The Downsizing of High-Tech America

On Wednesday morning, while walking to the company mailroom, I passed our director of human resources in the hallway. Without making eye contact, he walked by me and continued down the hallway toward Engineering. I knew something was terribly wrong. My heart sank as I quickly changed course and headed back to my office. I picked up the phone and called everyone who might have information about what was happening, but nobody knew. "It came without warning, like a nameless storm, and claimed many unsuspecting casualties along the way," said one employee.

By 10 A.M., almost 20% of our work force was escorted from the
building. In one fell swoop, we lost a significant number of software developers, testers, technical support engineers, trainers, and administrative personnel. Our company had downsized, without warning and without mercy. The number of casualties was staggering, but many of their identities were still unknown at the time.

The Stunned Survivors
Immediately following the massacre, our executive vice president called a company meeting. Everyone looked around the room, not only to see who was there, but also who wasn't.

Fifteen minutes of waiting seemed like an eternity, until the VP finally arrived. He was well prepared, and the beginning of his presentation was well received. He began with a synopsis of the state of the U.S. economy. "We're facing the start of a recession,” he said. Then, he continued his explanation with the condition of our U.S., Canadian, and international operations. Surprisingly, our company was profitable and, in fact, 2000 was a record sales year. At the conclusion of the VP's downsizing speech, he said, "...and everyone will receive a 7% EVA (Economic Value Added) bonus in February." We were stunned when we heard the financial figures and ashamed that our company was giving bonuses. Why would upper management make a decision to downsize the organization when we just had a record sales year?

The Paradox of Downsizing
Downsizing is a conscious decision made by management to reduce the size of its work force in an effort to immediately reduce operating expenses. The paradox of downsizing is that it can occur at any time, without warning. Companies may choose to downsize while in a strong financial position, or a weak one.

Traditional economic factors are no longer accurate indicators of a company's plans for its work force. Employees are carefully watching other companies as they downsize and are wondering if their company will be next. According to Melissa Wibom, a quality engineer, "News of other organizations downsizing is making people think twice before leaving here." Without traditional economic indicators, it's more difficult to predict which companies and positions are safe.

Short-term Psychological Effects
Although the question of "who will stay and who will go" adds enormous stress to departments and teams, that's just the beginning of the psychological psychological impact that downsizing inflicts on an organization. A new mood quickly manifests itself throughout a downsized organization. Perhaps most surprisingly, downsizing's biggest impact can be on those left behind in the office—the survivors. These are the people who weathered the storm to see what remains.

Few events cause as much stress, confusion, and uncertainty in an employee's life as a corporate downsizing. According to Eileen and Wayne Strider, consultants in the field of change management, "Survivors go through a predictable series of psychological stages after a corporate downsizing." Survivors usually feel guilty and angry about the loss of their co-workers. They may initially feel relieved that they're still employed, but later, they begin wondering if they may eventually become the next victims.

In the next stage, survivors feel