Laying to Rest a Company’s Reduction in Force : Noetics Group helps firms recover after letting workers go. Trauma often results in lower productivity--and another layoff.

NEWPORT BEACH — Many county companies have gone through a wrenching period of layoffs in the past two years.

Among them, Western Digital Corp. in Irvine reduced its work force from 7,700 employees to 6,300 in the past 18 months; CMS Enhancement Inc., an Irvine manufacturer of data storage products, laid off 30% of its worldwide work force, or 150 people, and Rockwell International Inc. dismissed about 130 employees in February.

With many such layoffs, companies provide outplacement services to the affected employees. Some firms work hard at communicating to their remaining workers the reason for the cutback to restore a business-as-usual attitude among the remaining employees.

Despite the brave front, the layoffs can lead to lingering problems. Although a Western Digital spokesman said the company “could not discern a falloff in productivity” after the staff cuts, CMS admits that the dismissals briefly slowed company productivity.

According to Denise Greenstein and Arthur Tunnell of the Noetics Group, companies that lay off workers tend to see a drop in productivity in the weeks that follow.

And failure to quickly raise a company’s productivity in the midst of tough market conditions often leads to another round of layoffs, they said.

Companies are beginning to recognize the psychological impact of layoffs on the remaining employees. For this reason, productivity consultants, such as the Noetics Group, are in demand.

“Companies are like living organisms,” Greenstein said. “So in a layoff, it would seem like a limb is cut off.”

When a layoff occurs, managers and workers go through a grieving cycle, she said. They mourn the loss of co-workers at the same time they fear losing their own jobs. Such factors drive down the self-confidence of the “survivors” and results in lower morale, she said.

Tunnell said companies believe that being leaner is more efficient and management believes that in a layoff only the inefficient employees are let go.

“This is not necessarily true,” he said. “A layoff is a psychological as well as an economic experience. It stigmatizes the productivity of many employees.

“Relationships are broken, and for a company to survive,” he said, “the rapport between the remaining workers, managers and employer must be rebuilt quickly.”

Otherwise, he said, a company may be forced into further staff cuts because of slow adjustment to changing market conditions.

“Our job is to address the human issues to acknowledge these fears and work through them so that productivity will increase and a company can improve its survival rate,” Greenstein said.

Like other consulting firms, the Noetics Group has created one- and two-week programs that can be tailored to a company’s specific needs. These include forming focus groups to discuss the company’s goals and future direction.

Focus groups are important because they can psychologically prepare employees and managers for more work ahead, said Mark Alch, who manages the Irvine office of Drake Beam Morin Inc., a New York-based management consulting firm.

“Morale can be sapped because people have to do extra work and still get the same salary,” Alch said. “So we have to redesign the work force and discuss how the work will be accomplished with the remaining people.”

Participants are expected to engage in planning their future with the company as equals, Greenstein said. This will help re-establish the networks among employees that were disrupted during a layoff.

“There is no boss ,” she said. “It’s a free, open, uninhibited opportunity to see and examine situations and circumstances just as they are,” she said.

These groups can help develop a stronger bond among remaining employees and help them work as a team for the company, Tunnell said.

“People grow together as they watch out for each other, and this will eventually help the company achieve its long-term goals,” he said.