Of trophies and battle-scars

This post was triggered by the conversations that I have had with Human Resources (HR) leaders who had played a leading role in 'workforce restructuring'/'workforce right-sizing' efforts in their respective companies. What struck me the most was the wide variation in the manner in which those restructuring efforts impacted these leaders. This was most evident in the way those leaders remembered those experiences, in the way talked about their role in those restructuring efforts and in the marks (residual emotions) it seems to have left on them as individuals. 

On one end of the spectrum were leaders who were 'deeply scarred' by those experiences. It was quite painful for them even to speak about it. On the other end were leaders who proudly displayed those experiences as 'trophies'.  Most of the HR leaders fall somewhere in between these two extremes. 

After the restructuring was done, there were leaders who organized lavish 'victory celebrations' for the restructuring team and there were leaders who found a way to avoid such celebrations. Some of them immediately updated their CVs/LinkedIn profiles to highlight this expertise (or even positioned themselves as 'restructuring experts') while the other leaders didn't do anything of that sort. 

The interesting thing was that the above variations were not really a matter of how successful those restructuring efforts were or how significant/effective were the roles of the leaders in those restructuring efforts! 

One of the factors that makes this issue complex is the dual role played by HR leaders - as they are both the facilitators and the survivors of restructuring!

Survivors of restructuring/downsizing exercises often suffer from the so called ‘workplace survivor syndrome’ with symptoms like anxiety, depression, decrease in performance, poor morale and increased propensity to leave. At the heart of the survivor syndrome lies two emotions- guilt (“I didn't deserve to survive when my friends didn't”) and fear (“Next time, it could be my turn”). Being employees (and human beings) themselves, the HR leaders are not immune to these emotions/reactions!

In the case of the HR leaders, since they were also facilitators of restructuring, the feeling of guilt can get accentuated. This usually happens in those cases where the HR leaders take their 'employee champion' role as seriously as their 'business partner role' and for some reason they feel that they haven't done all they should have done in the given context. 

Usually, the HR leaders are not the final decision-makers on whether to initiate restructuring/whether restructuring is the best option to enhance organization effectiveness in a given context. Being part of the leadership team they are expected to contribute to/influence the decision-making process and to implement the decision once the decision has made. Yes, how early they get involved in the decision-making process and the degree of influence they have on the same will have a bearing on the level of conviction and ownership they feel. 

Also, the HR leaders often play a very important part in deciding how exactly the restructuring should be carried out, how to balance the organization and employee interests/perspectives, how to ensure fairness and how to minimize possible adverse impact on the employer brand, employee engagement and productivity. Yes, they do understand that sometimes 'surgery' is required. Even in those situations, they feel the responsibility to use a 'surgeon's blade' (not a 'butcher's knife') and to provide sufficient post-operative care!

Depending on how true the HR leaders have been to their own convictions during these actions, the level of guilt or satisfaction can vary significantly. Yes, it also depends on the personality of the HR leaders involved - some of them tend to assume too much responsibility and some of them tend to assume too little responsibility (or even psychologically distance themselves from the actions, sometimes using humor for doing so). 

Some of the HR leaders look at restructuring as 'just another task to be done' (something that 'comes with the terrain') and some of the HR leaders look at look at restructuring as something that can potentially create a conflict with their personal values or their belief systems (one HR leader told me that 'he accumulated a lot of bad karma' through his involvement in a particular restructuring exercise!) or with their motivations for a career in HR. From a larger perspective, it can be said that the very topic of 'business-orientation of HR' is indeed a paradoxical one.

Many of the HR leaders felt that communicating the job loss to the impacted employees individually was the most difficult part. Here also, the degree of conviction the HR leaders had about the need for the restructuring, the fairness of the process followed and the adequacy of the transition support provided to the impacted employees, drove the psychological impact on the HR leaders. Another important factor here (for the psychological impact on HR leaders) was whether these difficult conversations with the impacted employees were entirely 'outsourced' to HR or it was jointly owned and carried out by the line managers and the HR leaders. Yes, the 'axe-man' or 'executioner' personas are difficult to integrate for most of the people!  

