptions of the job being done by management, as rated by employees, during the back half of 2009 as many of the programs designed to temper the recession began to have an effect among those still employed and further draconian layoffs were not as prevalent.
About Geographic differences in the USA:
If you compared the attitudes of employees against the unemployment level at the state level a significant relationship was found. In other words, in general those states that were exhibiting higher levels of unemployment were generally those where employees had the lowest levels of confidence. Some interesting patterns and exceptions to that statement emerged.
Those employees in southern states tended to be more positive than their unemployment level suggested they should be. In general, those in the mid-west were less positive than they should have been with the notable exceptions of Nebraska, the most positive single state and the state with the lowest level of unemployment, and Michigan with the highest level of unemployment and the second lowest level of employee confidence. Those states located in the northeast and west had employee attitudes as predicted by their unemployment levels with the exception of Oregon where employee attitudes were less positive than they should have been. The states that were exceptions certainly had the attitudes going in the predicted direction given their unemployment levels, it is just that the corresponding employee attitudes were more exaggerated than expected in either the positive or negative direction.6
- The recession has put organizations and employees on edge. While dealing with the increased stress and load created by aggressive cost-cutting, employees have a heightened sensitivity to leadership messages and missteps and organizational cues regarding the future. Critically, employees watch how the crisis has revealed the organization’s commitment (or not) to its stated values.
- As a result of this sensitivity, organizations may experience greater swings in engagement and/or satisfaction through the recession (the two not necessarily being related or moving in the same direction), though the swings may go in either direction and may be concentrated within a specific population. These swings may occur within key segments (e.g., management layers, functional areas or performance levels).
- But changes in survey results seen across clients lead to a conclusion: the recession isn’t the only cause of changes in employee opinions and engagement in particular; it’s the organization’s response to the recession.
- In many cases, employees have rallied behind their organizations’ recovery efforts, and are as engaged or more engaged than ever. In part, they are not simply comparing the “now” to what was. Clearly they understand that the crisis has demanded dramatic change, and they have hunkered down to help. To some extent they may compare themselves to other cases of what might be, for example to the failings of other organizations or to their unemployed acquaintances.
- One way to sum it up is that the recession has become a test of Vitality including strategy, values, behaviors, organizational agility and resiliency. Organizations are not passive players regarding the degree to which decision-making authority is sucked upwards, open communication is stifled, leadership commitment to values are maintained, or the emphasis on service remains central. Certainly, it has become harder to invest in employees. But in many cases, employees understand that and may take even greater pride in how their organizations handle the recession.
1Sources of published findings which were reviewed included: OrgVitality, McKinsey, CLC, Metrus, Valtera, Modern Survey, Kenexa and Towers Perrin among others.
2The Business Week 50, Business Week, March 26, 2009
3The Employee Confidence Framework was developed by Jeffrey M. Saltzman.
4 MSNBC June 9th, 2010
5Bureau of Labor Statistics; http://www.bls.gov/news.release/pdf/mslo.pdf
6Saltzman & Brooks, “Strategic Surveying in the Global Marketplace and the Role of Vitality Measures”, appearing in “Going Global” (Kyle Lundby, editor), 2010 Jossey-Bass
© 2010 by OrgVitality, Jeffrey M. Saltzman. All rights reserved.
Visit OV: www.orgvitality.com