The Effects of Layoffs on Surviving Employees

This series of blog posts is on leadership in the downturn. In fact, great leadership is always about what you do when things are tough, not when you’re hitting on all cylinders. Great leadership is also about what you do when no one’s looking. By that, I mean doing the right thing, even when it’s tough: Not trimming back on customer quality and services and doing what’s best for employees, as well. This series will try to capture some good strategies for business leaders.

Survivor Syndrome: In an article that appeared in the Washington Business Journal (January 23-29, 2008, p. 34-35) author Jennifer Nycz-Commer outlines quite well the effects of layoffs—now as common as hi-tech stock options were at the height of the tech boom (remember that roller coaster ride in the 90’s). Here’s a quote by Mark Murphy of Leadership IQ, the company which conducted the study on which the stats are based. Murphy’s quote: “There is a great myth that following a layoff the surviving employees will be so grateful that they still have a job that they’ll work harder and be more productive.”
Not so according to the following stats from Murphy's study cited in the Journal article by Nycz-Commer(p.35):

Life after layoffs
Employers may not realize that while they’re saving money on salaries, layoffs often ripple unforeseen repercussions through their staffs. In its study of 4,172 workplace survivors, Leadership IQ found:
• 87% say they are less likely to recommend their organization as a good place to work.
• 64% say the productivity of their colleagues has declined
• 81% say the service customers receive has declined
• 77% say they see more errors and mistakes being made
• 61% say they believe their company’s future prospects are worse

So, if you're thinking about laying off employees--always any CEO's most gut-wrenching task--consider the full impact.