Decisions about restructuring usually depend on models that show how different approaches might affect the enterprise, by projecting the values of organizational attributes such as net income, market share, or shareholder value. Although these projections rarely include attributes like employee anxiety or fear, such factors are truly important. They help to determine productivity, voluntary turnover, the workload of the people in Human Resources, and many of the attributes that the experts do model, albeit indirectly.
Most important, restructuring-induced fear can create a need for future restructuring, through a variety of paths, some of which are subtle and rarely identified. Here's Part I of an exploration of some of the less obvious mechanisms by which restructuring-induced fear creates a need for future restructuring.
- Degraded and disrupted relationships
- When we relocate people, eliminate positions, or merely change reporting structures, we disrupt relationships between people. Those who formerly relied on each other for advice, instruction, or services must sometimes find new contacts. Even the relationships that aren't totally eliminated can be degraded by restructuring-induced fear, in the form of competitive attitudes that can take hold when people come to believe that further restructuring is possible, and that everyone is in competition for a declining number of jobs.
- Although relationships between and among employees are valuable organizational assets, the value of these assets doesn't appear on financial statements. Unaware of the amount of these assets lost to restructuring, the depressive effects on results seem surprising to planners. The unexpectedly disappointing results can sometimes lead to further restructuring.
- Risk aversion
- When people believe that their When people believe that
their jobs are at risk,
their appetite for risk
in general declinesjobs are at risk, their appetite for risk in general declines. In effect, some people have difficulty keeping separate their own personal risk profile and the risk profile associated with their job responsibilities. This can affect the necessarily subjective judgments people make as part of their responsibilities, which creates a risk aversive approach to operating the enterprise.
- After experiencing several serial restructuring events, people in organizations that formerly had a healthy approach to risk can find themselves being overly conservative in their strategies and tactics, because they have begun to confuse their own personal risk experience with the risk experience of the organization. In this way, the organization can become so risk averse that it is no longer capable of accepting the levels of well-managed risk that are so necessary in today's market environments. These organizations then find that they can innovate only by acquiring innovative organizations, which is an expensive method for attaining market leadership. The resulting high costs and low yields sometimes lead to further need for restructuring.
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More articles on Emotions at Work:
- The Fallacy of the False Cause
- Although we sometimes make decisions with incomplete information, we do the best we can, given what
we know. Sometimes, we make wrong decisions not because we have incomplete information, but because
we make mistakes in how we reason about the information we do have.
- The Restructuring-Fear Cycle: II
- When enterprises restructure, reorganize, downsize, outsource, lay off, or make other organizational
adjustments, they usually focus on financial health. Here's Part II of an exploration of how the fear
induced by these changes can lead to the need for further restructuring.
- Big Egos and Other Misconceptions
- We often describe someone who arrogantly breezes through life with swagger and evident disregard for
others as having a "big ego." Maybe so. And maybe not. Let's have a closer look.
- Heart with Mind
- We say people have "heart" when they continue to pursue a goal despite obstacles that would
discourage almost everyone. We say that people are stubborn when they continue to pursue a goal that
we regard as unachievable. What are our choices when achieving the goal is difficult?
- Getting Value from Involuntary Seminars
- Whatever your organizational role, from time to time you might find yourself attending seminars or presentations
involuntarily. The value you derive from these "opportunities" depends as much on you as on
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- When we make decisions based on appearance we risk making errors. We create hostile work environments, disappoint our customers, and create inefficient processes. Maintaining congruence between the appearance and the substance of things can help. Available here and by RSS on July 3.
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- The Power Affect: How We Express Our Personal Power
- Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.