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CHAPTER 15: LEADING CHANGE 475
need for laying off employees, but the economic downturn of the early 2000s made
massive downsizing a common practice in American corporations. In addition,
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downsizing is a part of many change initiatives in today’s organizations. Re-
engineering projects, mergers and acquisitions, global competition, the
trend toward outsourcing, and the transition from an industrial to
As a leader, you can be compassionate when
an information economy have all led to job reductions. 62 Action Memo
Some researchers have found that massive downsizing has making changes such as downsizing that will

often not achieved the intended benefits, and in some cases has sig- hurt some people in the organization. You
nificantly harmed the organization. Nevertheless, there are times can provide assistance to displaced workers,

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when downsizing is a necessary part of a thoughtful restructuring of and remember to address the emotional
assets or other important change initiatives. needs of remaining employees to help them
When job cuts are necessary, leaders should be prepared for in-

creased conflict and stress, even greater resistance to change, and a stay motivated and productive.
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decrease in morale, trust, and employee commitment. A number of
techniques can help leaders smooth the downsizing process and ease
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tensions for employees who leave as well as those who remain. Some
leaders seem to think that the less said about a pending layoff, the better. Not so.
Leaders should provide advance notice with as much information as possible.
Even when they’re not certain about exactly what is going to happen, leaders
should be as open and honest with employees as possible. Leaders can also
involve employees in shaping the criteria for which jobs will be cut or which
employees will leave the company. Another option is to offer incentive packages
for employees to leave voluntarily and offer alternative work arrangements such
as job-sharing and part-time work.
Providing assistance to displaced workers, such as through training programs,
severance packages, extended benefits, outplacement assistance, and counseling

services for both employees and their families can ease the trauma associated
with a job loss. In addition, this shows remaining workers that leaders care about
people, which can help to ease their own feelings of confusion, guilt, anger, and
sadness over the loss of colleagues. Many companies provide counseling to help

remaining employees handle the emotional difficulties associated with the down-
sizing, as well.
Even the best-led organizations may sometimes need to lay off employees in
a turbulent environment. Leaders can attain positive results if they handle down-
sizing in a way that enables remaining organization members to be motivated,
productive, and committed to a better future.

Summary and Interpretation

The important point of this chapter is that tools and approaches are available to
help leaders facilitate creativity and innovation and manage change. Change is
inevitable, and the increased pace of change in today’s global environment has led
to even greater problems for leaders struggling to help their organizations adapt. A
major factor in the failure of organizations to adapt to changes in the global en-
vironment is the lack of effective change leadership. Leaders who can successfully
accomplish change typically define themselves as change leaders, describe a vision

for the future in vivid terms, and articulate values that promote change and adapt-
ability. Change leaders are courageous, are capable of managing complexity and
uncertainty, believe in followers’ capacity to assume responsibility for change,
and learn from their own mistakes.