Layoffs are miserable for those who go as well as those who stay

By Shawn Doherty, The Capital Times

Instructions in the 23-page manual from a local outplacement firm make it sound easy.

Prepare a “private setting” with at least two chairs, a desk or a table, and no windows facing work areas. Equip the room with a phone and “all necessary materials; tissues, cups and a pitcher of water would be ideal.”

Stay on schedule. Don’t make small talk. Get to the point. Rehearse scripts so you know what to say when things get awkward. Be sensitive but remain silent if employees get emotional and shout or cry. Contact security if needed.

These are preparations for what the manual calls an “employee separation.” There are many other less polite ways to put it. Terminated. Eliminated. Fired. Riffed (reduction-in-force). Laid off. Downsized. Sacked. Canned. Given a pink slip — a term so dated, a Google search pulls up pink lingerie.

Whatever it’s called, not even the most carefully prepared scripts and instructions can prevent the fear and anxiety on both sides of that table. Everyone dreads these meetings, even the boss.

“My clients just hate them. Hate them,” said Peter Albrecht, a labor and employment lawyer in Madison who has taken many depositions for lawsuits after these meetings have gone bad. “Employers fear that meeting and want to get out of it as soon as possible. I tell my clients that the employee has a relationship with the company. And when it breaks up, it’s like any other relationship. It can get sticky and emotional.”

Hurt most are the people who lose their jobs, of course. But a growing trove of research into the psychology of layoffs shows that survivors left behind at the workplace suffer, too. “Whether you are lucky enough to keep your job or you have been laid off, everybody is struggling,” said Dr. Ken Robbins, a psychiatrist with Stoughton Hospital and an online consultant with Health.com. Robbins said increasing numbers of his clients suffer from depression and anxiety related to the economy.

And it’s only going to get worse. Wisconsin’s unemployment rate climbed to 5.8 percent last year, and experts predict that January figures, to be released this week, will be higher. At 3.9 percent, Dane County has the lowest unemployment rate in the state, thanks to the state and the University of Wisconsin-Madison, but this area is still suffering. Last November, 2,700 fewer people were employed in Madison than in the year before.

It’s no longer just blue-collar workers from the giant General Motors plant that shut in Janesville or the electronics factory that left Boscobel for Mexico who are being hauled into the cafeteria and laid off. Hundreds of white-collar workers from companies like Famous Footwear in Madison and GE Healthcare Lunar in Middleton are now getting the grim news as well. Entire staffs are being abandoned by chains that pull up roots and leave town, including Cub Foods, or go bankrupt, like Circuit City. Media outlets that include In Business, The Capital Times, Wisconsin State Journal and Isthmus also have cut staff.

And people are let go by smaller businesses the state Department of Workforce Development doesn’t even track.

One day you might be joking with your colleague, and the next day her desk is so empty and quiet, you try not to look at it.

“It’s like during a war. At a certain point you get numbed to all the numbers. But it’s important to remember there are personal stories behind them,” said Charlie Trevor, an associate professor of management and human resources with UW-Madison’s School of Business. Trevor apologized during an interview for describing his research on the dynamics of layoffs as “fascinating,” given how devastating it is for those affected. “This is really scary,” he said. “Nobody is safe anymore. We all could be next.”

Employers may walk into a separation meeting armed with a termination script, a security script and a closing script. The employee, more often than not, is much less prepared.

Only in retrospect did Joe Bauernhuber, former creative director for the Madison magazine In Business, put the clues together. Someone called an “efficiency expert” had been traipsing about the office with his boss, the publisher. There had been closed-door meetings. But when he asked if he should be worried, he was told he was doing a great job and not to be “paranoid.”

On a Thursday in late January, moments after sending the February issue featuring a story on how to do layoffs to press, Bauernhuber and three colleagues showed up for an editorial meeting. As soon as Bauernhuber saw the woman from human resources sitting next to his boss, he knew. The HR rep, who had tears in her eyes, did all the talking. The economy was forcing the magazine to cut staff. They needed to go. Immediately.

