Among employees at organizations that have undergone recent layoffs, 38% report disrupted sleep, 59% are carrying additional workload due to understaffing, and full engagement drops to 44%, compared to 51% across all workers. Understanding what drives those numbers — and what leaders can do about them — starts with looking at what happens to a workforce after cuts are made.
The damage extends far beyond those who receive the call. Among employees at organizations that have undergone recent layoffs, 38% report disrupted sleep, 59% say they're carrying additional workload due to understaffing, and engagement drops to 44% among workers where layoffs have occurred — compared to 51% overall.
To understand how the most recent wave of layoffs is shaping the workforce, Perceptyx’s research team surveyed more than 5,400 employees across the U.S. The results show a workforce in flux, grappling with uncertainty, adjusting to new realities, and recalibrating what they want next. Here’s what we learned.
Layoffs typically go beyond a single company, affecting individuals and organizations throughout a troubled economy:
Nearly 1 in 3 workers say they’ve been laid off at some point in their careers.
1 in 6 workers say it’s happened within the past three months alone.
For those who haven’t been impacted directly, many are still on edge: 33% are at least moderatelyworried about being laid off, and 28% admit they’re not at all prepared if it were to happen.
What’s more, layoffs are rarely happening quietly.
28% of workers say there are rumors of layoffs at their organization,
22% say they’ve received official communications about potential cuts, and
24% have already seen them happen within their organization.
That fear is immediate, growing, and reshaping how people approach their work.
It might seem obvious that people who’ve been laid off are on the job hunt, but they’re not alone. Layoffs appear to have a ripple effect that drives job-seeking behavior across the board.
Overall, 61% of employees are currently looking for a new job.
Among those who’ve experienced a layoff before, that number jumps to 74% (versus 55% of those who have never been laid off).
When layoffs or restructuring happen at a company, 58% of employees say they’re more likely to look elsewhere, even if their own job wasn’t affected.
Workers report strong confidence despite the pressure: nearly 6 in 10 say it's a good time to find a new job in their field, and more than 4 in 5 report equal or greater confidence than a year ago that they could find a new role.
Uncertainty takes a measurable toll on engagement, and layoffs accelerate it. Layoffs can erode employee connection and motivation in ways that persist long after the initial cuts. Two foundations of engagement are especially at risk: psychological safety and a sense of belonging. Psychological safety depends on employees trusting they can speak up, raise concerns, and share ideas without fear of retaliation. When layoffs happen, that trust erodes because workers begin to associate visibility with vulnerability. Belonging depends on employees feeling they are part of a team and that their contributions matter. Layoffs fracture team structures and remove the relationships that make people feel connected. When both foundations weaken at once, engagement drops sharply.
While over half (51%) of all workers say they’re fully engaged, that drops to:
46% among those who’ve been laid off in the past,
45% at organizations that have recently undergone layoffs, and
44% among those at organizations where there are rumors about future layoffs.
Rumors alone reduce full engagement by 7 percentage points. Workers who report layoff rumors at their organization are also more likely to begin job searching and less likely to feel committed to their current role.
Beyond job security and engagement, layoffs leave a mark on employees’ emotional and psychological health. Those who are employed by organizations that have recently undergone restructuring or layoffs report a new onset of a variety of negative health outcomes.
|
Health Outcome |
Impacted Employees (%) |
|---|---|
|
Disrupted Sleep |
38% |
|
Periods of Anxiety |
37% |
|
Depressed or Sad Mood |
35% |
|
Shorter Temper |
26% |
|
Substance Misuse |
22% |
And the workplace dynamics shift too: more than half of workers (53%) say layoffs have made it harder to maintain friendships with co-workers, and 59% say they’re carrying extra responsibilities because their teams are understaffed.
In other words, the effects of a layoff don't stop at the exit interview. They linger in behavior, in morale, and in the day-to-day work experience. Over time, these shifts can reshape workplace culture itself, lowering productivity and accelerating turnover well beyond the initial round of cuts.
The way an organization handles layoffs can make a big difference because culture is ultimately defined by what leaders do in difficult moments, not by what's written on a values page. Employees were more forgiving and more confident when leadership was open, communicative, and respectful during the process. When leaders model transparency during workforce reductions, they reinforce the trust and psychological safety that keep surviving teams functional. Yet many organizations fall short.
Just 54% of employees said their organization communicated openly about layoffs,
53% say they don’t understand why the layoffs happened at all, and
Support wasn’t consistent: no single resource (e.g., severance, extended health insurance, or job search help) was reported by more than 36% of employees (severance packages).
However, when managers and leaders do their best to communicate openly, it can be a strategy to strengthen the connection with those left behind. Of those 54% whose organizations communicated openly, a full 61% were highly engaged — a figure 3x that of those who felt communication wasn't open and honest. This matters even more given that most employees already feel disconnected from their organization's cultural values. Layoffs are a high-stakes moment when managers can either reinforce what the organization stands for or confirm employees' doubts.
Layoffs affect more than headcount. They reshape relationships, identity, and trust across an organization. But they also create a window for change.
For workers, layoffs often force a moment of reflection: a reconsideration of what they want from work and what they're willing to accept going forward. As the data above shows, the majority are already acting on those questions by looking for new roles.