It is also interesting to look at the sense-making process in the context of restructuring. Often, the restructuring process is interpreted/positioned as an important enabler for organization transformation and it is referred to by highly positive-sounding terms like 'organization renewal', 'workforce refresh' and 'top-grading'. 

There is nothing inherently wrong with these terms (the organization reality is socially constructed to large extent and these terms can serve as 'generative metaphors' in that social construction of reality) so long as they mirror the true intent. Also, from the point of view of the psychological impact on the HR leaders who are facilitating the change, this kind of positive positioning of the change can be very beneficial, if they are convinced about the positioning.  Yes, whether or not these actions/changes make a net positive difference to the organization is often difficult to determine in the short-term. It can be very much psychologically damaging for the HR leaders to feel that they are in some sort of a 'Sisyphus-like' situation where the years of work they have done in the organization to build employee engagement and the employer brand is getting ruined because of the restructuring!  

So, where does this leave us? Whether their involvement in facilitating a restructuring/downsizing effort becomes more of a 'trophy' or more of a 'battle-scar' for the HR leaders involved depends on a wide range of factors that go beyond the 'success' of the restructuring effort (seen in the context of its stated objectives). Yes, these two (trophies and battle-scars) need not necessarily be mutually exclusive. It can also be said that while our discussion here focused on the HR leaders, most of it applies to the Business Leaders also (i.e. the psychological impact of leading restructuring efforts in the case of business leaders).

'Battle-scars' need not necessarily be a bad thing. In a way, they make us 'battle-hardened' and more ready for future battles! By the way, it has been said that in some of the ancient societies 'counting the number of battle-scars' was used as the method for selecting leaders!!

Any comments/ideas?

Of employee engagement and the 'survivor syndrome'

Employee engagement has been one of the key themes that we have been exploring in this blog (see Employee engagement and the story of the Sky Maiden, Passion for work and anasakti, The curious case of the object and subject of employee engagement, Appropriate measures for organizational commitment , The series on salary negotiations and psychological contract , Architects of meaning & Of owning and belonging for some of the examples). In this post, let’s look at employee engagement in the case of survivors of corporate restructuring/downsizing exercises(who often suffer from the so called ‘workplace survivor syndrome’ with symptoms like anxiety, depression, decrease in performance, poor morale and increased propensity to leave)  

At the heart of the survivor syndrome lies two emotions- guilt (“I didn't deserve to survive when my friends didn't”) and fear (“Next time, it could be my turn”). So, when it comes to employee engagement, the organization's best response is to help the survivors to deal with these emotions so that while the scars can't be erased, productivity can be restored to a great extent.

Guilt can be reduced by convincing the survivors that they deserved to survive (e.g. by following a transparent process for restructuring and for identifying the employees to be separated) and by ensuring that the employees who were separated have been well taken care of(e g. by providing a generous separation package & adequate transition support).

Fear can be addressed to some extent by publicly communicating (if possible) that the staff cuts have been completed and there is no such possibility in the foreseeable future. Providing the survivors the opportunity to receive psychological counseling/ stress management training with a focus on coping  strategies can also help. Of course, constant communication with the employees at all levels that addresses the stated and unstated concerns has to be continued. Another type of fear is regarding increased workloads and new skill sets required. This can be addressed through careful work planning and capability building. People managers can be trained to look for signs of stress in the employees and to manage the employees in a supportive manner. Of course, any tendency among the people manages to use the residual fear to drive productivity ('blackmailing' employees to work harder) should be curbed.

What is perhaps irreversible from the employee engagement point of view (especially for the next few years) is that the employer- employee relationship moves to a purely rational plane (whereas most definitions of employee engagement include the aspect of deep emotional connect that the employees have to the organization). This is because, layoffs are often perceived as a breach of the psychological contract. This would be more so in those organizations that have been communicating messages like ‘our company is one big family’ to the employees.

