Introduction The employees reaction to layoffs implementation means how would employees that survived and not survived

from the layoff programs react to the implementation of layoff decision that changes their employment status. (Erbas A., 2006) There are few types of layoff action which includes temporary layoff, indefinitely layoff, and indefinite/temporary reduction in time. The implementation of a layoffs program is necessary when organization is in financial constraints, relocating operations, restructuring and downsizing. However, there is a painful trade-off between the process of layoff and the outcomes of layoffs. Employees that stay from the program might face retention issues of survivor guilt or suffer from increasing stresses of working in a company that faces economic problems. Besides that, employees are expected to react with less job involvement, more resistance to change, decreased job satisfaction, reduced work effort, and reduced organizational commitment. On the other hand, those who were sent off will be unemployed and might bring further actions towards the company. The post-management of employee reactions are the main challenges for management to implement a successful layoff program (Erbas A, 2006). Therefore it is important to identify these reactions. The above reasons have reflected the significance of research in Employees Reaction towards Layoffs Implementation. Since any layoff decision made will have direct negative impacts on employees morale and organizational effectiveness, thus its very important for the company to study in dept in this area to understand employees reactions in order to manage and minimize the costly impact leftover on its greatest asset- The employees. Prior to this research, there are a lot of research studies in this area such as the study on Planning and Implementation of a Downsizing Program by Erbas A., 2006 , articles on post-layoff management and layoff survivor stress to its client by Certified Public Accountants(CPA), 2009 in Australia. Numerous researchers have focused on the impact of downsizing whose employment is terminated due to reasons independent of job competence (Cappelli, 1992) and Kay Devine, Trish Reay, Linda Stainton, & Ruth Collins-Nakai (2003) on outcomes experienced by victims and survivors. The research objective of this study is to assess the how and what are the possible employees reactions towards layoff implementation. This study also attempts to examine the key areas of layoffs by identifying pros and cons, critiques and to provide recommendation to the problems addressed through a case study on Malaysian Airlines System Berhad(MAS).
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Employees Reaction to Layoffs Implementation Layoffs usually occur because of insufficient funds, lack of work or organizational change. There are some layoffs being carried out based on discrimination of age, sex, religion and nationality. Employees are protected by federal law and it is their responsibility to ensure that layoff is not being carried out under discriminatory or unethical issues. Layoffs can be divided into two types i.e. voluntary and involuntary. Voluntary layoff is staffing reduction strategy that involves requesting or allowing the employees to voluntarily give up employment or benefits. Some employees may be considering of pursuing other work or life goals and thus, this could be a good opportunity for them to proceed with their pursuit. On the other hand, involuntary layoff is also a staffing reduction strategy but employees will be randomly selected to be laid off. It can often lead to morale problems and spread quickly through the company. However, laid off employees are entitled to unemployment benefits and generally, these include some compensation along with training and other methods of assisting them in their new jobs search. Whether it is voluntary or involuntary layoff, employees will be compensated and protected by the federal law if any wrongful termination happens. Despite the laid off employees, the terminations may also impact the remaining employees. Survivors may become more withdrawn from their jobs and organization to the extent that they believe that the layoff has been handled unfairly. Moreover, these tendencies should be especially true when the layoff victims were included in survivors' scope of justice. They would encounter increase in resignation, fear and depression, deepening sense of loss of control, and heightened, more focused anger (Noer, 1993). This is when fear and insecurity of their job position take over and thus, their loyalty, morale and job satisfaction will be affected. This is because they feel insecure about their job in the sense that they are afraid they will be next in line for the layoff. Meanwhile, the laid-off employees may experience changes in their mental and physical health. They would start off with experiencing shock and disbelief, grief and helplessness. Subsequently, they would have a negative attitude towards their work, which led to increased accidents and excessive absenteeism. They will be depressed, stress, worried, loss of self-esteem which will indirectly cause them to suffer from physical health problems such as coronary disease, diabetes, arthritis and others. Eventually, this would result in the loss of productivity of workers. Reactions of employees being laid off have direct relationship to the perception, attitudes and behavior of the surviving employees.
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Because of such negative effects that implementation of layoffs has on employees, it is essential that managers handle the aftermath of layoffs with care. Managers have to ensure that the remaining staff is in alignment with the vision and mission of the company and that their productivity is upheld. Communication during this stage is essential. Managers must tell the truth, and overcommunicate (Mishra, Spreitzer, and Mishra, 1998). By maintaining proper and positive communication with the staff, managers can ensure that the employees still feel motivated and will continue to strive for their jobs. Managers should acknowledge employees anxiety, and assure them that no other positions will be affected in the time being (if this is true). Managers should try to make the employees understand the reason why the company conducted the layoff program, and express optimism for the future. Managers should align goals throughout the organization and clarify roles and responsibilities (Graddick and Cairo, 1998). Managers should try incorporating employees ideas and suggestions, at the same time making them feel valued, by asking for suggestions for improving department effectiveness. In order for layoffs to be conducted more effectively, managers should take several steps when implementing layoffs. Managers should be trained on how to effectively communicate the downsizing (Mishra, Spreitzer, and Mishra, 1998). Managers should be more knowledgeable about the layoff process and available resources (e.g. Employment Unit, Benefits Unit). Also, they should try to understand the employees perspective and attempt to be more understanding. They should also maintain open communication while talking to the employees, and allow the employees to express their emotions. All employees should be treated with respect and dignity. Allowing laid-off employees to understand the reason of their termination and providing them social support can help them to rebuild their confidence. Survivors should be allowed to say goodbye to laid-off workers. This display of empathy, generosity, and understanding goes a long way, and helped add on to the perception of fairness in the minds of both the survivors and laid-off employees. There are pros and cons in implementing layoffs. It could be the best decision to make for cost reduction when a company is going through financial crisis but businesses should be aware that layoff is also costly to be implemented. Compensations, training costs and many other factors need be considered before a layoff decision is made. As long as it brings more benefits to the company in long term and layoff could minimize the short-term loss, then it is a good business decision. Otherwise, a company should consider other alternatives.
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Layoffs and employees reaction to layoffs play significant roles in shaping the future of a company. After layoff programs, survivors tend to be more fearful and depressed (Noer, 1993). This would inevitably reduce their motivation at workplace and eventually cause lower productivity amongst them. However, on the other hand, when fear and insecurity take place among survivors, they might feel the intense need to secure their positions at workplace, and hence increase their efficiency and productivity. This would, instead, bring positive effects to the company.

