Working Transitions

can you stop staring at me its really disturbing what happens to morale when companies downsize

The BHS saga continues this week, with Sir Philip Green giving a typically robust performance at the select committee (including his “stop staring” outbust) and Sports Direct owner Mike Ashley making another bid for parts of the business.

A senior Sports Direct spokesman said: “We can confirm that we have a continued interest in BHS and that we have written to the administrator seeking to re-open a dialogue about saving a number of jobs and stores along with the BHS name.”

It comes after administrators to BHS signalled the end of the road for the retailer, having been unable to secure a bidder. This has resulted in 11,000 jobs being made redundant.

For the workers, it is a difficult time. Yet again they have been given hope that their jobs could be saved and that rather than the retailer slip into the annals of history, alongside the likes of Woolworths, MFI and Blockbuster, there could be a future.

It is well documented that the uncertainty surrounding downsizing of any type can affect employee morale.  If the administrators of BHS are to maintain value in the brand and stand a chance of saving jobs, they must maintain a level of positive morale amongst the many long-serving employees. For a business in administration, this presents a particular challenge. Yet, when employees are living with the fear of redundancy, whilst often seeing others around them losing their jobs, maintaining morale is a significant challenge.

The importance of positive morale

Many companies underestimate just how important this can be.  An employee who has accepted and is engaged with the impact of change is much more likely to stay within the company, and make a positive ongoing contribution.

When a company is downsizing, it is likely to have an adverse effect on morale and if not addressed, may erode employees’ trust in the company and diminish personal motivation. Not only is this an issue in the short term, but companies may struggle to retain key people as low morale makes employees feel as though their contributions to the company are not worth anything in the long term, as their jobs may not be secure.

It is important that during times of change, companies consider carefully the potential for unintended outcomes of every action that is taken. This includes preparation for varied employee reactions to decisions made and how they may be able to monitor the impact on morale that their actions are having.

How to predict the response of employees

There are various reasons that companies suffer a loss of morale during downsizing and one of the most common is that when the pressure is on to act, a professional and sensitive approach is often lacking. Poor communication can often mean that what may be a valid and important reason for downsizing is misunderstood. Decisions which impact people’s lives are always tough to communicate but every effort must be made to deliver the news effectively, sharing the reasons why certain roles have been chosen, as fully as possible. If a decision is not properly understood then other employees are likely to worry for their own jobs in the future.

It’s a mistake to think morale will improve once the redundancies are over, how the ongoing impact is dealt with afterwards is important, too. Even if departing employees have been well supported, remaining employees often continue to feel uncertain about how any new company structure would affect them in the future. Ongoing lack of communication and support is likely to encourage a negative response in employees during uncertain times. Planning for and influencing the reaction of individuals is a key task to ensure that changes are implemented as smoothly as possible.

How to influence morale

Being able to maintain and build morale is incredibly important in achieving required outcomes of downsizing. Good communication is the most important element. It is vital that employees clearly understand the reasons for the change and how it will be implemented, as this can prevent rumours and ill-feeling towards management. Honesty is key, and employees will value this much more than ambiguous explanations or vague generalisations. It is better to say “I don’t know” or “I don’t have the answer to that right now” if you simply cannot communicate an issue in full.  It is also important that employees understand exactly what is expected of them if their own job role or workload has changed as a result of the new structure. It may help to have a support or training programme in place to ensure that employees are able to come to terms with the change and become productive as quickly as possible.

The importance of support for those who remain should not be underestimated. People may be relieved to still have job, but feelings of uncertainty and loss of trust and confidence can have a long term impact on productivity. Ongoing coaching, counselling or mentoring support can help them to cope with the changes ahead, and this means that you could have a much more effective team than previously at the end of the process. In addition, the entire team may benefit from structured team-based support, as this helps to cement a positive working relationship which will help to improve morale within the team in the long term.

Evaluating the effect of downsizing on morale

Encouraging open dialogue during and after downsizing enables learning and can improve the way that issues are dealt with in the future. There are tangible methods of identifying morale changes, including absence rates, turnover of employees, engagement surveys and any performance indicators that may be collected regularly. It is important to use multiple methods of gaining feedback as knowing how your team are reacting to issues in the workplace is the best way to find better ways of dealing with it.

Ultimately, during times of change and downsizing, the way the company handles the situation is critical when it comes to morale. Whether any parts of BHS can be saved remains to be seen. But if they are successful, like any business that successfully comes through a downsizing exercise, maintaining morale must continue to be a key focus in the months ahead.


Working Transitions handle the design, implementation and delivery of onboarding, development, change and outplacement. For more information, contact us today. 


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Working Transitions
17 June 2016
Supporting effective and successful organisational change


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