Managing Emotions After Restructuring Processes

Managing emotions after restructuring processes

1. Introduction

Sometimes it is unavoidable for a company to make decisions that cause toxic emotions among the employees, for example job-cuttings during restructuring processes. Such decisions, despite of being necessary, can trigger fear and anger on employees' side. Without handling such situations appropriately and recognizing the existence of toxic emotions, the organization is often not able to realize the planned gains and manage the implementation effectively. Organizations that understand this and care about its employees' emotions will create less emotional pain and will be more successful in the end in implementing also painful decisions. (HÐ'rtel, Zerbe & Ashkanasy, 2005)

Doubtlessly there exist situations in which a corporate structure has become outdated or in which a company has to cut jobs in order to stay competitive. This paper therefore does not want to criticize these kind of management decisions in general but wants to contribute to a more successful implementation of restructuring by a better management of remaining employees' emotions.

The paper first discusses which emotions can be involved in restructuring processes and how these emotions may affect a company's performance and the whole success of the process. Thereby the paper focuses on the emotions of the people who implement the downsizing decision and who keep their jobs. The emotional consequences for the ones who lose their jobs are not part of this paper, although this is definitely a very important topic within this whole research area.

In the second part, it is shown how companies can prevent or at least reduce the negative emotions caused by restructuring processes on employees' side. In other words: What can be done from the management side to reduce toxic emotions caused by the restructuring and to reduce the decrease in motivation among employees in the months after.

The paper therefore delivers a valuable, practical contribution to successful management of corporate restructurings by showing means to reduce the "often forgotten costs" of these processes. There has been written a lot in science about emotions in the context of organizational change but little about this special issue of restructuring changes. The topic is also from great practical relevance as emotions are of central importance to work performance (Flam, 1993, p. 68). So it is not only from an ethical perspective but also from a rational-strategic perspective, that a company and its management should care about the emotional side of the employees.

One reason for choosing the topic is a personal experience I had during an internship I did at Kraft Foods Germany. When I started working there in March 2006, the company had just undergone a restructuring time after a consultancy proposed to cut some jobs and to reorganize the European structure of the American based company because of profitability problems. Especially during my first weeks at work, I experienced the emotions that were caused by the restructuring among employees quite well. During the next pages, I will use my experiences at Kraft Foods to illustrate theoretical findings as far as possible.

2. Management of emotions after restructuring processes

2.1 Emotions: The forgotten costs in restructuring processes

In the past, organizational research and management studies based on the assumption, that organizations and their members are rational and that irrational elements like emotions disturb a productive work-life (HÐ'rtel, Zerbe & Ashkanasy, 2005). The organization was seen as a machine that works best in a rational, scientific way and without accepting the irrational side. With the beginning of the 90s of the last century, this view started to change when authors like Pekrun and Frese (1992) and Fineman (1993) triggered the discussion and the following paradigm shift. (Eide, 2005)

Today one would think that managers know and understand the influence emotions have on employees' behaviour and on the success of the whole firm. But as it is difficult to demonstrate this influence with numbers and powerpoint slides, emotions are still often forgotten, for example when a cost-benefit analysis of a corporate restructuring project is done. This may explain why many restructurings do not bring the success and savings that were estimated by consultants and top management. Clark and Koonce (1995) quote a study that showed that very often, the intended gains from job-cutting are not realized due to decreased employee morale and a decline in productivity and that nearly 68% of these projects are not very successful (p. 24). This section will point out what "forgotten costs" have to be taken into account when management decides for downsizing and calculates the additional profit coming from this change.

Change processes in general and especially restructuring processes in combination with job cuttings lead to emotions not only on the side of laid-off employees, but also on the side of the survivors and the managers who have to lay off the people. The following will focus on the last both groups.

One emotion that is involved among the remaining employees is fear. People usually fear change as it results in uncertainty due to change of the environment, the own identity and basic assumptions. Change is always combined with uncertainty about the future. The people do not know exactly how it will go on, what their role will be in the new organization, which skills they will need and if they still can cope with this new environment. They may feel threatened by this new future and fear to be the next who is laid off. (Henry, 1995; Huy, 2005, p. 301-316)

I could experience that clearly during my time at Kraft Foods. The restructuring introduced a "European" structure instead of the old, very localized company structure. This meant for the employees that they had to communicate and work much more international from then on. Especially in the first weeks, many people were uncertain about this as they were not used to have telephone conferences with Kraft Foods Spain for example where joint product innovations were discussed. A brand manager had to have suddenly not only the overview over his brand in one country, but in various countries, which required different skills. For some of my former colleagues, this was a difficult change and they were uncertain and afraid if and how they could cope with it. There was nearly no lunch break in which this issue was not discussed and in which people not