A Study of Reemployment Challenges After Downsizing

M layoffs in the 1980s and 1990s spawned a renewed interest in the effects of unemployment not seen since the Depression. Consistent with this focus, however, laid-off managers weren’t studied much after they had obtained new jobs. Reemployment signaled that a new, if somewhat different, equilibrium in employees’ careers had been restored. More recently, though, greater attention is being paid to the quality of the replacement jobs managers take after their layoffs. Many downsized executives end up “underemployed” in jobs that pay less money, are at lower levels than their last jobs, and for which they are overqualified in terms of their competencies and experience. The present paper addresses four interrelated questions about the subsequent career paths of downsized managers. First, the study presents evidence on the extent to which managers have had to take pay cuts, demotions, or jobs for which they are overqualified. It looks at the trade-offs these individuals make in deciding which replacement jobs to accept. Second, we examine the consequences of underemployment on downsized managers’ satisfaction with, commitment toward, and trust in their new employers. Third, we examine how the length, quality, and helpfulness of various outplacement programs facilitate (or hinder) employees’ abilities to deal with the trauma of job loss, get organized for a job search, and obtain new jobs. Finally, we examine the ways in which poorly conducted downsizings by former employers have long-term consequences for executives’ attitudes toOrganizational Dynamics, Vol. 29, No. 1, pp. 64–75, 2000 ISSN 0090-2616/00/$–see frontmatter © 2000 Elsevier Science, Inc. PII S0090-2616(00)00013-9