The employees you kept may be more stressed out than the ones you let go.

As the recession hit its stride and the layoffs continued to mount, my phone began ringing off the hook with entrepreneurs needing help dealing with downsizing their staffs.

Except that it wasn't the trauma of delivering bad news that they were sweating--it was massaging the tattered egos of the lucky few who they chose keep on.

Hard as it may be to comprehend, many employees fortunate enough to be spared the ax are now suffering, as one client described it to me, "off-the-screen stress." It turns out that psychologists and management consultants have a name (they always do) for this weirdly negative reaction: survivor syndrome.

This disorder drew attention during the early 1980s recession, though many people still confuse it with the similar sounding Stockholm Syndrome, a paradoxical reaction in which a prisoner connects with his captor.

Survivor syndrome works the opposite way: The still-employed, who by all rights should be grateful for having jobs, end up losing their identification with, and even resenting, their bosses. A big reason: Fewer hands on deck means more work for those still around, which can lead to stress, anger and betrayal, especially if the survivors don't feel the company is committed to their future.

Back in the '80s, I devoted roughly half my time to running workshops that taught managers how to deal with survivor syndrome. While the process is neither arduous nor complex, it does require a tricky attitude adjustment--specifically, that you see how survivors' achievement (that is, keeping their jobs) was a Pyrrhic victory.

First step: Hold a pity party. Letting your employees air their feelings about the downsizing will establish empathy, a huge ingredient to effective leadership. Start by having them share general emotions, then move to the sources of the pain--crushing workloads, crimped salaries, whatever. Ask questions. Jot notes. Make it clear that you are taking great pains to listen and that you care.

Be warned, though: At some point, you will come under attack. Under no circumstance defend yourself. Instead, respond with: "Look, I want the situation to improve as much as you do. Give me a list of deliverables, and I'll do my best." Addressing just one item on the rank-and-file's bill of particulars will go light years toward improving morale.

Remember, too, that feelings of deprivation are always comparative. Studies done on how GIs coped with the hardships of World War II found that draftees from the rural South (mostly poor African American men) had fewer complaints as privates than did second lieutenants who went straight from ROTC programs to military service. This seems paradoxical given that a buck private has no control over his life, while lieutenants have myriad creature comforts.

The explanation psychologists give for why this occurred is simple: College boys compared Army life to what they left back home and deemed their circumstance horrific. When draftees made the same comparison, the perceived difference was negligible.

At some point, of course, you have to draw a hard line with unhappy survivors. If they are convinced the grass is greener somewhere else in this dreadful economy, encourage them to follow their dreams. Then you can get back to trying to survive.