Where Did Everyone Go?

By Lisa Takeuchi Cullen

When Winstar Radio Services laid off a third of its New York City staff, the surviving employees felt little relief. Not only had they lost cherished colleagues, but they were also struggling with added work--particularly that of the office manager, who was among those who got pink slips. Although the remaining workers at Winstar (since acquired and renamed Excelsior Radio Networks) resigned themselves to doing their own filing and photocopying, they overlooked one small but essential task. Says Christopher Stogdill, 32, an affiliate marketing manager: "We ran out of toilet paper."

Welcome to the workplace of the jobless recovery, where keeping your position means that your In box swells, your pay and benefits shrink, and bathroom amenities don't magically appear. In an office haunted by the ghosts of laid-off employees, those workers who dodged the hatchet aren't necessarily the lucky ones. They must excel at their old jobs to avoid still looming staff cuts and must also juggle extra, unfamiliar duties.

Workplace experts are only beginning to grasp the phenomenon. "In the information age, knowledge is critical to business--and it's the employee who owns it," says Hamilton Beazley, 58, chairman of the Strategic Leadership Group, a consultancy in Arlington, Va. Beazley coined the term ghost work--now catching on around the country--to describe the additional workload taken on by surviving employees, usually without their former colleagues' trove of knowledge. "It's as if they're suddenly asked to start speaking Greek," says Beazley. "It can be totally demoralizing and can cripple the individual as well as the organization."

The future looks just as spooky. Even as sales pick up at many firms, top executives fear that business in 2003 will remain shaky. With inflation dead, most have no power to raise prices, and they see cost cuts--especially layoffs--as one of the few ways to eke out profits. Companies have already cut 1.2 million jobs this year through October--that's about 3,600 a day--according to Challenger, Gray & Christmas, the Chicago outplacement firm. Sun Microsystems, Boeing, McDonald's and J.P. Morgan Chase have announced that they will slash thousands more jobs in coming months, and many experts predict still other layoff announcements by year's end.

As layoffs rise, so does productivity. The Department of Labor reported last week that nonfarm business productivity clocked an annualized gain in the third quarter of 4% over the preceding quarter. In a typical slump, productivity declines as output tumbles along with hours worked. But this time employers started shedding workers early. And they're still doing it, even though most economists consider the recession technically over. Some employers have boosted productivity by using temporary workers in place of full-time staff. For others, heavy investments in technology made during the fat years are paying off. This holiday season, for instance, the Louisville, Ky., air hub of UPS will rely on a new, $1 billion automated sorting facility instead of the usual army of seasonal temps.

In most cases, however, bosses are simply leaning harder on their remaining staff, pushing some workers to the brink. "I'm tired, cranky and frustrated," says a 35-year-old vice president of the commercial lending division of a Chicago bank. "We don't have any support, so you have to do everything yourself. I don't have time to go out and develop new deals and make my objectives." Still, the tenuous employment scene fills her with enough fear that she asks to remain unnamed. "I have a good salary, so I just resign myself," she sighs.

The Department of Labor has not reported longer work days, but then the government doesn't track hours kept by managers and others who don't get overtime pay. Consider Melanie Mancebo. A recruiter for Atlanta-based IT staffing-and-consulting company AGSI, she's so exhausted from 10-hour days and weekend work that when she gets home, around 8:30 p.m., she heads straight to bed. Mancebo, 34, whose job is to hire tech talent, also handles research, sales and client relations. "We've always done a lot of pitching in around here," she says, "but now more than ever. It's definitely tiring." AGSI has imposed a hiring freeze and has upped productivity 23% over 12 months.

Not surprisingly, any increased productivity gleaned from the sweat of a layoff-decimated work force results in plenty of grousing. Manufacturing workers call ghost work "speed-up" (because the remaining employees have to hustle harder) or "stretch-out" (because of the longer hours). "They call it productivity," says Lane Windham, an AFL-CIO spokesman, referring to management.

Dell, the computer maker, hacked 6,000 of its 40,000 jobs over the past year. During that period, Dell has grown its revenues, profits and market share--thanks in part to the lower prices it could offer because of shrunken payrolls. "A lot of us are unhappy, but what are we going to do--go somewhere else?" says a longtime employee of the company, which is based in Austin, Texas. The computer industry ranks second after telecommunications in layoffs this year, according to Challenger, and that limits disgruntled workers' options.

