Redundancy and Survivor\'s Syndrome Investigating

Redundancy and Survivor's Syndrome

Investigating the Psychological Impact of Redundancy

Instability in the global marketplace and it impact, to a greater or lesser extent, on local economies has resulted in greater redundancy than the world has seen for many years. Much of the focus of this affect is on the workers that are displaced and the hardships that they face. Unemployment numbers are the focus of analytical results and forecasts about the future of the situation. However, with every person that is displaced, there is another, often overlooked side of the equation, those that are left behind. The affects of redundancy do not stop with the workers who were displaced. One must examine the impact that these changes within the organization have on the survivors of redundancy.

This literature review will take a look at the psychological and organizational affects of redundancy on those that are left behind, with a particular focus on "survivor's syndrome." It will examine current academic literature on survivor's syndrome and the impact on organizations that have experienced this reduction. It will explore the current state of academic literature on the subject.

Redundancy and Organizational Effects

Redundancy refers to a position within a company that is no longer needed. Redundancy may be a result of the need to cut costs or when the business shuts down. Redundancy occurs through no fault of the employee. Displaced employees are eligible to receive redundancy payments to help them until they can find another job.

Redundancy has become a growing reality in today's economic circumstances. It is important to understand its affects on the company, as it tries to continue with business as usual. Efficiency is the key reason behind redundancy. The focus of redundancy is on the ability to make the business more profitable and able to survive for those who are left. Recent mainstream managerial journals recently have highlighted downsizing as a managerial strategy for the purpose of achieving sustainability (Gandolfi and Hansson, 2010).

The concept of downsizing in order to achieve greater efficiency in the organization came about as Western companies began to adopt Japanese management concepts on including lean management techniques. Lean management meant that organizations could get away with few employees, representing a savings in cost. This meant that the number of people in the company as a portion of the ration of production became a metric of performance (Gandolfi, 2009). This meant that the fewer number of people needed to produce the greatest number of widgets represented the most desirable outcome., Unfortunately, this led to higher redundancy rates in countries that adopted this philosophy.

Literature is filled with different words that are designed to help ease the tension associated with layoffs, including re-engineering, re-sizing and rightsizing (Gandolfi, 2009). However, regardless of the wrapping that is placed on it, the effect is just as devastating to those that are laid off and those who remain. Layoffs can take many forms, all of which have a different affect on the organization. Gandolfi (2009) defines these types of force reductions using the following terms.

1. Voluntary separation plans -- These take the forms of offering employees attractive separation packages, such as early retirement plants and bonuses based on the number of years of service. This type of plan is risky for the company, because they could inadvertently lose employees that they intend to keep.

2. Across the board layoffs -- These are perhaps the most widely used forms of redundancy. This type of layoff strategy forces every department to reduce their numbers by a certain percentage, regardless of the actual person who is in that position. Gandolfi (2006) found that layoffs have the affects of decreased employee motivation, commitment, loyalty and increased levels of burnout, stress and distrust.

3. Downsizing -- This has also been referred to as rightsizing, and colorful HR terms. It means the reduction in workforce by the elimination of certain positions within the organization.

These types of layoffs are usually announced ahead of time, giving workers time to adjust to the idea and to make preparations. The companies will often provide assistance by the way of time off for job searches, assistance in financial planning and other services to help them ease the transition. The idea is to make the change less of a blow to both those that are laid off and to ease the minds of those who stay. Although these types of layoffs are means to ease the burden, Ganfolfi (2006) claims that they still have a negative impact on the remaining workforce. Farr-Wharton and Brunetto (2007), found that when employees are able to address their concerns and fears, the change process is much easier.

Another type of layoff is beginning to emerge, that represents a new managerial trend: the steal layoff. Stealth layoffs are a new trend to emerge from corporate America, but are beginning to be seen elsewhere as well. This type of layoff is done without any announcement of the impending layoff by management. Employees are not informed and managers must keep it a secret for fear of negative publicity. They may avoid negative press, but the promote a feeling of distrust among the employees, essentially sabotaging their ability to regain company morale and loyalty (Crossman, 2006). These types of layoffs are often used as a way to spread out layoffs, such as doing a larger layoff in small bites, one employee at a time until the desired numbers are reached. This has the effect of making employees pay more attention to wondering if they are next, rather than performing their job (Crossman, 2006).

Redundancy has been a key strategy used by large Australian and Swiss banks since the mid-1990s. It was found that Australian banks relied primarily on workforce reduction. However, Swiss banks relied on a combination of strategies that utilized workforce reduction, re-design of their business, and systemic changes within the organization (Gandolfi, 2007). The body of research suggests that not only is redundancy the key issue in achieving successful change management, the manner in which it is handled plays a key role in the surviving organization that remains afterward.

Redundancy and Survivors

Now that we have examined general literature on the various strategies that companies use to implement reductions in force, let us now examine literature on what happens to the survivors after a reduction in force has occurred. This examination will also examine how these reductions in force affect the company that remains after the change. Research has shown that mass media has been largely responsible for promoting the business ideology of downsizing (McKinley, Mone, and Barker, 1998). This holds true today, much as it did when the article was first published, only it has even greater impact due to the growth of the Internet and other new media forms. McKinley and associates considers downsizing and redundancy to be among the latest trends that are in fashion among managers. They support their idea by examining other ideologies in management that have came and went over the years.

Layoffs have a tremendous impact on every level and position in the organization. Parker and McKinley (2008) found that layoff agents, those who must implement the layoffs, often suffer from cognitive dissonance as a result of their role in the actions. A recent survey in Hong Kong found that workers who were still with the company one year after the downsizing had decreased intent to perform well in their job, experienced decreased attendance, and an unwillingness to voice discontent (Cheung, 2005). These studies support the ideology that redundancy has a significant psychological impact on the workforce that lasts for some time after the event occurs. Managers are more likely to experience health problems as a result of downsizing as time goes on (Grunbers, Moore, and Greenberg, 2006).

