'When something like a layoff happens, it reminds us that the relationship with the employer is very transactional'
With another year over, it’s often a popular time for layoffs, as companies react to financial results and cut accordingly.
Of course, the immediate impact can be very difficult for the dismissed employees and unsettling for the “survivors” — but employers may be surprised to learn that consequences for the workplace can extend for several months.
That’s according to a recent survey by Glassdoor, which found that in the 30 days following a layoff, employers’ overall rating drops four percent, on average, to 3.49 from 3.66 (out of five).
However, those overall ratings stay that low even 180 days after the layoffs; the same trend is true for other metrics: senior management, CEO approval and career opportunities, compensation and benefits, culture and values, diversity and inclusion, and work-life balance (see chart below), finds Glassdoor.
“When the organization goes through layoffs, it really brings to the forefront that we aren't a ‘family,’ we're not one big team,” says David Zweig, professor of organizational behaviour and HR management at the University of Toronto Scarborough.
“This is a very transactional relationship and so, of course, that is going to have an impact on people's well-being, on their satisfaction, their burnout or work-life balance.”
If the layoffs were handled badly, if they were done abruptly or in a way that’s perceived as unfair, employees remember, he says.
“They're thinking in their heads ‘Wow, my employer isn't going to give me all of the things they might have promised me.’ The way that former employees were treated still sticks in their mind. So it's no surprise at all that that is going to linger for quite a while. Because if their former colleagues are treated badly, who's to say that they won't be treated badly the next time there's another round of layoffs?”
Impact of layoffs: Surviving the cuts
The issue of “survivor syndrome” has been well-researched, when people see their colleagues laid off and it results in a negative psychological impact, says Nita Chhinzer, associate professor in human resource management and business consulting in the Dept. of Management at the University of Guelph.
“What we see is greater mistrust in management, lower organizational commitment, lower job satisfaction, an increase in absenteeism,” she says.
“Collectively, those result in behaviours that don't improve employee productivity in any way… and the remaining employees are left wondering whether they're valued.”
Those employees who remain will look at how the organization handled the layoffs, in terms of how it treated the departing employees and how it explained the rationale for the layoffs, says Zweig.
“They're taking that in and so if you handle the layoffs well in terms of… there's fair procedures, there's dignity and respect … that can help preserve elements of the culture. And so thinking about the impact of layoffs on survivors is really, really important.”
Impact of layoffs: Questioning relationships
Even for those employees who are relieved they weren’t laid off, there’s guilt about surviving a layoff. And it also makes people question the psychological contract that they have with their employer, he says.
“We all create a psychological contract, whether the employer promises us things explicitly or implicitly, we expect them — we give them things we want, we expect things from them.
“But when something like a layoff happens, it reminds us that the relationship with the employer is very transactional... it's a reciprocal relationship: ‘You give me X, I give you Y.’”
And yet many people have relational kinds of feelings about their employers, says Zweig.
“We want to feel valued by the organization, we want them to respect us, we want them to appreciate us, give us some sort of job security. But when something like a layoff happens, that really makes those transactional elements of the relationship much more salient for those that survive a layoff. And so we start to focus more on ‘What are they giving me? What am I giving them?’”
Impact of layoffs: Pushing back
Even while layoffs are prominently in the news, they can still come as a shock to staff, and survivors may then question, “Is my exchange relationship with work valid?” says Chhinzer.
“We see this with trends like quiet quitting, or social loafing, or individuals who are saying, ‘I'm not willing to go beyond XYZ for my employer.’”
That can lead to an increase in people who are setting boundaries and pushing back by not demonstrating that same level of base level loyalty towards their organization, she says.
“And it's not in ways that we could measure using our traditional measures. In the past, we've looked at things like tenure — how long have people been employed with organizations — as a measure of if they're loyal or not. But it's coming down to these more operational things; it's coming down to when we're being asked to take leadership on teams, asked to share our ideas, asked to do more than what we are required to do for our jobs.
“That extra role performance is actually something they want to keep committing to because it benefits the organization [but] they're beginning to doubt whether it benefits them.”
Impact of layoffs: Perceptions of fairness
Research has shown that negative reactions can be mitigated when people feel that the procedures used to determine the outcome are fair, and people are treated with dignity and respect when those outcomes are enacted, says Zweig.
