Can Teams Survive Downsizing

Many companies are facing the challenges of competition by implementing a team-based organization focused on customer satisfaction, profitability and continuous improvement. Many of these same organizations also face the prospect of reducing staff size to remain competitive. Can teams survive-and flourish-in an organization facing downsizing?

While no organization wants to downsize, it is a reality of survival for some. However, the lasting impact of downsizing is somewhat questionable. It is reported that whether through reengineering or mergers and acquisitions, more than 60 percent of downsizing efforts fail to meet the corporation's financial expectations or to have lasting positive impact. Why? For one, organizations usually focus on cost cutting rather than revenue growth. Without fail, an organization focused on staff reduction encounters serious morale problems. Second, downsizing fails to have the desired impact on financial performance because it eliminates people without changing the work process.

Implementing a team-based organization focused on customer satisfaction, profitability and continuous improvement may be a more appropriate survival tactic. The same skills, techniques and culture required to overcome the debilitating effects of downsizing and to refocus the company on a path of new revenue growth are also required to implement a team-based organization. If market conditions do require a major organizational upheaval, teams can help address members' emotional needs as well as customer and business needs. In addition, team members acquire the skills necessary to thrive in the organization of the future.

The school of thought has typically been that if a major downsizing is imminent, team implementation should be postponed until after the layoffs occur and the teams can be used to help the organization cope with the fallout. However, organizations often don't know when, and if, they will downsize and whether it will be a one-time event or occur repeatedly. In this case, it does not pay to wait to form teams to manage the work processes. Significant gains in customer satisfaction and profitability can be made through effective teamwork.

Survivor syndrome
To understand the potential impact of teams when an organization downsizes, let's first look at typical employee reactions. It is helpful to understand the "survivor syndrome," or the behavior of those who remain in the organization after layoffs. In David Noer's book Healing the Wounds, he reports that too many companies focus entirely on assisting those who are leaving the organization in finding new jobs, providing severance packages and counseling for adjustment. It's the layoff survivors-those who stay in the organization-who need attention so they can adjust and remain productive employees. Noer cites six major reactions to downsizing that can have significant negative impact on the organization:
Reduced risk-taking. This usually takes the form of reluctance to take on new challenges or introduce new products or ideas, and fear of proposing changes.
Lowered productivity. Survivors tend to become consumed by seeking information and reassurance rather than productivity.
Thirst for information. Noer describes an unquenchable need for any type of information, whether formal communications or through the company grapevine.
Blaming others, usually management. Everyone is looking for someone else to blame. It is the opposite reaction from a sense of empowerment, i.e., someone else is in control, someone else is to blame. Typically, everyone looks "up" in the organization for fault-finding.
Justifying the need for a layoff. In order to live with themselves, typically a group of survivors tries to justify the layoff decision. These are generally the people who took part in the decision-making process-managers and human resource people.
Denial. A common response is to deny the feelings of layoff survivors. It is particularly common among upper managers to deny the feelings of fear, insecurity, sadness, frustration, etc. typical of the survivor syndrome.


Noer further talks about the need for a new "contract" between the employee and the organization to overcome the survivor syndrome. This contract replaces the "If I just keep my nose clean, I have a job for life" contract that many organizations have perpetuated for years. This old contract often led to the large build-up of employees and corporate staffs that became the major cause for downsizing. The new contract encourages independence vs. dependence, focus on the work and the customer vs. internal politics, empowered work teams vs. individual contributions, rewards for work performance vs. tenure, and finding alternatives to rewarding with promotions (thus cementing multilayers and huge hierarchies). These tenets are all consistent with the principles of a team-based culture.

Following a downsizing, many companies feel too lean, left with too much work with too few people. In a recent survey of 476 companies conducted by Olsten Staffing Services, 46 percent reported that their companies felt understaffed and ill-equipped to do their work competently. This leaves organizations feeling emotionally bruised and overwhelmed by the workload. This is particularly challenging considering that recently downsized companies need to refocus on revenue growth. Their efforts should center on growing new products and services, and finding new customers. To get a downsized company to shift into a growth mode vs. a cost-cutting mentality, this principle needs to become part of the corporate strategy and a major culture shift.

