Layoffs and Creativity: Are You Expelling the Innovators?

Unfortunately, the downturn is placing pressure on a lot of organizations to do layoffs.  In recent days we have read about them at GM, eBay, and Tesla (the electric car company).  And there are going to be a lot more.  I have written quite a bit about downsizing, as much of my earlier research focused on organizational decline and death.  You can see some of my major arguments summarized here, here, and here at Harvard Online.  One big lesson from research on downsizing is that when organizations hold-off on layoffs as long as possible and do less deep cuts, they tend to bounce back faster (compared to similar organizations that rely more heavily on layoffs) when the upturn hits (especially organizations with skilled workers).  This happens, in part, because they save recruiting and training costs when the demand for their people returns, and by keeping their experienced workforce around, they can move more effectively than competitors who are scrambling to hire and train new employees with the right skills.  I noticed, for example, that Toyota is using the downturn to train employees -- to increase the skills of their existing workforce so that, when demand increases again, they can come back even stronger.

The other lesson I take away from the research on downsizing is that, if you must do layoffs, do it in a manner that gives people as much predictability about how and when it will be done, as much understanding about why it is necessary for business reasons, and as much control over their lives in the process. Finally, expressing human compassion to those who lose jobs, those who stay (who are losing friends, may feel guilty for not being cut, and also often fear the next round of cuts) , and the surrounding community also helps everyone get through tough times, and increases productivity and loyalty among those employees who survive layoffs.

I was also reminded of another lesson about layoffs  from an email exchange I've been having with Bill Burnett, over at Superinnovator. A downturn can be an opportunity to get rid of incompetent people and, of course, destructive assholes.  But beware of the evils of using layoffs as a reason to expel everyone in your organization who does not act, think, and look like everyone else -- beware that most of us are prone to hold an overly narrow image of a "good employee."  As I show in Weird Ideas that Work, since we human-beings have powerful and positive emotional reactions to people who are "just like us," and equally powerful negative reactions to people who are "different," the hiring process in most organizations acts to "bring in the clones." Or as Harvard's Rosabeth Moss Kanter famously put it her classic Men and Women of the Corporation, organizations engage in "homosocial reproduction." 

As this Dilbert cartoon suggests, the same psychological forces that cause leaders to bring in the clones during the hiring process can also cause them to (unwittingly)get rid of the people who think differently than everyone else and perhaps are prone to constructive argument.  So a risk of the layoff process in many organizations is that it drives out the variation and diversity  so essential to innovation in every organization.  Take a close look at the people you are keeping versus those you are cutting. Are you unwittingly protecting the clones, those people just like your favorite person -- yourself?  And are you consistently expelling able people who make you squirm, who give you the creeps at Scott Adams put it, but who will assure that your organization won't be condemned to be stuck in the past?

Comments

[Layoff]

Unfortunately they are not able to get credit and hence therefore not able to bear running costs...

[Chris Young]

Great stuff as usual Bob!

I have shared your post with my readers in my weekly Rainmaker 'Fab Five' blog picks of the past week found here: http://www.maximizepossibility.com/employee_retention/2008/10/the-rainmaker-2.html

[Wally Bock]

Thanks for the informative posts, Bob.

One of the problems with the ways companies respond to downturns is that they don't do it in any cohesive way. They will, for example, reduce headcount as a means of cutting costs, but without considering other cost cutting measures, such as deleting unprofitable lines. When they reduce headcount, they do it on an "interchangeable parts" basis, where the primary focus is on eliminating dollars and no thought is given to who is being shown the door.

Companies should have two tactical targets for the downturn. 1) Survive the downturn and 2) position yourself for the upturn to follow. If you do that, you see HR solutions (including things like work process re-design) as a subset of all the company efforts and headcount solutions (including options like voluntary part time) as a subset of the HR solutions.

When you do get to headcount reduction, make sure that the head that's heading out the door isn't one with vital knowledge and relationships you'll pine for when spring follows winter.

[Kevin Rutkowski]

I have seen what happens when layoffs are dragged on with little information. Most of the employees focus on destructive behaviors for the company:
1) spending time looking for other jobs,
2) focusing on self-preservation at the expense of teamwork,
3) spending hours per week speculating on the next layoff,
4) spending hours per week talking about the last layoff,
5) spending time trying to learn about the projects that lost key resources with no warning, and
6) focusing on short-term instead of long-term projects.

It's pretty difficult for employees to believe managers who say that a project is critical to the company when they see other "critical" projects lose half of their resources with no notice.

[PW Nalbandian]

I come at this with the perspective of an IS professional who was laid off in June after 12 years with a software company. Having been several times a survivor and seen many of my friends and two of my supervisors cut before my number came up, I would have like to seen a bit more sensitivity. Each time we assured the lay off was past and that it was a difficult process, but that was the extent of it. In this day and age our job, rightly or wrongly, provides much of our identity (not to mention income and access to health care)and being thrust out can be disorienting, not to mention more than a small bit scary. I know full well that this is most often a business and not a personal decision. I also know, as an MBA, that this is not a matter taught in business school.

The other side to this is from the army of the discarded will emerge innovators who will form organizations that generate the next boom.

[True Vibe]

I totally agree. I am in the dying newspaper industry and currently in the mist of my company laying off people. Some of the people laid off were a surprise to everyone. Those who remain are also a surprise to everyone.

I have worked with this newspaper, the Akron Beacon Journal, for several years and cloned management has been this company's true downfall. Yet, management is cutting or hindering personnel who could bring change.

Management walks and talks in the same ineffective ways.

[Jan]

Very true, all of it. I have been in this situation during the IT crisis in 2003. One of my colleagues, who came from a country in Central America said: "I used to live in a war zone, but this is worse. You have no control." Our manager was wise; he let a Priest come and talk about how people reacted in this kind of situation. He said that employes felt violated and that it was a natural feeling. He described the whole process of thoughts and feelings people went through. It helped. I can still remember it.

[Mike Wagner]

"are you consistently expelling able people who make you squirm, who give you the creeps"

Different is the new better employee. I'd agree 100%.

Is this possibly a strategic moment when the workforce will contain lots of "different" but very valuable innovators and creatives?

Always good to get my thoughts stirred up by reading your blog. Thanks!

Keep creating...a brand worth raving about,
Mike