Case Development The company of our choice is Malaysia Airlines System Berhad (MAS). MAS is one of the Asias largest airline companies providing airline services across 100 destinations to more than 14 millions of passengers that promise them with affordable and reasonable fares as well as safe trip and quality services. MASs trademark is to win smiles and services that come from the heart of the customers. Therefore, its cabin crews are exposed to a series of training which aims to enhance their skills and knowledge in selected areas in line with the customers request. Implementation and activities involved in Mutual Separation Scheme (MSS) In year 2005, MAS was in the verge of bankruptcy. Idris Jala who took over MAS, identified a few major problems faced by MAS including low yield, inefficient network and overstaffing and low productivity. In the attempt to reduce cost and to overcome the issue of over-supply of manpower, MAS announced Mutual Separation Scheme (MSS) in 22 May 2006 to right size the workforce. Mutual Separation Scheme (MSS) is a voluntary exercise where both the employee and employer have to agree for an employee to leave the company. Before MSS was implemented, MAS had taken action to have several discussions with employee unions and associations on the terms and conditions of the MSS. All MAS employees whom were Malaysians, permanent and confirmed employees of MAS and locally recruited Malaysian staff posted overseas were eligible for the MSS. However, contract workers and foreigners were excluded from the scheme. Invitations were sent to eligible employees who had 14 days period to make a decision. Once the employee had accepted, the respective Divisional Heads would then recommend whether the staff could be released. The management would decide the MSS candidates in two weeks time. Employees whose MSS applications had been approved, would receive payments based on their current monthly salary, ranging from 1 month to 3 months, for every year of service in the company, a one-off medical benefit payment of RM 2,000 per staff, hospitalization benefits for one year, annual leave buy-back on all unutilized staff leave and one complimentary travel air ticket. (Adopted from Malaysia Airlines Announces Mutual Separation Scheme To Rightsize Workforce, 22 May 2006)

