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.

trusted. The agreement between worker and employer has changed from the expectations of post-war economies.

Flexible employment isn't going anywhere, especially in manufacturing.

So are enterprises stuck inflicting harm on their employees?

"What we think is particularly harmful about being laid off," Laurence writes, "is the involuntary aspect of it. People have no power over this, and this sense of powerlessness, that the decision is taken out of your hands, and that it is being done to you without your consent, is one of the reasons we think being 'laid off' is particularly harmful."

Laurence suggests that phased, voluntary redundancy -- like offering severance packages -- might be a more effective way of handling needed reduction in staff.

[Read about how IoT is changing enterprise IT.]

"Similarly," Laurence adds, "there is a lot of anecdotal evidence that being laid-off is particularly harmful when it comes out of the blue, so to speak. There are stories in the UK when people turn up one day at work and are told, sometimes just by e-mail, that they've been laid off. Again, these experiences are likely to be much more detrimental for individuals. So, preparing employees that layoffs may be occurring, entering into a dialogue with them, and especially providing phased voluntary redundancy options, may all go a long way to limiting the detrimental effects of redundancies."

Of course, a cynic might point out that enterprises don't really care if they foster distrust in employees. After all, they are laying these people off. They may never see them again. In fact, a true cynic might even say that it is a great way to seed a bunch of disgruntled, untrusting, unhappy workers on the competition.

Cynics could be right that many enterprises feel that way, but the problem is that with so many mass layoffs, this is now everyone's problem. Hiring has been strong the last year, meaning a bunch of untrusting folks are rejoining the ranks of the employed. If companies come together to treat this issue with more respect, they may or may not improve their current lot, but they may improve it in the future, since yet another global downturn will eventually occur.

There are a few natural limitations of the study. Due to the limits of the larger study the cohort was pulled out of, all of the work centered on people who were between the ages of 33 and 50. They were unable to make studies of younger or older workers. They also weren't able to study as of yet whether the effect improves over time (though they believe it probably does) or how long it is a real problem (it lasts at least nine years).

But even with the limitations of the study, this gives managers and employees plenty to think about.

Layoffs are inevitable. The damage is more long-term than we realized. Given their recent numbers, we have an awful lot of hurt people who are trying to put their broken confidence in the companies they work for back together. And inevitably, we'll have to do this again. Can we do it better? Can we work together to make this better for everyone? Or will we continue to distrust each other, fail to engage in our jobs, be less happy and healthy, and fail to meet our potential? A lot of it is up to managers and enterprises in how they treat the topic of layoffs in the future.

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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
3/28/2015 | 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.
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. 
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.
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.
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.

 

 
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.
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?
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.
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.
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."
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