Layoffs Breed Long-Term Employee Distrust, Study Finds - InformationWeek

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Layoffs Breed Long-Term Employee Distrust, Study Finds

Being laid off causes long-term trust issues even when the employee gets hired by another company. The world-wide financial crisis of just a few years ago makes this a global crisis.

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Starting in 2008, with the collapse of Lehman Brothers and the financial crisis that followed it, the US and many other parts of the world experienced one of the biggest rounds of layoffs since the Great Depression.

A new research article, "(Dis)placing Trust: The Long-Term Effects Of Job Displacement On Generalised Trust Over The Adult Lifecourse," suggests that the impact of those layoffs will be felt by the workforce for at least a decade to come and hurt employee trust, engagement, and even health.

What can employees and employers do about it now, and what can they do to avoid it the next time?

The employment study, conducted by Professor James Laurence of the Cathie Marsh Center for Social Research at the University of Manchester, England, looked at more than 10,000 people who were selected from the National Child Development Study cohort -- a long-term project that follows people born on a certain week in 1958. The cohort tracks their lives through surveys and interviews in an attempt to get long-term data about various factors of life in Britain.

One of the factors studied in the cohort is general societal trust.

Laurence’s study of the cohort found that being made involuntarily redundant -- in other words, being laid off -- contributed to distrust in workers for at least nine years after the experience, even after they had a new job. The study could not cover farther at this time, but there is no reason to think the impact couldn't go even longer. It also showed that other types of unemployment, including being "fired," didn't have the same effect -- showing that being laid off was an especially bad way to lose a job.

(Image: Geralt via Pixabay)

(Image: Geralt via Pixabay)

Trust is clearly a major issue both for society and the enterprise.

General trust as a trait usually leads to people being happier, more socially engaged, healthier, and better at their jobs. Distrust leads to less engaged, less healthy workers. It doesn't take a management genius to know that's not good for anyone.

Given the millions of layoffs that occurred four to seven years ago, a large percentage of the workforce may be suffering from general distrust of their own employers, a sense that they can't commit to their new employer because they can't be sure that their job is secure, and a feeling that they don't want to get burned again.

If you were laid off, or you are managing or hiring folks who were, you need to understand the phenomenon.

One thing to know is that trust is more likely to be lost in the types of people we tend to look for in the enterprise.

"One of the striking findings," Laurence wrote in an email to InformationWeek, "was that how being laid off affecting one's trust seemed highly dependent on their level of 'employment-centrality' -- that is basically how central one's job is to their identity, their sense of self and sense of self-worth. People who had higher levels of employment-centrality before they were laid off (for whom, in theory, work is much more central to who they are) were especially sensitive to the harmful effects of redundancy -- their trust decreased the most."

In other words, all of those go-getters everyone is trying to find, the ones who work the late hours and don't balance work and family life, are exactly the ones most likely to respond poorly to being laid off.

"As such," Laurence continued, "[one way employees can help themselves] may be diversifying one's sources of self-worth and meaning in life. Many of us are guilty of the adage 'living to work', I'm sure, and do derive much meaning form work in and for our lives. However, this leaves us especially susceptible to negative experiences within the labour market."

And one way employers and managers could help themselves is by accepting that the "best" worker for them may not always be the one that works insane hours. The face-time culture is being replaced with an always connected culture, but it is still the same problem.

The changing nature of work

Another issue is the nature of employment itself. Laurence suggests that the erosion of unions and more flexible manufacturing methods have created a sense that employment is no longer permanent or to be

Page 2: Can The Damage Be Fixed?

David has been writing on business and technology for over 10 years and was most recently Managing Editor at Enterpriseefficiency.com. Before that he was an Assistant Editor at MIT Sloan Management Review, where he covered a wide range of business topics including IT, ... View Full Bio

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shamika
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shamika,
User Rank: Ninja
3/20/2015 | 10:41:59 PM
Layoffs
This is an interesting article. As mentioned in the article, when an organization layoff its employees  it will a demotivation factor for the rest of the employees. 
Broadway0474
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Broadway0474,
User Rank: Ninja
3/21/2015 | 9:23:02 PM
Re: Layoffs
This research is only supported what we've known in the workplace for a decade or more anecdotally. Perhaps it started with the Generation X'ers who saw their parents get laid off in the recession of the early 90s, but there has been a whole generation of workers who do not trust their employers like their parents did and who do not feel the same sense of loyalty. I would rather see research on how this trust issue manifests itself --- is there a clear change/increase in the number of employees that the avg US white-collar worker works for over their career, the number of years they stay in one position/employer, etc. Let's get some real data on this issue. 
SunitaT0
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SunitaT0,
User Rank: Ninja
3/21/2015 | 10:21:19 PM
Re: Layoffs
Layoffs are not easy to handle at all. Organisations have to tolerate waves of disgruntled employees asking for a specific date when they will be laid off too, in case the company hits a new low and/or its a recession period everything is going through. And why would it be easy for employees to trust the organisation if they don't get any answer regarding their job security?
SunitaT0
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SunitaT0,
User Rank: Ninja
3/21/2015 | 10:23:50 PM
Re: Layoffs
@broadway: I agree to this as well. My parents were private workers as well, but they were happier in the work they did, and I don't understand how. Basically they had a good employee-employer trust relationship throughout the company and the management took up most major responsibilities, rather than blaming employees. Why can't the same level of management and hence trust be build today?
shamika
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shamika,
User Rank: Ninja
3/21/2015 | 10:44:15 PM
Re: Layoffs
I agree with you. It's also a difficult decision for an employer too. Sometimes this will lead to lose their best employees.
shamika
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shamika,
User Rank: Ninja
3/21/2015 | 10:46:56 PM
Re: Layoffs
@sunita I like your idea. However most organizations now focus on profitability. Therefore they pay more attention on reducing cost.
shamika
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shamika,
User Rank: Ninja
3/21/2015 | 10:54:15 PM
Outsourcing
In my opinion outsourcing has been used as a major tool for staff layoffs.  Most of the multinational organizations use this concept now.
xmarksthespot
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xmarksthespot,
User Rank: Apprentice
3/21/2015 | 11:53:47 PM
Re: Layoffs
Thanks to brainyquotes website:

Trust everybody, but cut the cards. -Finley Peter Dunne

The trust of the innocent is the liar's most useful tool. -Stephen King
jries921
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jries921,
User Rank: Ninja
3/23/2015 | 1:00:45 PM
No surprise
It made sense to test the hypothesis, but it would have been surprising if the findings had been otherwise.

 
hho927
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hho927,
User Rank: Ninja
3/23/2015 | 2:31:47 PM
Everybody is replaceable
Everybody is replaceable if they can find a equivalent replacement at much lower cost. It's human nature. We what quality things at cheap price.

The question is what make you unique, irreplaceable?
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