Malaysia Airlines had activated Help Desks in KL International Airport (KLIA) and Subang, including a toll-free Helpline to assist staff throughout the MSS exercise. Furthermore, to help employees who made decision to accept the MSS, the company had discussed with various airlines on outplacement opportunities and the Ministry of Human Resources and external parties on advisory and counseling services. Employees reaction towards Mutual Separation Scheme (MSS) The employee union in MAS also known as Malaysia Airlines System Employees Union (MASEU) claimed that at the beginning stage when the scheme was introduced, the union had no knowledge about the plans of MAS in MSS nor the benefits that will be given to the employees who agreed to accept and apply for the scheme. While waiting for the details of MSS from MAS top management, MASEU only hope was to prevent the element of coercion if MSS was to be implemented. Alias Aziz, being the president of MASEU was concerned about the future job opportunities of those employees aged between 35 and 55 years old who were under the scheme as they might face difficulties in searching for new jobs when their services with MAS were terminated. In 2006, MAS also carried out route rationalization program where the rural air service (RAS) operations in Sabah and Sarawak were handover to Air Asia which then set up Fly Asian Xpress (FaX) to operate the service. This abrupt decision was strongly objected by Malaysia Airlines System Employees Union (MASEU). However, the plan still continued on and MAS East Malaysia operations were practically closed due to the cost cutting measures. MASs staffs who mostly originated from Sabah and Sarawak were offered with MAS Mutual Separation Scheme. Fortunately, majority of the employees who took up MSS were offered job by FaX. Nevertheless, the government realized FaX could not serve East Asia flights with efficiency after some time and thus decided to hand rural air service (RAS) operation back to MAS. MAS set up a subsidiary company entitled MasWing to operate RAS. In an open interview in Miri and Kota Kinabalu, MasWing invited all FaXs staff for an open interview except all the former MAS staffs who took MSS. The staffs were not satisfied with MAS discrimination because of their choice of taking up MSS at the first place. They claimed that they applied for MSS because they had no other choice or else their services would still have been terminated by MAS because of the redundancy of staffs. Furthermore, it was practically hard for
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the staffs to leave their families members behind back in Sabah and Sarawak and relocate to West Malaysia to continue working for MAS. MasWing need pilots, co-pilots and cabin crew but yet they still barred staff who had taken up MSS from applying. In the end, MasWing chose to recruit captains and co-pilots from Indonesia and the Philippines, paying them expatriate rates double what a local would earn (Rejal, 2007). Ex-MAS MSS recipients were disappointed with MasWing action of employing expatriats at twice the cost of employing Malaysians. They had sought help from Malaysia Immigration Department, the Department of Civil Aviation and the Human Resource Department to protect their rights yet they were not entertained. Captain Wan Mohamad Ali Bin Wan Abdullah, Flight Operations Manager of Fly Asian Xpress Sdn Bhd said that they are willing to meet any government agencies or anybody else to hear their predicament. They are asking for a mere chance to serve their own airline over those which will be a drain on their resources (Capt. Wan Mohamad, 2007) Advantages of Mutual Separation Scheme (MSS) According to annual report 2006, implementation of MSS helped MAS to reduce its manpower by 15% and it solved the problem of excessive workforce in the company. It helped to increase productivity of the employees as MAS could fully utilize its human resources instead of having manpower exceeding the work to be done. Reduction of employees also reduced the cost of wages and salaries in long run. It contributed a success key to beat the target of Business Turnaround Plan which is to report a reduction in loss for more than RM1.1 million. MSS promote its layoff scheme to be an agreement between the employees with the employer- MAS. MSS allows the employees to apply for it voluntarily and unlike other layoff scheme which forced employees to leave their jobs. Clarification has been made during the announcement of MSS and reasonable compensation has been made to the approved applicants as stated before. MSS is successful in avoiding any negative and aggressive reaction from the employees. Disadvantages of Mutual Separation Scheme (MSS)

However, the implementation of MSS affects the image of the company. Investors and customers tend to be unconfident with the company. Therefore, some existing transit passengers chose other Airlines company to board their flights. This has also caused the remaining employees to feel insecure with their jobs and it takes a long time to rebuild their loyalty to the company. It will also cause the company to lose some qualified and experienced employee. If they are employed by other Airlines company, it will be a great loss to the company. Furthermore, MAS has to spend a big amount of money in the beginning stage of MSSs implementation. This is proven when MAS said that the company will pay some RM500 million for the release of 2,622 staff who have been successful in their applications under its mutual separation scheme (MSS). (Samsudin A.M. , 2006). MSS also leads to other human resource issues include discrimination and diversity. As mentioned above, Former MAS staffs who took MSS were being discriminated by MasWing. This causes employees dissatisfaction towards the Mutual Separation Scheme which falls under MAS. Critiques Implementation of MSS caused remaining workers to deal with ongoing job insecurity and increased workloads. This will reduce the morale of the workers and thus reduce the overall operations efficiency of the airlines. Implementation of MSS will also cause MAS to face difficulty to attract new potential employees to join the airlines in the future as those new applicants are afraid with the high turnover rate of MAS employees as seen in the year where Mutual Separation Scheme (MSS) is introduced. Subsequently MAS may face the situation where they are lacking of young generations to support the airlines. Besides that, MSS did not guarantee the desired level of employees to be reduced. MASs target is to dismiss 3000 to 5000 employees through MSS. However, there were only 2,622 employees being dismissed in fact. If there is too few number of applicants, MAS will not be able to reduce its excessive employees until they reached the most appropriate level. On the other hand, the implementation of Mutual Separation Scheme will help the remaining employees to improve on their work performance. This is because for those who have obtained MSSs offer and choose not to accept the offer will automatically readjust their work attitudes and increase their efficiency in the work. They are afraid they will be sacked somehow
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in the future if they improve on their working attitude or performance. Thus, this scheme is beneficial to the company.