Now let us examine studies that examine specific affects of layoffs. Brandes, et al. (2008), found that organizational cynicism often emerges as a pervasive problem after a layoff. This cynicism was found to be directly related to feelings of job insecurity among survivors. Chirumbolo (2010), found that job insecurity after redundancy was closely connected to surviving employee's need for closure. When they did not receive closure, they suffered from poor mental health, which in turn, affected their job performance.

Edwards and Karau (2007) explored two different types of employment contracts: social and psychological. These two types of relationships were designed to assess employee beliefs about their ideal employment relationship. A study in Singapore found that manager's belief in perceived contract breach in downsizing was connected with their beliefs about market competition and shareholder interest (Rust, McKinley, Moon, and Edwards, 2005). These studies suggest that the affects associated with downsizing are connected to psychological and social factors that go beyond money or material affiliations. Perceptions of the psychological contract differ, depending on one's perception of the employer's perceived contractual obligation. For instance, it was found that workers perceive their own layoff as a breach of contract more than someone else's, even if the circumstances are the same (Rust and McKinley, 2005).

Downsizing, upsizing, and restructuring have had an impact on the skill set of the employees. These changes meant employees must learn new routines, new skills, and take on greater responsibility (Littler and Innes, 2003). In some cases, this has meant that employees must deskill. For instance, they may have to perform the jobs that were once assigned to lower skilled, displaced workers. Deskilling can have a significant psychological impact on the surviving workforce as well. In certain sectors, such as the healthcare industry, or social work, restructuring and job shifting can have a significant impact on their ability to deliver quality care. Carey (2007) suggests that in countries where these public services have undergone privatization, a deskilling of the labour force has occurred and will continue to occur unless something is done to stop it.

Survivor's guilt results from traumatic events. Many times it is associated with an event such as a plane crash or natural disaster. However, survivor's guilt can also affect those who remain in a company after redundancy. Those whom are left behind are likely to experience a range of emotions. They might feel happy or relieved that they were not axed. They may feel uncertain or distrustful about their own job security. However, they may also feel guilty, particularly if they felt a sense of closeness with those whom were let go. They may ask the question most commonly associated with survivor's guilt, "Why them and not me?"

Workers who have been survivors in the downsizing of large corporations sometimes feel envious of those who do not have to survive the ordeal that they must endure. According to Kiviat (2009), life does not go on as usual on the day after. Workers report the atmosphere at work as depressing or sullen. They often have to take on additional work, and stress. The office is quiet if the reduction has been drastic. There are empty desks, familiar routines change. According to Kiviat, when someone gets a promotion, others want to congratulate them, but they realize that it was because two others lost their job. A feeling of gloom and desperation in this situation can be contagious. Workers who are distracted by the changes in the workforce often change, Innovation decreases because workers are afraid to take chances. Turnover rates increase. This the reality of what survives in that aftermath of redundancy. Survivor's guilt is dangerous to the company by creating a toxic work environment (Proudfoot, 2009). This can cause tempers to flare, as tension increases.

Longitudinal studies indicated that as time elapses, employees are more likely to suffer from stress related physical problems, depression and changes in eating, as compared to employees who had not experienced layoffs in their company (Grunberg, Moore, and Greenberg, 2001). Several studies also confirmed that alcohol use rose in the time elapsed among survivors of layoffs (Grunberg, Moore, Anderson-Connolly and Greenberg, 1999; Sikora, Moore, Greenberg and Grunberg, 2008). In workers who had experienced downsizing, not only once, but more than once, it was found that the first incidence still affected them and influenced their reactions to subsequent layoffs. (Moore, Grunberg, & Greenberg, 2006).

Organizational Commitment

Organizational commitment is defined by what an employee is willing to do for their company. Organzational commitment can be divided into two categories. The first is interpersonally directed commitment. This is a person's willingness to help out or step up without being asked, when the need arises. Organizationally directed commitment refers to their willingness to do extra when asked.

Organizational commitment can be divided into three categories: affective, continuance, and normative. Affective commitment refers to the employee's positive emotional attachment to the company. Continuance commitment is the commitment based on the need to keep their job. They cannot afford to lose organizational membership, so they remain committed, whether they are emotionally attached or not. Normative commitment refers to feelings of obligation to the organization. When organizations invest resources in the employee, they might feel guilty if they do not return the obligatory gesture by doing their job. Understanding these types of organizational commitment is essential in understanding survivor's syndrome, as it makes type of commitment and important factor in the analysis.

Iverson and Buttigieg (1999) found that organizational commitment among firefighters was more closely tied affective commitment than organizational effectiveness. Firefighters were more likely to remain with the organization if they felt an affective commitment. The type of commitment involved in organizational loyalty has only recently begun to be studies. Many of the studies found considered organizational commitment as a single factor. They did not break the various types of commitment into their subsequent categories. One o the key gaps in the literature is the studies need to be conducted on survivors in terms of not only their overall organizational commitment, but the type of commitment that effects their decision to stay or to look elsewhere. This information would greatly help to improve retention levels after redundancy.

Organizational Justice and Redundancy

The previous section addressed some of the key issues surrounding the affects of redundancy on the organization and on the individual workers. Some of this literature briefly touched on the topic of feelings of breech of contract on a psychological and/or social level. Let us now examine redundancy from a survivors perception of justice. French (1964) described organizational justice as an individual's perception of fairness in and organization.