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 | 10:23:50 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 | 10:46:56 PM
Re: Layoffs
@sunita I like your idea. However most organizations now focus on profitability. Therefore they pay more attention on reducing cost.
David Wagner
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David Wagner,
User Rank: Strategist
3/23/2015 | 5:50:32 PM
Re: Layoffs
@Broadyway0474- That research already exists. There's quite a lot of research how lack of trust changes your behavior across all aspects of your life-- work and home. But what is interesting to me is getting laid off effects your whole ability to trust, not just at work. It is frightening. People were asked the questions, "are people generally trustworthy." The answer went down for those that had been laid off. So it isn't just not trusting companies, it is trusting ANYONE which is kind of sad.
Broadway0474
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Broadway0474,
User Rank: Ninja
3/23/2015 | 8:42:30 PM
Re: Layoffs
David, if you could direct me to some of the older research, I would appreciate that, particularly in terms of generational differences. For instance, so much talk is had about millennials and how entrepreneurial they are --- perhaps this is born out of inherited mistrust issues.
David Wagner
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David Wagner,
User Rank: Strategist
3/23/2015 | 8:48:05 PM
Re: Layoffs
@Broadway0474- Actually, check out the research paper I linked to. If you check out the introduction, it goes through a good history of the trust literature. Should help you out better than I could. Good luck.
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?
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.
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
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.
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.

 
David Wagner
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David Wagner,
User Rank: Strategist
3/23/2015 | 5:46:57 PM
Re: No surprise
@jries921- I think the surprise is how long it continues. I would have guessed that people reset once they are hired elsewhere. I'm a bit surprised it goes at least 10 years and possibly longer.
jries921
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jries921,
User Rank: Ninja
3/23/2015 | 6:02:07 PM
Re: No surprise
I'm not surprised at all.  It would be different if savings rates were higher (but then workers would feel freeer to quit when they didn't like their jobs), but, as the proverb says "once bitten, twice shy".

 
hho927
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hho927,
User Rank: Ninja
3/23/2015 | 6:45:59 PM
Re: No surprise
Most people are willing to pay for quality (not illusional quality). If he/she has the quality, she/he should not be affraid to move on.

"Men don't fail. He only fails when he blames others."
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?
jries921
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jries921,
User Rank: Ninja
3/23/2015 | 5:59:28 PM
Re: Everybody is replaceable
Nothing's free, not even cheap labor.  It may be that employee loyalty and pride of workmanship make up for the higher wages paid.  It may even be that the price of serial layoffs as an industry standard is an anti-business political climate with voters much less willing to give multinationals tax and other breaks than otherwise.

The invisible hand of Adam Smith is always with us; it's just that it manifests itself in many ways (even public policy), not just in direct buying and selling as market fundamentalists like to think.

 
moarsauce123
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moarsauce123,
User Rank: Ninja
3/24/2015 | 7:22:35 AM
Re: Everybody is replaceable
Yes, everybody is replaceable, but it is ill advised to fire a well-liked, experienced employee to replace her with a cheaper, unexperienced know it all who is a drain on everyone's productivity.

There are really only very few good reasons to lay off workers. Companies tend to be too eager to quickly hire a lot of folks. Hiring should be under the mindset that the new hire will be with the company for decades. Wages and benefits are then only just another deciding factor.

Turnover, voluntary or involuntary, is bad for any company. Managements need to do way more to get tha turnover rate as close to zero as possible. Nothing ruins trust more even within a company than one of these "John Dowe no longer works for our company, effective immediately" emails. Management cannot go into the reasons for the departure unless it is voluntary (and in those cases it usually is not effective immediately) and that leaves everyone else wondering what one was to do or not do to get fired and who is next. Me?
hho927
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hho927,
User Rank: Ninja
3/24/2015 | 1:23:17 PM
Re: Everybody is replaceable
I see lots of 'fake it, until you make it' workers in our company.

If management makes the wrong move, the company may die. I don't like our management either because they keep pushing more work to us. But I understand their position. If the investment is not profitable, they have to cut it (layoff). Survival is first.

It's like: if you invest in a company, if the company is not doing well. Why do you hold on to your shares? You should sell your shares and find a better one.

It's only wrong when the company is doing well and the reason for laying off people because the CEO wants more money.
Broadway0474
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Broadway0474,
User Rank: Ninja
3/24/2015 | 8:55:07 PM
Re: Everybody is replaceable
Moarsauce, you are correct about those types of effective immediately scenarios. Probably everyone on this comment board could share a story or two. The worst I've experienced usually entail the company leaking the supposed cause of the firing through the rumor mill. So cynical, but I have seen it happen. Usually, the supposed reason is something not nice --- like, did you hear that employee used to watch porn on his work laptop? I heard of one cause that was so supposedly so awful that the rumor spreader telling me it said they couldn't tell me it --- hinting that it was something akin to child porn. Most likely, these rumors are completely false, but spread even more fear than the usual scenario.

 

 
shamika
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shamika,
User Rank: Ninja
3/28/2015 | 10:38:32 PM
Re: Everybody is replaceable
@moarsauce123, I agree with you.  It is always better to keep the turnover rate to zero. However in my opinion it is not an easy task. Especially from the employers point of view. There are some employees who leaves the company even it provides all the benefits. 
kstaron
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kstaron,
User Rank: Ninja
3/25/2015 | 3:11:30 PM
Treat employees with respect even if their about to be former employees
From personal experience I can say this is spot on. I've been laid off twice. The first time we had a couple weeks notice, they put us on 'casual status' which meant we could check with HR every so often and see if they needed anything and get some work. I didn't like it, but it didn't feel as bad as the second time after I spent weeks coming in early and going home late to get the project done only to get laid off immediately after the project was over, this time with no option of 'casual', losing my connection with the company. This sudden job loss felt much more like a betrayal, especially since I'd been working incredibly hard just prior to it. And I suppose jobs after this have a slightly more jaded version, more interested in making sure I have work-life balance over overtime, given what overtime has gotten me.

While giving workers notice of staff reductions can increase their anxiety about work, it can help prepare them for the possibility. Always layoff in person, seriously, it's a professional break up so text or email is not the way to go. make the person feel like YOU value them even if the company can't keep them on. Treat your employees with respect or all you will have when you're in a growth phase is disgruntled, un-trustful former employees to hire from.
Kelly22
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Kelly22,
User Rank: Strategist
3/25/2015 | 3:44:13 PM
Re: Treat employees with respect even if their about to be former employees
I can see how advance notice of a layoff would be stressful - after all, there really is no stress-free way to go about this. But to have the option of 'casual status' so you can look for a job is nice. Definitely better than the immediate, no-warning layoff. Either way, I completely agree that the conversation should happen in person. No matter how long an employee has been with the company, they deserve that level of respect.
shamika
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50%
shamika,
User Rank: Ninja
3/28/2015 | 10:57:43 PM
Re: Treat employees with respect even if their about to be former employees
@kstaron, I second your idea. It always better to respect your employees. As you said, by talking with them will make them confortable about the decision. Then they will not feel bad about the decision.
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