This would mean that, after the restructuring, companies would have to rely more heavily on rational means to retain and motivate employees (e.g. highly competitive salaries & performance-linked incentives, gain sharing schemes etc.) as well as investment in capability building to ensure 'employability'. Yes, the emotional connect can drive discretionary effort and lead to remarkable (business) results. But, organizations should engage the emotions of the employees only if they are willing to look at employee engagement as a relationship (and not as a tool) and are willing to reciprocate (in terms of going out of the way to care for the employees, beyond what the employment contract requires)!

In a way, the way out of the survivor syndrome is through a psychological transition process. So, actions that can facilitate the transition process like clearly explaining the need for restructuring and the process that would be followed, helping the employees to acknowledge and deal with their feelings of fear and guilt (as detailed above), clearly articulating the new vision for the organization and the possibilities it creates for the survivors and getting the survivors actively involved in rebuilding the organization and the social networks within the organization(that would have suffered because of the loss of social capital) are perhaps the highest leverage actions that organizations can focus on!

Social capital, restructuring and attrition

Social capital in an organization refers to the collective value of all social networks (connections among the individuals) in that organization. These connections have 'value' for both the organization and the employees.

A significant portion of the 'work' in organizations gets done through these connections (often referred to as the 'informal organization') rather than through the 'formal structure' in the organization. These 'connections' motivate employees to do things for one another beyond what is specified in the job descriptions. Hence social capital has a positive influence on productivity. The importance of social capital in the creation of intellectual capital has also been recognised. Since these 'connections' are difficult to copy, social capital could be a source of sustainable competitive advantage for the organization.

These 'connections' (social capital) could also help in addressing 'relatedness' needs of the employees. So in addition to enabling the employees to get their work done faster/easier/better, these 'connections' contribute in meeting their their social/'connectedness' needs. Thus social capital could add to 'personal effectiveness at work' and the 'total employee deal' as perceived by the employees and hence it could have a positive influence on employee engagement and retention.

Organization restructuring is one of the popular ways of responding to a dynamic business environment. While the business case for restructuring is quite compelling in many contexts, the hidden costs of restructuring in terms of loss of social capital often gets overlooked. Restructuring breaks up the human networks/connections in organizations and dilutes the social capital in the organization. Since (as mentioned above) these connections are valuable for both the organization and the employees, there could be adverse impact on the organization (in the form of reduced productivity, reduction in the rate of intellectual capital creation, increased employee turnover/ attrition etc.) and on the employees (in terms of reduced engagement, work effectiveness, satisfaction etc.). Of course, many of these factors are interrelated and hence the adverse effects could get amplified.

As we have seen above, organization restructuring and the consequent loss of social capital could reduce the 'value' that the employees derive from organization and hence this could lead to employee turnover/attrition. The social networks bind the employees to one another and hence to the organization. It can also be said that one of the reasons that the employees don't want to leave an organization (to join another organization) is the reluctance to 'start all over again' (in terms of having to build new networks/connections). Thus if a restructuring breaks up their existing connections, employees might have less reason to stay on in an organization. Costs of attrition are well known. Apart from these costs attrition also leads to a further erosion in human capital as more social networks/connections get broken when employees leave. When 'key' employees (with a large number of strong connections) leave the impact on social capital would be more. It is also possible that employees might leave in groups if these groups have a large number of strong connections within them (especially if another organization offers an opportunity to maintain these connections).

Thus one of the key hidden cost of restructuring could be in terms of loss of social capital and its ripple effects. Loss of connections/social capital could lead to attrition which in turn leads to a further erosion of social capital. This could lead to a vicious cycle and organizations should be careful about this. When an 'impact assessment' is done for the proposed restructuring exercise, the impact on social networks/connections/social capital should also be factored in. Since these social networks also serve as communication channels, the communication strategy for restructuring requires even more emphasis (as the restructuring could have broken up some of the existing communication channels). The overall change management plan should give specific attention to retain key people (people with a large number of strong connections) so as to reduce the erosion of social capital. The plan should also focus on creating an environment that would facilitate building of new connections to replace the old ones hence to restore and enhance the social capital in the organization.

See a related post here.