“All that was going through my mind was my kids. How would I take care of them?” he recalled later. He asked a question or two about who would put out the magazine and then angrily stormed out of the room. When he got to his desk, the office was eerily quiet. His colleagues had been whisked away into a nearby conference room. His access to the computer’s server had been shut down and locked. He couldn’t retrieve any of his work for a future portfolio. “My boss was kind enough to bring me a cardboard box,” he noted with sarcasm. He refused to take it. Instead he grabbed his personal belongings, turned in his key and left.

Bauernhuber is still angry, especially because he found out that his boss hired three replacement workers. “Most of us in that room had families and kids. And it was just — get the hell off the property. Boom! You’re out.”

Yet there are reasons, from the employer’s perspective, for these abrupt endings, said Kevin Farrell, formerly of Famous Footwear. Farrell, who was human resources director when the company moved its corporate headquarters from Madison to St. Louis last year, has been on both sides of the table. Some of the company’s 270 employees moved to St. Louis, too, but around 220 stayed, Farrell said. “I placed 180 of them,” he said proudly. The rest are still looking for work, including Farrell himself.

But he is not bitter. “It’s not personal,” he said. “It’s business. It’s something that needs to happen to survive in a rough economy.” Farrell said that after he gave people the bad news, it was important to just “sit with them and watch them, and make sure they’re OK.” He’d listen. And he’d do some tough-love coaching. “Pick yourself up,” he would say.

Then the former employees were escorted off the premises. That wasn’t personal either, Farrell said. “You just don’t know how people will react,” he said. “If you let them run into the washroom, the next thing you know, they’re bawling their eyes out, and that could upset the other employees. Or the next thing you know, people might sabotage the computers. Or some people might come back and shoot. People commit suicide. They can be horribly hysterical. Our role is to be as good as we can be to everybody. But we also gotta protect the business.”

The layoffs went in ripples and then waves over the last two years at Advance Transformer in Boscobel. After nearly 40 years of employing up to 800 workers, the factory shut down last September. Production moved to Mexico. Ronda Rutherford joked she wouldn’t leave without a fight. “We were going to run through the factory naked and screaming so they’d have to send in the white coats to take us out,” she said.

But when she and two other girlfriends from her shift were called one at a time into the office and let go one June morning, they went quietly, and with just a few tears.

Rutherford was 53, and she’d spent the last 13 years of her life working all the different assembly lines at the plant, from winding the coils to electronics to inspections and packing. So she had one question before she left: “Why are you laying me off and not Robbie, who only knows two lines?” she asked. They didn’t have a good answer, she said. But in the end, it didn’t matter. They canned Robbie a couple of weeks later.

There had been rumors about impending layoffs, but still, she was stunned. “You never think it will really happen to you,” she said. The thing that got her the most, she said, is that she wasn’t even allowed to pick up her lunch pail and purse. “Why walk us out like criminals?” she said. “I wanted to go back to the line to joke around and say goodbye. That was a big part of my life. I got to know those girls, you know? I knew if they’d had a fight with their husbands, or if their kids were sick, or if their dog had got hit in the road. And all of a sudden, I couldn’t even say goodbye. That hurt.”

But it didn’t hurt as much as it would have if she had been singled out for poor performance, like the time the plant fired a forklift operator for driving into a rack of expensive parts. “I see a lot less shame with these layoffs because they are so widespread,” said UW Health psychiatrist Nancy Barklage. “There’s even a sense of camaraderie.” On the other hand, Barklage said, there is also an existential sense of anger, betrayal and loss at the enormous changes in a work world that will probably never look the same, and at the government for letting it happen.

But none of this was expressed during the 10 minutes Rutherford met with her managers. “It don’t take long to lay you off,” she said. They explained her benefits and acted “real polite,” she said. “They were watching their P’s and their Q’s. They gotta watch their butt, you know. They could get sued.”

She’s right. Getting sued is a big concern of many companies and the lawyers who coach them through these awkward meetings. Invariably, Albrecht said, some employees will end up feeling they have been treated unfairly. And that is why he advises his clients not to rush, which is their inclination, but to take time to explain their decisions and to treat the employee with what he called “dignity” and kindness. “Not only are there humane reasons for doing so,” he said, “but there are legal considerations.”

