After more than two decades of research into corporate downsizing, a fundamental question remains: How can managers and employees rethink their organizations even as they confront the need to downsize? It turns out that the most successful companies focus on building trust and empowerment in their employees. This is because there are four archetypal responses to surviving corporate downsizing, and only one is positive. Survivors who don't trust their managers very much and who feel disempowered exhibit fear, often withdrawing from work because they are worried and feel helpless. Survivors who trust management but don't feel empowered will go along with whatever they're told to do, but will refrain from taking any initiative. If survivors feel empowered but don't trust management, they will feel cynical, angry -- even outraged -- and could attempt to retaliate in some way. Only survivors who both trust their management and feel empowered are apt to be hopeful and to willingly engage in activities that will improve their organizations.
This article is adapted from “Downsizing the Company Without Downsizing Morale,” by Aneil K. Mishra, Daren E. Mishra and Gretchen M. Spreitzer, which appeared in the Spring 2009 issue of MIT Sloan Management Review. The complete article is available athttp://sloanreview.mit.edu/smr/.