When the ax falls nearby

Linda is a survivor.

The software developer for the Chicago division of a large telecommunications company still has a job, although she has watched as 500 of her fellow workers lose their jobs in three rounds of layoffs over the past year.

Recently, she was reassigned to work on a new project she calls "the promise of our company." But she's far from feeling secure, and she spoke about her experience only on the condition that her real name not be revealed. "People are saying the next quarter's forecast will still be bad. Rumors about new layoffs will start again [this month]," she predicts.

While Linda waits for the future, she works surrounded by empty offices. Once, her work group consisted of 35 people; now it's just herself and five others. "The building is deserted now. It's kind of depressing to go there," she says.

In one sense, she's not so alone. Although the layoffs of some 2.5 million workers last year grabbed headlines, management experts warn that "downsizing survivors" like Linda are part of an important and often overlooked group.

"The anxiety for the people left behind is heightened, because they have to do more with less, and it takes a toll," says workplace consultant R. Brayton Bowen, president of The Howland Group in Louisville, Ky. "It has a numbing effect on people. They're unable to put their complete attention on their work."

In fact, layoff survivors often experience a range of emotions similar to mourning the loss of a close friend, says Batia Wiesenfeld, professor of management and organizational behavior at New York University's Stern School of Business.

After studying the effects of layoffs for 13 years, Ms. Wiesenfeld concludes that survivors appear to go through predictable emotional stages, starting with shock and denial when cutbacks are announced, to depression, and finally acceptance.

"People who remain usually don't lash out," she says. "Their reactions are more like depression, which can be far more dangerous than anger, for themselves and for the organization.

"There is a lot of energy in anger that can be directed in a productive way. With depression, it is hard to pull yourself out of it," she adds.

Workers suffering from these reactions may take months to return to their full levels of productivity, Wiesenfeld says.

The new role of managers in this downsizing era is to make the period of unease shorter and the dip shallower. Unfortunately, today's managers often feel the same job-security fears as their staffs and that can have a further negative impact on the organization, says Sigal Barsade, associate professor of organizational behavior at the Yale School of Management.

Nevertheless, how managers direct the logistics of a layoff goes a long way toward determining how well a company copes with downsizing. Unfortunately, not every employer handles layoffs deftly.

One large media company announced large year-end cutbacks by leaving after-hours voice mail messages on employee telephones. A large Long Island computer company insisted that fired employees immediately leave the building and even delayed one woman's attempts to retrieve her child from the on-site daycare center.

Another high-tech company, in California, posted names of laid-off workers on a bulletin board.

"That's management by ambush," says Larry Chavez, a workplace violence-prevention consultant with Critical Incidence Associates in Sacramento, Calif. "When it comes time to cut positions, it has to be done in a fair manner that preserves dignity."

Wiesenfeld says downsizing shocks can be lessened if companies demonstrate that they used consistent criteria to determine who would be let go. Fair severance payments and outplacement counseling also help laid-off workers retain their dignity and ease the worries of survivors, she says.

Some companies go a step further by trying to generate continuing loyalty even among jettisoned workers. One telecommunications company bought newspaper ads touting the talents of its former workers and inviting other companies to hire them, Wiesenfeld says.

The brokerage Charles Schwab announced last year that departed workers would be eligible for a $7,500 rehiring bonus if they were rehired within 18 months. Workers were also eligible for up to $20,000 over two years in tuition reimbursement if they returned to school.

Fortune Magazine named Agilent one of the country's top companies to work for, in part because of the regular face-to-face meetings top executives held with workers to keep them informed about worsening economic conditions and, ultimately, layoffs.

For now, Linda, the software developer, is philosophical about her new responsibilities. "Our skill set had been getting old," she says of her department of developers. "Fortunately, my new job involves learning new skills and new programming languages. If I do get laid off later, I'll be more employable."

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