The Effects of Downsizing on Middle Management

by Ralph Heibutzki

Middle managers are the linchpins of any company's productivity and working relationships. These relationships are severely tested, however, when managers lose their jobs to downsizing. Long-term unemployment for older managers is among the most commonly documented effects associated with downsizing, but not the only one. Declining morale, diminished productivity and psychological trauma are just some of the other effects that managers who keep their jobs in a freshly downsized workplace can expect to confront.

Lack of Security

Lack of security remains a constant risk for middle managers, particularly those in their 40s and 50s, a Wharton School of Management analysis indicates. The boom in midlevel managerial payrolls during the 1990s made them a logical cost-cutting target when the Great Recession hit in 2008. Managers caught up in this cycle are often seen as more expensive, but less tech-savvy, than younger counterparts -- which also makes them expendable to employers looking to burnish their bottom lines.

Loss of Competitive Edge

Managers are the point persons in any company's innovative efforts, which suffer through repeated downsizing, "Inc." magazine columnist Erik Sherman contends. As turnover increases, managers must compensate by rebuilding the relationships that a company needs to create new products and services. However, new ideas are less likely to emerge in such a climate, Sherman says. Eventually, a company loses its competitive edge, resulting in a downward revenue spiral that jeopardizes the management team's likelihood of keeping its own jobs.

Mental and Emotional Stresses

Downsizing creates severe mental and emotional stresses on managers who must inform employees when they're being let go, and what options they have. Other stresses stem from motivating the remaining employees, whose own productivity is likely to decline -- at least in the short run -- after watching longtime co-workers go off the payroll, "Fortune Management" magazine contends. Often, employees may not understand why they're being spared, which deepens the psychological strain of managers who are still expected to engage them.

Poor Morale and Productivity

Larger workloads and reassigned duties are two outcomes that managers must convince a newly downsized workforce to accept. This is easier said than done, however, since remaining employees may see little point in soldiering on for an employer whom they feel has betrayed expectations of job security, according to the Smart Business Network's analysis. To motivate them, managers must devise a fair way of redistributing existing workloads and identify employees to lead the company through its rebuilding phase.

About the Author

Ralph Heibutzki's articles have appeared in the "All Music Guide," "Goldmine," "Guitar Player" and "Vintage Guitar." He is also the author of "Unfinished Business: The Life & Times Of Danny Gatton," and holds a journalism degree from Michigan State University.

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