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Managers Facing A Different Kind Of "Hangover"

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In the aftermath of a season of over-indulgence, many of us will continue to feel the effects for quite some time. Be it in the pocketbook or on the treadmill, there's always a price to pay for our actions.

For managers who have recently presided over layoffs (and boy is that a growing category), a hangover of a different kind awaits.

A recent Vault survey invited employees to sound off about the layoffs that 74 percent of respondents reported either experiencing directly or witnessing at their firm. Unsurprisingly, the survey elicited some passionate responses from that number and some of what they had to say—especially those still fortunate enough to have jobs—have serious resonance for those tasked with managing them in the coming months and years, not to mention some lessons for handling future layoffs.

More to come?
As if the constant media drumbeat on the recession isn't enough to distract employees from their jobs at the moment, some 58 percent of survey respondents admitted to being afraid of a second (or in some cases fourth or fifth) round of layoffs to come. Some 65 percent, meanwhile, confessed to being concerned enough about the economy to be looking for a more secure job.

It doesn't take a genius to figure out that a worried, job-seeking employee isn't working to their full potential, and may even be carrying out their job-search activities at work, something that further harms a business when it can least afford it. The question is: what can management do about it?

The answer to that question may lie—partially, at least—in an answer to another question posed in the survey. When asked whether they had been warned of layoffs at their firm, some 60 percent of respondents answered in the negative. While situations requiring companies to take drastic measures do crop up, comments such as "company insisted layoffs weren't in the cards at the beginning of November (at a lavish off-site in Mexico) while beginning to plan the cuts" suggest that some workers are either being willfully misinformed to keep them happy or simply kept in the dark. Either way, that leads to a breakdown in trust between management and those below them, which in turn leads to a situation where even workers at well—performing companies are fearing for their futures and all because of a lack of information and clarity from above.

While honesty about a company's situation may not necessarily be the easiest news to deliver (especially as people have a tendency to believe that reassurance during bad times is a lie to prevent them from leaving), management owe it to their employees to be as straight with them as they can be regarding their company's current situation and future prospects. The alternative is retaining a group of fearful workers who are not invested in the future of the company, and who may well be looking around for a more steady ship to jump to.

Less is more
One other surprising statistic the survey threw up is that, while 64 percent of respondents suggested they would accept a cut in pay to prevent layoffs, only 19 percent were offered a pay cut by their companies. Obviously, there are a couple of caveats to consider here. Without wanting to second-guess anyone's motives, the 64 percent figure may well be skewed by those no longer in a job, and to whom a pay cut in hindsight of a layoff may seem a lot more attractive than it might have when they were still employed. Also, several respondents suggested that their willingness to accept a cut in pay was by no means altruistic: "I would take a pay cut to prevent me getting laid off, not other employees," said one.

Even bearing all of that in mind, however, it seems that companies may still be missing a trick when it comes to cutting costs. Given that layoffs seriously dent morale, and cause employees to give less than 100 percent while they look for opportunities elsewhere, how much worse can salary reductions be? To use a simple example, which is worse: 100 employees at 90 percent of their previous salary working at 90 percent capacity, or 90 employees at full salary working at 90 percent?

Lead by example
One final note that emerged from the survey: when it comes to cost-cutting and trust-building, employees look to those in senior positions to lead by example. Nothing causes quite as much resentment as the front-line employees taking the brunt of layoffs and salary reductions while those in the C-suite go about business as usual.

If you are considering further cost-cutting measures at your firm, consider those three points before acting. First, let your employees know where they stand: each and every one of them has a right to look out for their own future, no matter how inconvenient it may be to your business. Second, consider wage reductions as an alternative to a reduction in force. And finally, if you are going to make cuts, consider what you're asking others to give up, and how that compares to what, if anything, you're sacrificing.

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Phil Stott is a staff writer at Vault.com. Originally from Scotland, he now lives in New York, and has also lived and worked in Japan, South Korea and Eastern Europe.

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