Coming to the case study in question, the observations made by Bill Conaty, former HR Manager at General Electric, are very pragmatic. Conaty is someone who believes in an equitable and compassionate mode of management. In this spirit, the difficult process of layoffs can be handled by upholding basic principles of fairness. These three steps for managing the equity process are consistent with Conaty’s vision of equity and fairness:
“Recognize that an equity comparison will likely be made by each subordinate whenever especially visible rewards such as pay, promotions, etc are being allocated. Anticipate felt negative inequities. Communicate to each individual your evaluation of the reward, an appraisal of the performance on which it is based and the comparison points you consider to be appropriate.” (Motivation Theories, p.185)
The truly great leaders will make surviving employees see opportunity in the apparent adversarial situation. This is factually true as well, for a reduced workforce makes the chances of promotion and career progress easier for the surviving members. Although it sounds Darwinian it is also a matter of fact that surviving workers have less competition in the race to determine the fittest. The better managers will make surviving employees see their own worth in terms of how they out-survived their fellow journeymen/journeywomen. To give an example, Google, which is one of the major software companies in the world, is excellent in its handling of human resources – both during periods of boom and bust. Bill Conaty’s advice thus makes sense, as he asks managers to focus on the surviving talent as opposed to spending is proportionately high time in the layoff process will bring greater rewards. Conaty notes,
“Those survivors need to be recognized and rewarded. Yes, they’ll pay close attention to how humanely layoffs are carried out, but they’re also aware that their own workload and stress level has just been stepped up. You want this group to play offense, not to fret over when the next shoe will drop or feel that they’re being overburdened.” (Conaty, as quoted in Kreitner & Kinicki, p.234)
Inputs from Expectancy Theory is also helpful for dealing with worker layoffs. This theory assumes that motivation or effort is a
“function (multiplicative) of three components: 1) an effort –> performance expectancy, 2) a performance -> outcome expectancy and 3) valence. The E->P expectancy refers to the individual’s perception of the chances that increased effort will lead to good job performance. The P-> O expectancy refers to the individual’s perception of the chances that good performance will lead to certain outcomes or rewards. Valence refers to the value or attractiveness of a given outcome or reward to the individual.” (Terpstra, 1986, p.376)
Hence, for an employee to be motivated, he or she must believe that extra effort will result in higher performance. The individual must also believe that better performance will be associated with greater rewards or outcomes. Also, those rewards or outcomes must be valent – in other words, valued by the individual.
Terpstra, David E, Theories of Motivation – Borrowing the Best, Personnel Journal (pre-1986); Jun 1979; ProQuest Central, p.376.
Herzberg, Frederick, One More Time: How Do You Motivate Employees?, Harvard Business Review, Jan/Feb 1968.
The Effective Manager, Chapter 6: Motivation Theories, p.185 – p.189.
Kreitner, R & Kinicki, A 2013, Organisational Behaviour , 10th edn, McGraw-Hill Higher Education, New York.
Kreitner and Kinicki, OB in Action Case study (HOW Should Managers handle Tough Employment Decisions?): 10th ed. Page 234.
Fishbein, M.; Ajzen, I. (1975), Belief, attitude, intention, and behavior: An introduction to theory and research, Reading, MA: Addison-Wesley
Murphy, Jim (2009), Inner Excellence, McGraw-Hill, ISBN 978-0-07-163504-2