Corporate Anorexia May Wind Up Being Fatal : Business: Restructuring in the form of wholesale layoffs starves firms of people rich in skills and long-term vision.
The trouble with corporate restructuring is not simply that firms are overdoing it, cutting staff to the point of “corporate anorexia.” Nor is it simply, as some critics charge, that greedy companies are fattening their profits at the expense of laid-off employees.
The fundamental problem with corporate restructuring as it is practiced today--as an ongoing strategy even in profitable times, rather than as an emergency move--is that it is based on a flawed vision of what makes people and organizations work well. It creates an unhealthy culture in the American workplace, and sooner or later we are all going to pay.
Of course, the tune being played at many corporate headquarters is quite different. Cutting heads is seen as a painful but necessary part of building a new culture in which everyone wins: The company is “rightsized” and stays lean and flexible. Remaining employees are “empowered” by taking on new responsibilities (albeit without new pay) and those who are let go learn to “break the bonds of co-dependence” with their employers.
The ideal seems to be a nation of free-wheeling economic entities with interchangeable parts. Companies plug in the “human resources” they need at any given moment, workers enjoy unrestricted free agency and we all dance in and out of employment relationships in response to the shifting demands of the market. It’s like quick-change tooling or just-in-time inventory, except on a national scale and with people.
What’s wrong with that?
To begin with, it fosters narrow, short-term thinking. Nearly everyone agrees that a great weakness of American business has been its failure to think strategically for the long term. Yet now we see a culture emerging in which more work is farmed out to independent contractors, in which full-time employees always have their resumes out and even key executives don’t last long.
In such a culture, who is going to look out for the long-term good of the firm? In some of our research, my colleagues and I have tracked managers and professionals who were let go in downsizings and subsequently employed elsewhere. These are the supposed success stories; the ones who landed on their feet. Yet we found that many of them habitually job search, often spending more time looking for new work than people who are unemployed. Instead of focusing on the company, its customers or their fellow employees, they learn to look after their own skins.
Among the things they do not learn are attitudes and behaviors conducive to the internal “team-building” often touted by corporations. Good teamwork requires trust and the ability to negotiate conflicting interests. These qualities are far more likely to be found in long-term relationships, not in the fluid, mobile exchanges that characterize life in many corporations today.
We know this not only from our studies within corporations but also from laboratory research that shows, for instance, that people tend to negotiate differently (and more productively) when they know they’ll be negotiating with the same parties again in the future.
We also know it from everyday experience. Sports teams that perennially shuffle rosters are seldom contenders. Nations in which the governing coalition changes frequently are seldom viewed as good places to live.
Why do we think corporations can be the exception? The great danger of restructuring as it is practiced today is that it creates a culture with no sense of collective responsibility.
It’s not empowering for the individual, either. While some people thrive in the new environment, most of us are not constituted this way. We like stability and continuity. We are quite willing to adapt and innovate, but we require a reasonably stable situation as a platform for learning and creativity.
One message that comes across loud and clear in a downsizing is that how well you do your job doesn’t matter much; you may lose it anyway. Everyone knows a top performer who was let go. This teaches people that they don’t control what happens to them on the job--the most disempowering message of all.
It can lead to a state that psychologists call “learned helplessness,” a model used to explain why battered women stay with their batterers. They find they are liable to get beat up no matter what they do, so eventually they become passive. They learn to keep their mouths shut. Don’t make waves. Just try to hang on.
Corporate restructuring as it is practiced today speaks a bizarre language. It is a language that confuses commitment with co-dependency and stability with stagnation; that mistakes moving around for moving forward. It’s a language that puts an entire nation on the wrong track and tries to call it rightsizing.