The culture that elicits growth consists of entrepreneurial, empowered employees who don't fear taking risks. Employees must be innovative and creative about how to do their existing work with fewer people. They need to think about developing new services or products for their customers. This is a big emotional and psychological step from the "survivor syndrome" mentality. Teams can be an excellent vehicle to move from a fearful "hunker down in the trenches" mode to an entrepreneurial, innovative mode as long as managerial behavior is supportive and the organization's social/cultural systems support this shift.

Team principles
To see how teams and downsizing can interact, it is important to explain the principles of a team-based organization to understand the cultural characteristics being created by this methodology. Following are 11 principles that need to exist to have a true culture of managing the business through teams.

Total involvement. Everyone in the organization must participate in the culture change for it to be successful and sustainable. Every individual, from the executive to the first-line employee, will participate on a team designed to serve its customers and manage its day-to-day business.

Customer focus. Everyone serves the team's customers. Team members perform the important work of getting products and services to the end user as opposed to worrying about internal workings, politics and administration of the internal organization.

Diversity. The organization values people with different thinking methods, skills and views of solving problems. This results in people thinking creatively vs. conforming to organizational norms.

Sharing information. Managers must be free with information to help the teams make good business decisions. This display of trust and disclosure of information formerly withheld helps teams understand their part of the business and how it fits in with the larger organizational strategy. It also creates an atmosphere of openness and candor among employees and management.

The world's greatest experts. These employees do the hands-on work in serving the customer. This principle serves to drive the organization to truly value employees' input to process improvement changes. These are the people who best know the work and, therefore, if given all the right information and the power to make changes, are best-suited to manage the work processes.

Scorekeeping. This is critical in making teams more self-directed and independent. Having a balanced scorecard that reflects the team's performance in serving the customer and managing the costs of the process is often all teams need to make intelligent decisions about conducting their work.

Listening. This is most critical in driving the successful behavior change of both the team member and team leader. In the old paradigms, management rewarded employees for coming up with the single "right" answer. In a team-based organization, teams depend far less on leaders telling them what to do and far more on leaders listening and facilitating discussions that lead the group to a more creative and comprehensive solution.

Continuous improvement. This important principle drives the understanding that the organization will never again be "still." This process won't have a finish line; instead, it will require organizations and people to continue to look for ways to better serve their customers in a more cost-effective manner.

Belonging to a team. This is no longer a "nice thing to do" but a critical building block for the future. Organizations will continue to change and evolve, grow and shrink. Individuals must belong to a group of people with whom they feel some commitment and security. They need to understand the value of their work and their contribution to something larger than themselves. This is what the principle of teamwork means in this environment.

Adding value. This simply means that teamwork should be built around individuals performing true, value-adding work to the products and services of that organization. Too often, days are spent doing busywork that may serve some purpose to the organization's internal workings but, if eliminated, would not detract from the organization's true output or affect customer satisfaction.

Recognition. This principle elicits high levels of performance. Rewarding and recognizing behaviors that are valuable to the organization's competitive edge will obviously strengthen the organization.

How can teams help?
In looking at the survivor-coping strategies and principles driving the culture of a team-based organization, it seems evident that the team system should help the organization get back on track following a downsizing situation. Specifically, some advantages include:
If team members receive education and training around survivor issues, they can become a vehicle for starting the healing process. Using time in the team meeting to discuss feelings of loss and powerlessness enabled one team of computer programmers to vent their feelings and support each other and ultimately refocus on their work. Discussing their feelings and putting them into some acceptable context helped the team move on. The team was then relieved to focus on ways of streamlining their processes and dealing with the work most critical to their customer base. They got back the sense of being productive.

