The labor market in the U.S. is currently in an unsettled and perhaps unprecedented position: a phase during which some organizations are executing or contemplating layoffs even as others struggle to retain staff and fill open positions. The data reinforces this split-screen view of our current economic climate.
On the positive side of the ledger, metro-area reporting from the U.S. Bureau of Labor Statistics found that jobless rates in August 2022 were lower than a year earlier in 384 of 389 metropolitan areas surveyed. However, low unemployment also means talent is harder to find. Recent Perceptyx research found that 62% of HR professionals were having more trouble filling open positions in 2022 than in 2021. In the same study of HR professionals from large organizations (1K employees or more), 1 in 4 say they have made or intend to make layoffs during the middle third of 2022. Another 1 in 4 reports that the topic has been discussed, but they have made no concrete plans. 7 in 10 surveyed are concerned about maintaining their current staffing levels during a possible recession.
After a Layoff: The Impact of Survivor’s Guilt
For those firms that have moved forward with mass layoffs or significant restructuring activities, Survivor's Guilt — the feelings of guilt that occur after surviving a life-threatening or traumatic event when others did not — is a common reaction. Explaining the reasons for layoffs or furloughs is necessary, but not sufficient for mitigating this guilt. Effective organizational communication involves not only proactive communication to employees but also being open to listening to the concerns employees have. Organizations must learn how to effectively listen to and coach employees through any large-scale change if they want to maintain the productivity of the organization and, more importantly, the health and well-being of their employees. This is particularly true in the case of layoffs.
When layoffs occur, organizations need to understand that they are building an employment brand, not just for those remaining within the organization, but also for those who have been offboarded. Offboarding under trying economic circumstances doesn’t mean that an organization has to be the “bad guy.” The best organizations have systems in place, like placement or career coaching, clear communication about benefits and technology transfers, and keeping in touch through alumni and after-lifecycle surveys. When done well, this experience can drive both boomerang rehires and continued referrals to the organization, ensuring that the organization has a healthy talent pool to draw from when conditions improve.
The experience of layoffs or furloughs during the early months of the pandemic was widely shared by employees across the economy. In a study Perceptyx conducted about layoffs in late 2020, more than 4 in 10 of the employees interviewed were employed by an organization that had some layoffs or furloughs since the pandemic began, with almost 16% of employees experiencing a layoff or furlough personally. Even though many of those employees had returned to old positions or found new ones by late 2021, the emotional toll of this period remains an all-too-recent memory for most.
During that same period, Perceptyx also examined the effects of layoffs on those who retained their employment by surveying more than 3,000 American adults. Employees who were left behind felt less empowered to make decisions regarding their health and personal life in the wake of layoffs, likely out of concern that they might be next. Those employees who worked in a department that had layoffs were 50% more likely to say they often worry about their job security. They were also less likely to say that the stress levels at work were manageable than those who worked for an organization where no layoffs or furloughs occurred.
Perhaps the most noteworthy finding was that the health and well-being of the employees left behind suffered considerably. These “survivors” were more likely to report unhealthy coping behaviors, such as binge drinking, poor behavior with family and friends, sleep issues, and lack of productivity than employees who did not have the specter of layoffs looming over them.
Put plainly, organizations should begin considering the ramifications of an economic downturn now — and those considerations should involve ensuring that the voices of their employees are heard. In that same study of layoffs, Perceptyx found that employees of organizations that were actively listening to and communicating with them during the layoffs were more than twice as likely to be fully engaged. Workers who are not engaged — that is, not psychologically committed to the success of the organization — miss more work than their fully engaged counterparts. Less engaged associates missed, on average, one more day per month due to stress or illness than those workers who were fully engaged.
The reality is that layoffs and furloughs will continue to happen, particularly if the economy enters a full-scale recession in the coming months. How an organization communicates through these tough decisions will make a difference in how its employment brand emerges on the other side.
A majority — 6 in 10 — of HR professionals interviewed in Perceptyx’s recent study already understand this and say that gathering perceptions of workplace culture during a recession is more important than during favorable economic conditions; only 5% of those surveyed say it is less important. HR professionals who plan to listen more during a possible recession are also 2.6 times as likely to say their organizations adapt well to change and 3.8x as likely to report having a highly engaged workforce. If and when a recession occurs, everyone in the organization will be watching how layoffs and other responses are handled — so the leaders of the organization need to ensure they are listening to all affected.
3 Strategies For Managing Layoff Survivors
So if your organization has conducted layoffs this year, or is considering them in the near term, what strategies can you use to support and engage those employees who are left behind?
- Lay the foundation for employee and organizational resiliency now — not just when stress is high. Organizations that do the work to support employees before they are stressed will help mitigate negative health effects when the stress comes. Pacing work appropriately, flexible scheduling, and providing tools and support to help employees handle stressful situations are all keys to minimizing a harmful impact on health and well-being. Perhaps unsurprisingly, the time to build the resilience needed to cope with acute stress is ongoing and should ideally occur before the stressor. Empowering employees to make decisions about their health, being a psychologically healthy place to work, and nurturing teams that cooperate in dealing with issues or mistakes will help boost employee morale after layoffs — or other large-scale changes — and increase survivors’ ability to manage workplace stress.
- Clearly communicate any workforce changes. 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 those employees who were able to ask questions to fully understand the changes to the organization. This continuous conversation with employees is also important during the regular course of work. Employees are 2.5 times 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. This means that the best time to have a conversation is now — whether your organization is contemplating layoffs or struggling to find talent for open roles or if it’s just business-as-usual.
- Listening is critical even (and perhaps, especially) in tough times. Employees have important perceptions about all things happening within the workplace, not just during a planned survey time period. 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 for decision-making. 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, 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 planned survey events.
Helping Employees Through Layoffs and Other Organizational Changes
Unmanaged workplace stress takes its toll, not just on employees individually, but on the organization collectively as employees miss work, struggle with productivity, and arrive less well-rested and focused on the task at hand. Organizations that strive to create a healthy and engaged workplace when times are good — and then continue the work in a purposeful way when times are tough — will reap the benefits of greater retention and productivity. The employees will also benefit, by remaining physically and emotionally fit to contribute to the workforce, their families, and their communities.
As an experienced listening partner, Perceptyx can help your organization conduct all the meaningful conversations needed to fully and comprehensively understand the employee experience during disruptive times. To learn more about how we can help, schedule a meeting with a team member.