Recommendations Support for remaining staff To help the remaining staff to deal with job insecurity and increased workloads, MAS should show support to the remaining staff. MAS can organize workplace celebrations for them as an appreciation for their work effort. MAS should also acknowledge trust concerns to the remaining employees. In addition, MAS should set realistic performance expectations for the staff to increase their morale in workplace. Increase the workloads gradually and provide adequate supports from higher management will help to increase employees trust towards the management, contribute creative ideas and commit to new ways of doing things. Reinforcement of post-layoff performance After the implementation of MSS, MASs reputation and brand name were being affected. It was followed by some crucial negative impacts which included losing of customers as well as foreign investors confidence and trustworthy towards MAS. In order to rebuild their confidence, MAS should make a declaration about the post-layoff position of the company through holding news conference. Apart from that, MAS should provide guaranty to public that the quality of service will be maintained and even improved although there is a 15 percent reduction in workforce. It is useful to lure former customers back to MAS and to attract new customers. Potential foreign investors may gain back their confidence towards MAS. Hence, revenue and investment results in MAS can be boosted. Reemployment of laid off employees It is advisable that MAS to reemploy the laid off employees when MAS faced a shortage of pilots, co-pilots and cabin crew for MasWing. MAS should not bar all of the laid off employees under MSS from applying for the jobs. MAS should consider about the profession and expertise of the laid off employees. Superior laid off employees should be reemployed instead of hiring expatriates with doubled cost of employing the locals. This could reduce the cost of salaries as
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well as the learning costs of new employees as the ex-MAS staffs were familiar with its operation. This could enhance the remaining employees impression and loyalty towards MAS due to the return of their former colleagues. Hence, productivity per employee can be improved through their better performance. Reconsideration of to whom the invitation to accept MSS should be sent MAS had sent Mutual Separation Scheme (MSS) offer to all MAS employees who possess the characteristics of being Malaysians, permanent and confirmed employees of MAS and locally recruited Malaysia staff posted overseas. However, the company did not categorized those offered with MSS scheme staffs according to their age group and analyzed whether they should be allow to take up the scheme. MAS should offer MSS scheme to those staffs aged below 45 years old. This is because those employees who are between the range of 45 to 50 years old are those well-experienced employees who had familiarized with MASs operation for years. They could be those higher level managers in the corporation and they could contribute by helping MAS in their cost cutting measures. MAS should appreciate their existence and not inviting them to take up MSS scheme. Other than that, early retirement could be offered for those who were above 50 years old with better benefits such as offering EPF till death do them apart.

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Conclusion A layoff program usually comes along with managements plan to downsize operations, restructure or relocating operation. It is even more attractive for company to implement it during difficult times. Although layoff implementation can help the company to achieve its short-term goals, such as immediate cost-cut to deal with financial distress, but it could have a serious consequence on its employees which could then become an obstacle for company to achieving its long-term operational effectiveness and cost-efficiency. Therefore, to avoid the disappointment of a failed downsizing effort, management should anticipate and be proactive in counteracting employees negative reactions created through layoffs implementation. Management should know how they will react towards the decision and so as to design a strategic plan for post-layoff management. This understanding should provide managers with a framework for planning and implementing a layoff program that will elicit less work related stress and more positive or less negative. In year 2006, MAS which was in the verge of bankruptcy successfully overcame the distress by introducing a MSS that subsequently lead to reduced cost and had overcome the issue of over-supply of manpower. It became financially solvent after the implementation but various post-layoff problems also come along with the solution. Various employees reactions can be observed from the case study. Some employees were supportive with the plan but some were not. Those who chose to stay faced stresses because of increasing workload and low morale, while others who chose to leave benefits from the little compensation suffer from unemployment and reemployment problems. Its performance was affected greatly by the negative reactions. The poor post-layoff management and the controversial reemployment practices by MAS had caused the company a lot of problems. The unpopular practices had certain impacts on the companys reputation and young pilots were deemed to be more resisted to work with MAS because of its unfair discriminatory practices towards employees who voluntarily left the company under Mutual Separation Scheme (MSS). One of the recommendations suggested by
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our group is to reinforce its image by reoffering job opportunity at MAS to those who accepted MSS so that MSS is still relevant for MAS to use in future downsizing efforts. In short, companies should anticipate and take employees reactions when planning and implementation layoff program in order to enjoy the desirable benefits in the long run.

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