Such considerations are also behind the outplacement services and severance packages many employers offer workers during separations. In fact, a recent survey by Lee Hecht Harrison — a “talent” or employee management and outplacement giant — found that 69 percent of companies cited “avoiding future litigation” as the key driver for severance policies compared with 5 percent of companies that said they provided the help because it was the “right thing to do.”

“It’s a way to minimize risk and to show that they care,” explained Clara Hurd Nydam, the president of Career Momentum Inc., a Madison firm that helps displaced workers with resumes, networking and job interviews.

Hurd said she can barely keep up with a huge explosion in demand for what the industry calls “career transition.” Business has doubled in the past year, and she has had to hire extra help, she said. “It’s totally crazy,” she said. But she loves it: “The process of helping people get back on their feet is very rewarding.”

Firms like hers also act as a “third party” to ease the tensions between employees and employers during separation meetings. Hurd and her colleagues do everything short of delivering the bad news itself. They meet with employers beforehand to coach them, and provide manuals and scripts; they role-play the conversations with HR managers; and they wait in a nearby room during terminations so they can offer shocked, angry and tearful employees counseling and services immediately afterward.

These services can easily cost a company up to $4,000 per laid-off employee, Albrecht said, but that’s a lot cheaper than a lawsuit. “We’re there to settle them down,” said Sharon Harkins, senior vice president and general manager of the Madison branch of Lee Hecht Harrison, another firm that has experienced a huge increase in outplacement business.

Some experts worry that as the economy tanks, more of these meetings could end in violence. Hours after he was canned last November, a computer engineer at a Silicon Valley start-up returned to the office with a gun and allegedly murdered three of his bosses, including the company CEO and the head of human resources. A hospital worker laid off in Los Angeles last month went home and shot his wife and five kids, and then himself.

Such incidents are extremely rare, however. In over 15 years, Harkins said, nearly all the employees she has counseled have behaved in a “very professional” way, even moments after receiving devastating news. About the worst thing she saw, she said, was an angry employee who threw a bunch of folders around.

If distraught workers become more threatening or out of control, outplacement counselors and human resources staff are trained to call security and 911. “So many people ask me, ‘How can you do this?’ ” Harkins said. “But we’re there for them to vent, to offer reassurance, to let them know that they are not alone.”

As for those left behind, reactions often vary.

Some survivors of layoffs get cocky, psychiatrist Robbins said. “It’s like when you were a kid on the playground, and one of the two captains chooses you first for his team,” he said.

But others end up feeling guilty, sad and anxious. Some research shows a decline in productivity and customer service at companies dented by layoffs. Other studies suggest that resentment and distrust of managers grow. Experts say creativity freezes as nervous staff play it safe and avoid risks. More employees may call in sick or behave oddly at work. Suddenly, UW’s Barklage explained, they realize just how fragile their job security can be.

“They are grateful to still have their jobs. But they know they could be next,” said Barklage. “It’s not a ‘whew, I made it through.’ It’s an ‘oh my God!’”

UW’s Trevor released a study last year that found downsizing could unleash an exodus of valuable employees. A 10 percent layoff, according to Trevor, could trigger a 49 percent increase in voluntary turnovers. “Downsizing is a shock to the survivors,” Trevor explained. “So it leads these people to take stock of the current situation with their employer.” Also, he said, remaining employees are exhausted and stressed. “They’re being asked to do more work,” he said.

Would dissatisfied survivors still want to risk jumping ship, given the worsening economy?

“Stars can find jobs virtually anytime,” he said.

But Trevor said companies can improve retention and morale by attempting to make their finances and decisions fair and transparent. For example, firms that created an appeals system or an ombudsman for grievances, or created a hotline for problems, saw retention rates improve. “Companies need to handle downsizing in a fair way if for no other reason than to make sure survivors feel better about staying there,” said Trevor.

Outplacement firms know this. At least, it’s in their manuals. “Be sensitive to emotional reactions among the remaining employees,” one reads. “Some remaining employees may feel guilty that they were spared. Others may be angry that management was not able to prevent this. There may even be some that are upset that they were not chosen. In organizations that have experienced a previous downsizing, survivors may feel a betrayal of trust — it wasn’t supposed to happen again.”