“It's not necessarily about being transparent about everything, but it's being upfront and getting a real justification for why the negative outcome’s occurring. So why layoffs are occurring and not just shifting blame or giving some sort of excuse, but really to help people understand what the situation is,” he says.
Another aspect of fairness is “distributive justice” which is about the probability or likelihood that one group will suffer while the others don't.
“When we see people who are laid off who are the strong performers, or people who are the ones who take initiative in the workplace or something happens, we think to ourselves ‘Out of all of the people to cut, why are the ones who gave it their all and produced and had the positive outputs, why are these the ones who are being laid off?’” says Chhinzer.
There’s also the issue of equity, meaning equitable outcomes for those laid off, she says, such as the employer giving generous severance packages, following legal obligations or offering outplacement services.
If there are gestures that demonstrate care, those things can mitigate the negative impact,” says Chhinzer, “and then the survivors, they're still harmed, but they get into recovery a little bit faster.”
Impact of layoffs: Work distribution and turnover
One of the biggest challenges that people have after a layoff is a lack of clarity in regards to work redistribution — and often that’s forgotten, she says.
“What happens to the gaps that were created? In that case, the leaders need to mobilize or HR needs to mobilize the managers in regards to clarifying the structure accountabilities and responsibilities of members in the in the team.”
The employees who remain are dealing with the fact that there's fewer people to carry the same workload, so they're probably being asked to do more as well, says Zweig.
“When organizations tend to make layoff decisions, they get legal advice, they get HR advice around the nuts and bolts about how to handle it — a lot less planning often goes into ‘What is the work going to look like day to day for specific employees, the ones who are left behind?’ That often falls to direct managers or leaders to try and figure out across organizations and how they address that.”
Not surprisingly, turnover is one of the clear outcomes, he says.
“Of course, people are going to start looking around going, ‘OK, what are my options here? Do I need to cut and run? Do I want to stay?’ So that's why the way that the layoffs are done and how people are treated is so very, very important.”
Softening the blow of layoffs: Transparency
Communication around the layoffs is, of course, a huge consideration for HR and leadership to soften the blow.
Every situation is organization-dependent but it may be advisable to give some kind of warning before the layoffs are carried out, according to Zweig.
“That's a signal that you respect your employees enough to tell them ‘Listen, this is the situation, this is what might occur’ and share as much information as possible for people to prepare them for the outcomes that might be coming around the corner.”
Transparency prior to the layoffs would help to reduce the shock factor, says Chhinzer.
“If people were shocked by the news, then perhaps you haven't been articulating the true position of the company clearly enough; for example, if you're going to engage in layoffs because of organizational decline — a loss of customers, financial squeeze, whatever it might be even strategizing… [or] because you're trying to pivot or adapt your workforce to whatever the trends are externally to your company, and your employees are caught off guard, then that means that there's a disconnect between what you're seeing and what they're seeing.”
Softening the blow of layoffs: Empathy and authenticity
But after the change happens, helping individuals, especially middle managers, reach a recovery mindset is all about demonstrating a commitment back to the organization and communicating effectively, she says.
So it's about providing information, being transparent, sharing information and holding town halls, for example.
“We want to lead with some level of empathy, and recognize the pain that people have, but not necessarily feed into the pain. So in these environments, when we're having those conversations, conversations need to be focused around recovery: ‘What are we going to do now?’”
In messaging out to employees, leadership and HR need to talk about the real reason this is happening, says Zweig.
“Why is it happening? Are there going to be more layoffs? … Sharing that kind of thing goes a really long way in preserving or even mitigating some of the negative feelings, negative behaviours.”
Group layoffs can be a shock to survivors, and it can take some time for employees to normalize around that, says Chhinzer.
“But they're also a little bit cautious at the start. So if you’re going to offer something like a training session or a recovery session, it's fine to offer that but it might be perceived as tokenism or fake if the behaviours that need to be aligned with that are not there,” she says, such as offering career development training if there's no organizational culture behind it.
“If you are an organization that is likely to lay off in the future, you don't want to apologize and try to rebuild this commitment to job security if you are not the employer to offer that — that becomes disingenuous.”
And if the condition remains volatile, with the possibility of future layoffs, says Chhinzer, the recovery efforts should really highlight that “We're still not out of the woods, we're going to try our best to work together as a team, but this is the goal that we want to work on.”
