Company crises make managers' families suffer and what to do about it

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With current political developments such as the ongoing trade war between the US and China or the Brexit, economists predict an economic downswing during the coming years. Global recessions such as the one in 2009 can cause the collapse of countless companies and leave others struggling to survive. Many countries have still not fully recovered from the last recession due to limited economic growth, high household debt, and excessive unemployment. As a result, organizations have turned to layoffs and salary reductions to reduce costs. The last global recession has created a tense business climate where everyone seems to know someone who has lost a job. In turn, employees who have kept their jobs are worried about their job security and experience intense anxiety about the future.

Managers seem especially vulnerable to the effects of a recession since they are typically charged with meeting organizational goals and partly blamed when the organization fails to meet performance targets. Managerial jobs have been compared to a “pressure cooker” with the popular press characterizing management positions as one of the most stressful organizational jobs. Indeed, managers are the most frequent targets for staff reductions when downsizing which may make them particularly interested in their organization’s performance. For those managers who worry about their organization’s health and thus, their job security, they may feel anxious about their future ability to provide for their families.

Indeed, a recent study conducted by researchers from Northeastern University, the University of Berne, and EDHEC Business School in France showed how the troubles related to company performance can impact managers’ level of stress and even spill over to their family life. In particular, their study of the past major crisis illustrates that managers who perceive their organization as performing poorly are more likely to feel that their work is infringing on their family life.

But what can organizations do to reduce such detrimental effects on their managers’ family life? Also this question was addressed in the study. Usually companies are well advised to offer additional support in cases when managers’ work-family life balance is at stake. Past research has shown that giving recognition to managers’ work, treating them in a fair way, or reducing the degree of monitoring at work regularly can all mitigate the level of stress in the workforce. However, it appears that such support mechanisms do not work in struggling companies as managers seem to be too preoccupied with the critical situation. Most typical sources of support proved to be ineffective during times of crisis and did not shield the managers’ family from the negative effects.

So, given this ineffectiveness of the usual mechanisms to more work-life balance, the study provides important learning. Struggling companies need to be aware how their performance is viewed by their workforce, particularly if their performance could be perceived as worse than reality. Internal rumors go a long way and can exacerbate reality leading to fears and worries. Careful communication of organizational performance, therefore, may steer the perception of staff and managers in the right way and avoid overly pessimistic perceptions. This may be particularly important when facing environmental demands such as a global recession or competitor pressures, as well as during times of organizational change such as company restructuring and shifts in strategy.

Source: Eddleston, K., Sieger, P., & Bernhard, F. (2019). From Suffering Firm to Suffering Family? How Perceived Firm Performance Relates to Manager’s Work-Family-Conflict. Journal of Business Research, 104, 307-321.

Please find attached an authored article on the topic Company crises make managers’ families suffer and what to do about it written by BERNHARD FABIAN, PHD, Associate Professor, EDHEC Business School