New Research Reveals Growing Layoff Anxiety and Ways to Combat It
In the wake of an unstable economic landscape and increasing layoffs, Perceptyx initiated comprehensive studies in December 2022 and May 2023 to explore the impact of these job losses on employee experience and well-being, and suggest resilience-building strategies for remaining employees.
Both studies confirmed a pervasive state of anxiety among workers, with significant effects on business performance as well as personal relationships. Let’s take a look at some of the key findings from this research, as well as the strategies and recommended actions emerging from it.
The Current Climate
Judging from the media headlines, layoffs have swept many sectors of the economy – sparking layoff anxiety in many more. According to tech jobs tracking website Layoffs.fyi, more than 197,000 jobs in this sector have been lost since January 2023, with 687 companies reporting layoffs.
Overall job openings, a key indicator of labor demand, fell by 384,000 to reach 9.59 million at the end of March, marking the lowest level seen since April of 2022. The professional and business services sector reported a decrease of 135,000 job openings, while retailers noted a decline of 84,000 vacancies. At least for the time being, layoffs appear to be here to stay. Nevertheless, the labor market remains tight with 1.6 open roles for every unemployed person, and the projected labor shortage due to shifting demographics continues to be a concern.
The Workplace Experience Is Increasingly Characterized by Layoff Anxiety
In December 2022, we found that 27% of employees had experienced some layoffs at their organization in the past six months, with half of that group (13% of the population) being laid off themselves. Moreover, 1 in 8 employees reported losing a direct supervisor to a layoff. These numbers have increased over the past six months according to the May 2023 Perceptyx Workforce Panel, with nearly 4 in 10 of those surveyed reporting company layoffs — including 18% who were personally laid off — and 1 in 4 losing a supervisor to a reduction in force. Job loss jitters were present in more than half of the employees in nearly every subgroup studied, with the most prominent concerns among young, white-collar fathers.
Open, clear communication is one strategy to mitigate layoff anxiety. One notable finding was that employees display higher levels of worry when there was speculation about layoffs versus when their organization had issued official communication about actual cuts. Ninety percent of employees who heard reduction-in-force rumors had some layoff anxiety — 8 points higher than those working in organizations that had actually executed layoff actions, highlighting the importance of communicating, not just frequently, but authentically to limit rumor-mongering.
The Business Impact of Layoff Anxiety
Overall, U.S. employees are increasing their job-seeking behavior. In December, 56% of employees reported at least one job-seeking behavior in the 30 days prior to the survey. That number has increased to 64% in May.
Anxiety compounds this problem. Nearly 2x as many employees say that recent layoff news has increased their desire to look for a new job versus decreasing it. This number jumps to nearly 3x for employees working in organizations that have had recent layoffs.
Employees with layoff anxiety are 50% more likely to indicate that they don’t intend to be with the organization this time next year. While it makes sense when layoffs are occurring that employees will be looking elsewhere, those employees with anxiety are the ones most likely to look. Among employees with no anxiety, 62% exhibited no job-seeking behavior in the past 30 days, and 2 in 3 plan to do even less in the next 60 days. Meanwhile, among those with high anxiety, 79% exhibited job-seeking behavior in the past 30 days, and more than 7 in 10 plan to increase their efforts over the next 60 days. This behavior tracks with anxiety level, with more anxious employees being more likely to seek new jobs.
The Impact of Layoff Anxiety on Well-Being
The presence of anxiety also relates to increased mental or physical exhaustion at the end of the working day. Employees experiencing layoff anxiety are 1.5x as likely to feel physically exhausted and 1.3x as likely to feel mentally exhausted. These differences double when people report high anxiety. Whether an employee has been exposed to layoffs at their own company, or just heard about recent job cuts in the news, they report negative effects on their well-being. 1 out of every 4 employees reports periods of anxiety, low energy, and bouts of sadness.
Unfortunately, these same employees have also had trouble maintaining healthy behaviors that may help to mitigate some of the negative effects of anxiety. Nearly 15% of all employees studied have reduced or stopped exercising and 1 in 4 has had a new onset of sleep disruption. Even employees reporting no job loss worries have engaged in negative coping behaviors such as substance abuse or overeating since news of layoffs picked up, with about half having engaged in one such behavior and 18% engaging in two or more.
Three Ways to Deal with Employee Layoff Anxiety
If your organization has conducted layoffs this year, is considering them in the near term, or just attempting to maintain business in the face of tough economic news around you, what strategies can you use to mitigate the layoff anxiety of your employees?
- Regularly communicate information about the health of your business. Layoff survivors who reported open communication about layoffs and furloughs were more than twice as likely to be fully engaged than those whose organizations did not communicate openly. The same was true for employees who were able to ask questions to fully understand the changes and resulting impacts on the organization. This continuous conversation with employees is equally important when layoffs aren’t on your radar. Opening a dialogue creates an environment where difficult conversations are not only OK, but encouraged. According to earlier Perceptyx research, employees are 2.5x as likely to be fully engaged if their workplace is a safe place to ask questions when they don’t understand a decision, and twice as likely to be fully engaged if they can speak up about things with which they don’t agree.
- Lay the foundation for employee and organizational resiliency now, not just when stress is high. If you're currently reducing the size of your workforce, it’s not too late. Ensure you're not further decreasing employee well-being by overloading your layoff survivors. Of those “survivors” of recent workplace layoffs, 61% say team members are taking on increased workloads to compensate for those who were cut and the same percentage have additional worries about being able to hit their goals for the year. For organizations not currently contemplating layoffs, doing the work to support employees before they are stressed will help mitigate negative health effects when stress comes, whether in the form of a layoff or something else. Pacing work appropriately, offering flexible schedules, and providing tools and support to help employees handle stressful situations are all keys to minimizing a harmful impact on health and well-being.
- Listening is even more important in tough times. Employees have important perceptions about their workplace experience, and not just during a planned survey period. A recent Perceptyx study of Human Resources professionals regarding employee listening during a possible recession drove that point home, with more than 60% indicating they would survey and formally listen to employees more during a recession rather than less. That’s why it’s important for organizations to have a comprehensive yet adaptable listening strategy that reaches employees in a variety of ways. However, listening alone isn’t enough — organizations must also use that data to act and make decisions. When employees report action, they are nearly twice as likely to want to stay, want to be an advocate, and feel pride and motivation to do good work. As reaffirmed by our latest research on employee listening, organizations that listen and act well can see around corners and adapt rapidly to change. A mature listening strategy, supported by a world-class listening platform and people analytics expertise, allows for a rapid organizational response to important topics as they occur, without waiting for scheduled survey events.
The Anxiety Antidote
The prevalence of layoffs and layoff anxiety among employees underlines the urgency for organizations to proactively tackle this issue. By cultivating open, transparent communication, reinforcing employee and organizational resiliency, and enacting timely listening events, businesses can efficiently alleviate the adverse impacts of layoff anxiety on employee well-being, workplace relationships, and overall performance.
Does your organization need guidance on how to navigate these challenges? Our new report, Managing Uncertainty: How Layoff Anxiety Is Changing the Employee Experience, provides practical strategies for tackling layoff anxiety, fostering resilience, and maintaining a healthy balance between the needs of employees and the needs of the organization. Click here to download the full report now.