People's jobs are their livelihood, their sense of meaning, or, at the very least, a great way to occupy eight hours a day. The company needs to understand the ramifications of a workforce that has lost its job security, and should take special measures to make the process as painless as possible. Companies can be pro-active when faced with layoffs and help the surviving employees overcome low productivity, low morale, health problems, and an uncertain future.
When an employee encounters the first rumors of an impending downsizing, their world is filled with uncertainty. The employee immediately loses the capacity to weigh the outcome of their actions, and creates questions about their future role with the company, opportunity for future advancement, and whether or not they will be ultimately fired (Paulsen et al., 2005, p.465). The situation where the workforce is notified by rumors presents an unwelcome situation for everyone involved. According to Cascio and Wynn (2004), "many employment downsizing efforts fail to involve employees in any decisions either about the process or the desired outcome. As a result, employees feel powerless and helpless, and there is massive uncertainty in the organization" (p.427). While manager or employee input may be able to smooth the process, they may see the decision as inevitable and be reluctant or unwilling to offer any input. This places the company in a position to act impersonally with aloofness and distance. It is in this scenario that the ill-advised e-mail used by Radio Shack becomes the corporate culture.
Avoiding the pitfalls of the workforce being notified of looming terminations by rumor requires the company to be pro-active in their communication on the issue. To avert problems, either perceived or real, personal communication with the workforce needs to take place well in advance of the termination date (Brockner, 1992, p.11). Employees should be notified of the company's plans in an environment that generates trust. There is a risk that the period between alerting the workforce of the downsizing and the date of termination can be marred by a work slowdown or even sabotage. A meeting, or series of meetings at different levels, can be used to justify the reasons for the layoffs and assure the employees that it is a last resort alternative (Brockner, 1992, p.10). The corporate culture will also have a marked effect on this initial phase. A company that has practiced "honest, consistent, and regular communication efforts from the highest levels of executives on down" will be less prone to the negative effects of rumors and speculation (Cascio & Wynn, 2004, p.427). Good communication before, during, and after the layoffs is essential to the effective management of downsizing.
One of the biggest effects that downsizing has is the impact it has on the perception of job security among the survivors. In many cases, downsizing takes place in an environment where a company is struggling to make a profit and job security is already at a minimum. Job insecurity can affect an employee's productivity, creativity, innovation, decision making, and personal health (Probst, Stewart, Gruys, & Tierney, 2004; Alam, Robinson, & Pacher, 2006; Kivimki, Vahtera, Pentti, & Ferrie, 2000). In addition, the stress of job insecurity spills over into