Most Companies Aren't Prepared for the Aftershocks of Layoffs

New i4cp report finds most don't anticipate the dramatic decline in morale and productivity that follows

SEATTLE, WA (April 8, 2009) - With layoffs becoming more difficult to avoid, it's important companies learn how to implement these reductions smoothly and effectively, while at the same time keeping remaining employees engaged and productive. The new Corporate Restructuring Highlight Report from the Institute for Corporate Productivity (i4cp) examines these challenges as well as other strategies companies are using to make it through, whether it's redesigning the organization, building strategic partnerships or developing innovative sourcing strategies.

According to the report, a majority of respondent companies (58%) underwent a reduction in force in the first part of 2008, and almost 40% planned to implement one by April 2009. Additional i4cp research shows that corporate restructuring is a business consideration that will increase in importance in the coming years, with nearly two-thirds of business professionals saying it will be an 'extremely important' or 'important' issue in the future. Process reengineering and managing strategic alliances will similarly grow in importance over the next decade.

When companies do implement layoffs, "too often managers are ill-prepared for the dramatic decline in morale and productivity that follows," says David Wentworth, research analyst with i4cp and author of the report. And some companies may implement limited layoffs even if it's not a financial imperative.

"The current economic crisis provides companies, even those with healthy balance sheets, with a perfect 'burning platform' to make moves that in many cases should have been made earlier, such as letting poor performers go, restructuring to focus on core competencies, or acquiring another firm," says Jay Jamrog, i4cp's senior vice president of research.

Critical components of corporate restructuring that are addressed in the report:
  • Layoffs need to be implemented in a dignified, efficient manner that meets the needs of affected workers and survivors while at the same time avoids legal difficulties.
  • Most companies see layoffs as a last resort, and there are several strategies to cut costs and avoid dramatically reducing headcount.
  • Outsourcing can be a useful tool for gaining efficiencies and reducing costs, while strategic alliances can help speed innovation.
  • No one organizational design is right for every company, and it can be a challenge to find the structure that meets a business's needs.
i4cp's Corporate Restructuring Highlight Report is a synthesis of original research and market studies representing the definitive collection of the data i4cp has gathered on the subject over the past year. The report, available exclusively to members of i4cp, reflects material currently available online in i4cp's Corporate Restructuring Knowledge Center. That center covers the current trends, drivers, implications and strategies relating to corporate restructuring. It also puts forward four scenarios on how corporate restructuring may change over the next 10 years.

About i4cp, inc.

i4cp is the world's largest vendor-free network of corporations focused on improving workforce productivity. Our vendor-free community facilitates innovation by giving our members - among the largest and most respected organizations in the world - access to:
  • Peers to spark new ideas and prevent "reinventing the wheel,"
  • Research to enable members to understand current practices and next practices,
  • Tools to put ideas and research into action, and
  • Technology to enable members to easily access tailored information and execute workforce strategies.
With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit
Erik Samdahl
Erik is the head of marketing at i4cp, and has nearly 20 years in the market research and human capital research industry.