Teams can offer a fresh start, a new beginning, especially if formed around key work processes, products or customers vs. the traditional functional and hierarchical structure. When organizations have accomplished their work purely through their functional hierarchies, work has often been slow and cumbersome. Structuring new teams around core processes, customers or product lines can often give people a revived sense of accomplishment. They find they can get things done in a quicker and more effective manner. Being on a team with new members can also add life to the dynamics of getting the job done. It also moves people away from the "mourning" process of losing team members in their former work group configuration.

The skills necessary to manage through teams are critical in creating the new contract between company and employee. Following a downsizing in a major oil company, one employee said, "At least with this new team reward system, I now feel like it's really my work performance that counts, not how well I get along with my foreman."

The empowered work force created by the team process working toward self-directed teams is necessary to overcome survivor symptoms and also for success. In order for a company to revive, individuals need to feel connected directly to their work product and their customer. Job satisfaction comes from excellent performance vs. perks or position. This is much more likely to be achieved through teams.

Having a demanding performance challenge placed on a team by a customer can energize the team and get them focused on their work rather than on company politics. One "help desk" team in an information systems organization had to figure out a way to support the same number of customers with a third less customer service representatives. Their problem solving around this issue and eventual success did much to revive their sense of accomplishment and motivation around work.

The single best team-building experience is the successful completion of a demanding project. If you want to see people become more innovative and creative about their work, help them have a successful work project within their team.

Learning new ways to get work done through continuous improvement tools and creative problem solving can also help recreate the spirit of innovation and risk-taking that is threatened in a downsizing environment. Continuous improvement tools and techniques are critical to streamlining work processes and finding better ways to achieve more with a smaller employee population. However, during this phase, managers must use caution not to punish a team's failed attempts. They need to give teams some time and space to work through their problems. This will give employees a sense of safety and willingness to innovate.

The team system offers an organizational structure of interlocking teams holding routine and regular meetings. This affords the organization much more frequent opportunity for information sharing in small groups going up and down the organization. This not only helps get the work done quickly and efficiently but also helps the survivors' need for regular and candid information sharing. It creates an organizational grapevine for sharing accurate and consistent information. The more honest the manager is in sharing information, the stronger the trust factor.

The team system offers a form of camaraderie that helps promote teamwork around getting the job done and enables people to feel connected to something smaller and safer than a large organization. People generally have an innate need to feel connected to a small group of people. Everyone wants to feel needed and that they can make a difference. Teams offer this in the work environment.


While downsizing an organization is an unavoidably unpleasant experience, it is sometimes an economic requirement. Organizations that have experienced this process, or think they might have to, should consider implementing a team-based culture. Teams will help surviving employees deal with the emotional impact of loss as well as refocus their attention on the future success of the organization.

References
Gilkey, R., "The Psychodynamics of Upheaval: Intervening in Merger and Acquisition Transitions," Organizations on the Couch: Clinical Perspectives on Behavior and Change, Jossey-Bass Publishers (San Francisco, 1991).

Howard, J.M., and L.M. Miller, Team Management, Miller Howard Consulting Group Inc. (Atlanta, 1994).

Katzenbach, Jon R., and Douglas K. Smith, The Wisdom of Teams: Creating the High-Performance Organization, Harvard Business School Press (Boston, 1993).

Noer, D.M., Healing the Wounds: Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizations, Jossey-Bass Publishers (San Francisco, 1993).

"Growth After Downsizing Requires a Return to the Basics-and a New Corporate Attitude," The Lakewood Report, Lakewood Publications (Minneapolis, May 1995).

About the author

For the past 11 years, Jennifer Howard has been vice president of Miller Howard Consulting Group, an Atlanta-based consulting firm specializing in organization performance improvement and large-scale systems change through team management and organization design. Howard held a similar position with the firm of Tarkenton & Co. before co-founding Miller Howard Consulting Group in 1983. She has been in the organizational change business for 16 years.