Best Practices in Responsible Restructuring

Even though there is no single, correct way to restructure, following the guidelines presented in this excerpt from Responsible Restructuring by Wayne F. Cascio, has yielded positive results for companies and their workforces.

Wednesday, November 1, 2006
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Two key considerations in any restructuring effort are justice and communication. These two themes are so important that they deserve separate treatment, prior to discussing in more specific terms what to do and what not to do. Let's begin by defining some terms.

Justice refers to the maintenance or administration of what is fair, especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments. It is one of the fundamental bases of cooperative action in organizations.

Procedural justice focuses on the fairness of the procedures used to make decisions. Procedures are fair to the extent that they are consistent across persons and over time, free from bias, based on accurate information, correctable, and based on prevailing moral and ethical standards.

Distributive justice focuses on the fairness of the outcomes of decisions?for example, in allocating bonuses or merit pay or in making decisions about who goes and who stays in a layoff situation. In simple terms, it is the belief that everyone should "get what they deserve."

Both procedural and distributive justice can be combined into a broader term, organizational justice.

Why Address Organizational Justice?

In the wake of decisions that affect them, such as those involving pay, promotions, or layoffs, employees often ask, "Was that fair?" Judgments about the fairness or equity of procedures used to make decisions?that is, procedural justice?are rooted in the perceptions of employees. Strong research evidence indicates that such perceptions lead to important consequences, such as employee behavior and attitudes. When employees feel that they have not been treated fairly, they may retaliate in the form of theft, sabotage, and even violence. In short, the judgments of employees about procedural justice matter. Here is what one set of researchers had to say about fairness:

A workplace is perceived to be fair when three key elements are present: trust, openness, and respect. When an organization achieves community, people trust one another to fulfill their roles in shared projects, to communicate openly about their intentions, and to show mutual respect. When an organization acts fairly, it values every person who contributes to its success, it indicates that every individual is important. All three elements of fairness are essential to maintaining a person's engagement with work. In contrast, their absence contributes to burnout.

Procedurally fair treatment has been demonstrated to result in reduced stress and increased performance, job satisfaction, commitment to an organization, and trust. It also encourages organizational citizenship behaviors (discretionary behaviors performed outside one's formal role that help other employees perform their jobs or that show support for and conscientiousness toward the organization).  As we noted in chapter 6, these include behaviors such as the following:

Volunteering to carry out activities that are not formally a part of one's job

Persisting with extra enthusiasm or effort when necessary to complete one's own tasks successfully

Helping and cooperating with others

Following organizational rules and procedures, even when they are personally inconvenient

Endorsing, supporting, and defending organizational objectives

Procedural justice affects citizenship behaviors by influencing employees' perceptions of organizational support, the extent to which the organization values employees' general contributions and cares for their well-being. In turn, this prompts employees to reciprocate with organizational citizenship behaviors. These effects have been demonstrated to occur at the level of the work group as well as at the level of the individual. In general, perceptions of procedural justice are most relevant and important to employees during times of significant organizational change. When employees experience change, their perceptions of fairness become especially potent factors that determine their attitudes and their behavior. Since the only constant in organizations is change, considerations of procedural justice will always be relevant.

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Components of Procedural Justice

Although disagreement pervades the professional literature about the number of components of the broad topic of organizational justice, we consider procedural justice to have three components. The first of these is employee voice. Organizational policies and rules may provide lots of opportunities for employee input to decisions.

The second component, known as interactional justice, refers to the quality of interpersonal treatment that employees receive in their everyday work. Treating others with dignity and respect is the positive side of interactional justice. Derogatory judgments, deception, invasion of privacy, inconsiderate or abusive actions, public criticism, and coercion represent the negative side of interactional justice. Violating any of these elements of interactional justice leads to decreased perceptions of fair treatment. Evidence indicates that employee perceptions of interactional justice that stem from the quality of their relationships with their supervisors are positively related to their performance, citizenship behaviors directed toward their supervisors, and job satisfaction.

Informational justice is the third component of procedural justice. It is expressed in terms of providing explanations or accounts for decisions made. Consider layoffs for example. Evidence indicates that layoff survivors who were provided explanations for the layoffs, or who received advance notice of them, had more positive reactions to layoffs and higher commitment to the organization. Survivors had the most negative reactions to layoffs when they identified with the victims and when they perceived the layoffs to be unfair.

think about your own experiences in times of change. Was the fairness of procedures important to you? Did your perceptions affect your attitudes toward your employer and your behavior at work? Did you wish you had more say in decisions that might affect you? When it comes to restructuring, decision makers must always keep in mind that the first question employees will ask themselves, and discuss with others, is "Am I (or are we) being treated fairly?"

Excerpted from Responsible Restructuring: Creative and Profitable Alternatives to Layoffs by Wayne F. Cascio (Berrett-Koehler Publishers).

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