It takes an average of seven months for companies to recover from layoffs — and HR teams aren't using the strategies most likely to speed that up
When a headline pops up on our screen announcing a new round of layoffs at Company XYZ, first reactions are usually alarm and concern. But soon we get on with our day and the news is forgotten.
For the employees at these companies undergoing layoffs, however, the impact is considerable – and a new report suggests the ripple effect can take longer than expected.
Among 69.8% of respondents whose companies have fully recovered from layoffs, the average time for recovery was 7.2 months, according to a survey of 600 HR leaders who had either led or been directly involved in a layoff within the past 24 months.
The firm behind the survey, Careerminds, found that 40.2% said their company's culture managed to recover within six months, but 58.5% said recovery took a full 12 months.
Trust, confidence falter with layoffs
Not surprisingly, trust is usually hit the hardest after layoffs: trust in senior leadership fell by 18.4% while trust in direct managers dropped by 14.7%.
Confidence in the company's long-term future also declined by 19.1%, according to the poll.
“It’s common for organizations to focus their support on employees who are leaving, offering resources such as outplacement services, severance packages, and references to help ease the transition,” says Amanda Augustine, resident career expert for Careerminds.
“While these are important investments, they only address one side of the equation. Layoffs also take a toll on the employees who remain. They've just watched colleagues lose their jobs, and many are left questioning the organisation's decisions and feeling less confident about their own future with the company.”
So, how many employers take into account the full impact of their restructuring efforts? While I’m sure many acknowledge the logistical challenges and the employee rumour mill about who, what, when and why, I doubt they appreciate the sharp and lasting effect on remaining employees.
For one, many workers are unaware of exactly which coworkers were let go. Often, the media is the first to report the numbers, or subgroups on Reddit. Then there’s the way people are let go, be it a Zoom call for a group, or an employee suddenly has no access to workplace emails and messaging apps.
And if the layoffs are large or seemingly came out of nowhere, or occurred despite strong financials, the impact can be that much heavier for remaining staff.
All that to say, for an organization to take an average of seven months to recover is understandable. But for those employers who carry out more than one mass layoff in a year, or several over the course of several years, it’s hard to imagine the ongoing impact to the productivity or wellbeing of employees.
Boosting recovery times
Encouragingly, the Careerminds survey shows there are a few ways that HR can try and build back up what’s been broken after layoffs.
The most popular? Holding a team event after a layoff saw recovery times 22.1% faster than those that didn’t do this — but only 11.1% of HR teams do this.
Other popular strategies with faster recovery rates include:
- A focus on “refreshed company values” (20.2% faster recovery but 11.8% adoption rate from HR)
- A commitment to rehire “boomerang” staff (18.6% and 11.7%)
- Board-level acknowledgment of the cultural impact (17.5% and 6.3%)
- A public no-layoff-window commitment (12.8% and 8.3%)
- One-on-one conversations between managers and employees (11.1% and 48.7%).
And if you’re wondering about the strategies that really don’t move the needle on culture recovery, the Careerminds survey found town halls explaining the layoffs had the lowest recovery speed rate (0.3% but with an adoption rate of 36.8% by HR).
These numbers suggest there’s a lot that HR and employers can do to soften the blow, but they’re not doing them. Instead of focusing just on the upfront work — which is arduous, no doubt, in figuring out the numbers and individuals being laid off — the aftermath is equally important in terms of bolstering the culture and next steps.
The data suggests the costliest part of a layoff may not be the severance — it's the seven months of fractured trust that follows.