Agilent Technologies, a Palo Alto, Calif., electronics and tech manufacturer, made Fortune's 100 Best Companies to Work For this year--despite having announced 20% job cuts of 8,000. At the time, employees rallied around management to fight to save the company. But unlike Dell, Agilent continues to struggle, and the surviving workers are feeling the strain. Steve Peterson, 55, a global online-support manager, says, "We are just really working hard and are discouraged that things are not better."

Discouragement and stress are serious issues for ghost workers. "Already we're coping with 9/11 and the possibility of war with Iraq," says Michael Faenza, a social worker and head of the National Mental Health Association. "On top of that, the larger workload and stress on productivity leave workers less able to focus on the work at hand. It can lead to depression, anxiety, substance abuse."

Perhaps the only people more frazzled than those struggling with ghost work are their managers. Jim Pilgrim, a director of product management at e-business support provider Digex, had enough on his hands boosting the rock-bottom morale of his overextended workers. Their Laurel, Md., employer had recently cut 650 jobs. What's more, workers' blues were compounded by a sense of betrayal by the firm's parent, WorldCom. Pilgrim, 46, suffered too. "I go home and run, do yoga and meditate," he says. "It chips away at me, and I see it in other people." Managers "suffer the same sort of shame and guilt as all the workers, but they can't disclose their feelings--and they're supposed to provide the leadership," says Willie Garrett, a psychologist and director of employee-assistance services at Ceridian, a human-resources firm in Minneapolis, Minn.

The problems suffered by ghost workers can be costly. CCH, a human-resources consultant in Riverwoods, Ill., found that this year nearly twice as many employees as last year are logging unscheduled "sick" days for "personal needs"--21% of total absences. Overall, absences are costing employers an all-time high of $789 per worker. "When people get stressed, they are more likely to call in sick, even if they aren't," says Helen Darling of the Washington Business Group on Health. "But when there have just been layoffs, the opposite occurs." Those handling lots of ghost work come to the office even when they are sick for fear of being laid off--which doesn't exactly help their well-being or that of their co-workers.

Many employers remain woefully unprepared to help their work forces adjust. Some 30% of firms polled last year by the Society for Human Resource Management said they took no steps to reduce employee stress in the wake of layoffs. The growing sense of crisis among ghost workers, however, is forcing some employers into action. Pinnacle West Capital Corp., an energy company in Phoenix, Ariz., that is eliminating 600 jobs, plans to stop requiring so many meetings and reports.

One consolation that those burdened with ghost work won't see is cash. With raises frozen and more health-care costs passed on to workers, some employers are recognizing the need for what John Challenger of Challenger, Gray & Christmas calls "recession perks." His firm queried companies across the country and found many that had adopted cheap, creative ideas. Harley-Davidson lends its motorcycles to workers and rewards some with front-row parking. A Florida-based Toyota distributor built an on-site day-care center for employees.

Telecommuting is another popular perk. Twenty-eight million Americans telecommuted in 2001, up 42% from 1999, according to the International Telework Association and Council. "Of course I used to telecommute two days a week, and now it's down to one," says a mother in her 40s who works in sales at a top Wall Street firm. The worker, who requested anonymity, survived a massive layoff and has taken on many duties once performed by junior employees. "Still, I feel fortunate."

Some companies look to kill costs and ghost-work stress with a single stone: unpaid vacations. Since BellSouth offered unpaid leave to its 80,000 remaining employees in July, almost half have grabbed it--saving the Atlanta-based telephone company $14 million in payroll costs. Some firms, though, have made unpaid vacations mandatory. Last year Dell demanded that workers take one-week vacations without pay. "That had a lot of people grumbling," says an employee.

Some employers have managed to avoid layoffs altogether by asking all their workers to sacrifice. Patrice Tanaka, 50, who runs her own New York City public-relations firm, began trimming costs last year by deferring tech upgrades and bonuses. She then snipped staff perks like free bagel breakfasts, ice cream, yoga--even the fresh flowers that once perfumed the loft offices. It wasn't enough. In a last-ditch effort to hold on to her staff of 40, she asked her partners to swallow a 20% pay cut and other workers to forgo 10%. "It's not a Utopia; we have our good and bad days," she says. But business is picking up, no one has left, and their kindly yoga instructor even donates her time. Says Tanaka: "She says we need it now more than ever." --With reporting by Leslie Berestein/Los Angeles, Elizabeth Coady/Chicago, Collette Parker/Atlanta, Eric Roston/Washington and Melissa Sattley/Austin

With reporting by Leslie Berestein/Los Angeles, Elizabeth Coady/Chicago, Collette Parker/Atlanta, Eric Roston/Washington and Melissa Sattley/Austin