The objective of this study was to investigate the self-reported well-being of employees facing organizational change, and the effect of an intervention. It was a controlled intervention study. Subjects were allocated to study and control groups, and brief individual counselling was offered to the subjects in the study groups. Questionnaire measures were administered before and after counselling (a 3-month interval), and non-counselled subjects also completed questionnaires at the same times. The setting was 15 estate offices in an urban local authority Housing Department. Subjects comprised the total workforce of the Housing Management division: 193 employees, male and female, aged 22–62 years, facing compulsory competitive tendering between 1994–97. Main outcome measures were baseline and comparative measures of psychological morbidity, including the General Health Questionnaire (GHQ) and the Occupational Stress Indicator (OSI). Questionnaire response rates were 72% and 47% on first and second occasions respectively. The uptake of counselling was 37%. In comparison with (1) the UK norms for the OSI and (2) the norms for a similar occupational group, this group of workers were under more work-related pressure and their self-reported health was markedly poorer. They were not however at a disadvantage in terms of coping strategies. Those accepting the offer of counselling were subject to greater levels of work stress, had poorer self-reported health and markedly lower levels of job satisfaction than those who did not. Questionnaire scores were not significantly different before and after counselling, giving no evidence of treatment effects on symptomatology. However, almost all subjects rated counselling as having been extremely helpful. This study suggests that adverse effects on staff facing organizational change may be ameliorated by improved management practice. [ABSTRACT FROM PUBLISHER]