Therapeutic Dose: What It Really Means to Downsize

May 19, 2005
Can there be best practices for plant closings?

Stories of downsizings and plant closings are becoming so common in the industry that they’re almost passe. Employees show up for work one day and are herded into an emergency meeting with management. Wasting little time, the GM drops the bomb. There are gasps and cries of protest, blank stares on the faces of shell-shocked workers. And there are lots of questions. Why? Why us? Why now?

That’s pretty much what Eric Good witnessed one day in December 2003, when his former employer, Wyeth, announced the shutdown of its St. Louis biotech operations. As a director of project management at the plant, Good sat in the front of the room when the announcement was made. He saw the faces.

He had known it was coming. His superiors told him just days before. The excruciating part was not being able to do anything about it. Some were getting master’s degrees, had babies on the way, or student loans to pay. He had met with several of them during the preceding days for their year-end performance appraisals, and listened while they spoke of goals and ambitions for the upcoming year. He kept on with scheduled Lean and Six Sigma training.

As it turns out, the plant didn’t close. Wyeth worked behind the scenes and, four months later, reached a buyout agreement with Johnson & Johnson, which made the facility part of its Centocor Biologics subsidiary. J&J retained Good, and rehired many of the employees that were initially let go.

A happy ending, but a question gnawed at Good: Did Wyeth do it right?

Good holds no ill feelings towards his former employer; quite the contrary, he says the firm counseled those it had laid off, provided outplacement services and healthy severance packages, and worked tirelessly to find a buyer to keep the plant open. Still, he wonders whether management could have made the announcement and the days and months that followed any easier for the 400-plus workers who lost or expected to lose their jobs? Could the experience been made less traumatic?

These questions have driven Good back to school, in pursuit of a Ph.D. in management and organizational leadership through the University of Phoenix. He is currently working on his dissertation, as yet untitled, on the psychological and physiological effects of downsizing on the participants—the “victims,” the survivors, and the managers who make such difficult decisions. Centocor has put its full support behind his educational efforts.

What happens to people? “Data is rich in the negative,” Good points out. There are the documented cases of laid-off workers experiencing severe depression, illness, and family breakups. But Good suspects that a lot of positives happen as well. At his plant, some of the downsized found better, higher-paying positions elsewhere. Throughout the ordeal, they bonded and supported each other—Good himself made phone calls and sent out resumes for his staff. And life went on: The babies were born, the degree finished, and the student loans paid off.

Good theorizes there may be untold damage to the “lucky ones” who avoid layoffs. They are the ones who must overcome the survivor’s guilt and wonder, “When’s my turn?” as they deal with sagging morale at a shrinking operation.

The greatest damage may be to the company itself. There is increasing evidence, Good says, that layoffs may result in little or no financial benefit to companies in the long run. Good wants to know if this holds true in the pharmaceutical industry. He’s also just beginning his qualitative research—sitting down with anyone who’s been part of a downsizing and asking, “How was it for you?” Later this year, he’ll share some of his initial conclusions with our magazine.

Good hopes to distill a set of “best practices” for downsizing, which management and workers can use to make informed decisions about pharmaceutical plant closings and prepare themselves for the trauma and uncertainty.

So much happens when jobs are cut and plants closed. “I don’t think it soaks into people how many emotions and experiences there are,” Good says. “I had no idea what we were getting ourselves into. We weren’t prepared.” With a little more research, that may change — both for managers and those on the “receiving” end.

About the Author

Paul Thomas | Managing Editor