The Effect of Layoffs in the Workplace

January 27, 2023

Let's talk layoffs & how they affect current employees. We all know that in the past few months, 150k+ employees have been laid off, putting them in a sticky situation. Companies often say, "our people are our greatest asset," but then proceed to cut 20% of their staff. But what about the lucky employees who made the cut? Their morale?

Don't take it from us - take it from Harvard Business Review. After a layoff, survivors experienced a 20% decline in job performance. Layoffs can cause employees to feel they've lost control: The fate of their peers sends a message that hard work and good performance do not guarantee their jobs. Employees who survive the layoff may struggle with anxiety, insecurity, low morale, sadness, and survivor guilt, which leads to disengagement and hinders job performance.

Research shows that anxiety about job security, grief for coworkers who were let go, and overwork can reduce innovation. Quality may decline as employees focus on improving productivity to keep their jobs. Managing talent becomes more difficult as existing staff resign. Reputational damage may make it harder to attract high-quality new hires.

About 70% of "layoff survivors" say their motivation at work has declined since the layoff, according to a survey done in late November by BizReport. Additionally, 66% report they feel overworked since the job cuts, and a third of those who survived a layoff believe that things will worsen for their company in the future. Workers feeling insecure in their jobs and higher levels of stress lead some employees to quit out of frustration.

In conclusion, layoffs can have a significant impact on the morale of current employees. While it may be necessary for a company to make job cuts, it's important for leaders to be aware of and address the potential negative effects on the remaining staff. Clear communication and support can help mitigate some of these effects and create a positive work environment for all employees.

Written by: 
Afra Nehal
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