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The effect of layoffs on remaining employees becomes worse during a crisis.
18 May 2020

Effect Of Layoffs On Remaining Employees During A Crisis

The effect of layoffs on remaining employees during a crisis is worse than in normal times. In normal times they’re bad. Crises compound them.

Effect of Layoffs on Remaining Employees During Normal Times

In normal times, research shows remaining employees have a 41% decline in job satisfaction, 36% decline in organizational commitment, and 20% decline in job performance. Quality and safety suffer too. Stress-related illness rise 50%.

Now, the effect of layoffs on remaining employees is not the same for all. Research shows a small portion of the workforce does not feel this. Personality plays some role. Not all employees have the same emotional empathy and sensitivity as others do.

A key factor minimizing this effect for some is the degree to which they feel control over their fate. Uncertainty is low for them. They don’t see a layoff in their future.

How Crises Compound the Effect of Layoffs

The effect of layoffs on remaining employees is not the same for all.

In normal times remaining employees from layoffs suffer declines in job satisfaction, commitment and performance. Crises make these worse.

Crises raise uncertainty. They erode feelings of control. Employees feel more at the mercy of events. If the crisis goes beyond the firm to the community, society, state or nation, uncertainty grows further. The feeling of control becomes a shadow of itself in normal times.

The key feeling of long-term security leaves. As firms let go employees, others have to pick up those duties. Crises are crises because they upend rules. They upend processes.

In the highly digital, processed and standardized work culture of today, workers lose these security blankets in crises. These were set for a normalcy that no longer exists. Strict rule-based cultures are less creative, adaptable and responsible than those that operate more under a sense of guidelines than rules. Crises showcase these differences.

Even going to the well of experience might leave one finding it dry. Crises are often crises because they’re unique. That means few have experienced working through them.

Getting a Workforce Pass the Layoffs in a Crisis

The more employees feel a sense of control the more a company can fight the effects of layoffs on remaining employees during a crisis. Yet, this must bear fruit. It’s not only about control for the employee. It’s the sense employees have that management has things under control.

That means going to employees who are comfortable working as generalists outside of rules and processes. Crises will likely demand new divisions, processes and rules. Such employees are best suited at crossing the old to come up with the new to attack the crisis.

In short, to minimize the effect of layoffs in crises, the enterprise must not only look at new ways gaining control of its business. It must look at the people in its workforce in new ways too.

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