For leaders, layoffs are a test of values and communication. How you handle these moments leaves a lasting impression on both those who go and those who stay. Organizations with strong cultures outperform their peers precisely because they invest in open communication, mutual respect, and employee growth, especially during disruption.
For organizations at large, the current climate demands organizational resilience. That starts with consistent communication and genuine investment in the people who remain, not just the numbers on a headcount plan.
Even when layoffs are necessary, the way they’re handled can soften the blow and preserve trust. Based on our findings, here are five strategies organizations can use to support employees before, during, and after workforce changes.
Communicate Early, Often, and With Specifics: Share what you can, early and often. Employees who feel informed are less likely to fill the silence with fear or misinformation. Communicate the why behind decisions, what comes next, and how employees will be supported. Transparency builds trust, even in hard times.
Prioritize Employee Well-Being: Layoffs don’t just create job insecurity, they create conditions for employee burnout that impact mental health, sleep, and emotional resilience. Offer well-being resources, normalize conversations around stress, and train managers to recognize when employees may need extra support. Small gestures of care can go a long way.
Acknowledge the Toll on Survivors: The people who stay often carry survivor’s guilt, extra work, and uncertainty about their own future. As the data shows, 53% say layoffs have made it harder to maintain friendships at work, which directly erodes the sense of belonging that drives engagement.Recognize their challenges, involve them in rebuilding efforts, and create intentional opportunities for teams to reconnect. Make rebuilding a team effort, not a solo recovery.
Invest in Career Development: In times of uncertainty, employees want to know they still have a future at the company. Highlight internal mobility, learning opportunities, and growth paths, even if budgets are tight. When people see a path forward, they’re more likely to stay engaged and committed.
Create Meaningful Opportunities for Listening and Action: Invite feedback, listen to concerns, and act on what you hear. Employees are more likely to stay resilient when they feel their voice matters. Whether through surveys, focus groups, or manager check-ins, make employee listening a continuous, intentional practice rather than a one-time event.
Layoffs may be a business reality, but empathy, communication, and care are leadership choices. Organizations that invest in their people during tough moments build the loyalty and trust neededto thrive long after disruption passes.
Workplace culture is the shared attitudes, values, and behaviors that shape how people work together every day. It reflects an organization's character: how leaders communicate, how teams handle conflict, how management makes decisions, and how policies are applied in practice. Culture is also shaped by hiring, onboarding, recognition, and development practices. When left undefined, culture forms on its own, often in ways that undermine the organization's stated goals. Culture directly affects engagement, retention, and performance. Layoffs can shift it quickly by increasing fear and reducing trust among the people who remain.
Layoffsreshape how employees feel about their work, their teammates, and their organization. When staff reductions happen, the people who remain often take on extra work, lose close colleagues, and start questioning their own job security. That combination drives disengagement fast.
Perceptyx research found that full engagement drops to 44% at organizations that have recently gone through layoffs, compared to 51% overall. The effects go beyond productivity: 38% of employees at those organizations report disrupted sleep, 37% experience anxiety, and 53% say layoffs have made it harder to maintain friendships at work.
When leaders stay silent or communicate poorly, the damage compounds. Only 54% of employees said their organization communicated openly during layoffs, and 53% still didn't understand why the cuts happened. Without honest communication, fear spreads and trust erodes, sometimes permanently.
Layoffs signal instability, and employees respond by protecting themselves. When workers see colleagues let go, they begin questioning their own job security and whether the organization values their contributions. The combination of workload increases and the emotional toll of losing teammates drives employees to search for new roles. Our research shows that 58% of employees become more likely to seek new opportunities after witnessing layoffs at their organization, even when their own roles weren't affected. This "survivor flight risk" represents one of the hidden costs of workforce reductions that many leaders fail to anticipate.
Culture recovery timelines vary widely depending on how organizations handle the transition and what actions they take afterward. Companies that communicate transparently, acknowledge the toll on remaining employees, and invest in rebuilding trust can begin seeing engagement improvements within months. However, organizations that treat layoffs as a one-time event without addressing the underlying cultural damage may struggle for years. The key factor is whether leadership demonstrates through consistent action that they value the people who stayed. Without intentional culture-building efforts, the negative effects can become permanent features of the work environment.
Managers sit between organizational decisions and day-to-day employee experience, which makes them critical during workforce reductions. They're often the ones delivering difficult news, fielding questions, and helping teams stay functional in the aftermath.
When managers receive proper training and support, they can limit some of the cultural fallout by keeping communication open, showing genuine empathy, and helping employees process the change. But managers are affected by layoffs too. They may be grieving the loss of team members while managing their own uncertainty about what comes next.
Organizations that give managers clear guidance, talking points, and access to mental health resources put them in a much stronger position to maintain team stability through the disruption.
A toxic workplace culture is one where negativity becomes part of everyday interactions — reducing trust, raising stress, and hurting performance. Common signs include poor communication, employees who feel unsafe speaking up, and unusually high turnover. Layoffs can accelerate these patterns when organizations handle them poorly. Perceptyx research found that 53% of employees at companies that went through layoffs didn't understand why the cuts happened. Without honest communication, employees fill the silence with fear and frustration, which are conditions that erode culture fast. Employees at these organizations reported higher rates of anxiety, mood disruption, shorter tempers, and difficulty maintaining workplace relationships.
Healthy post-layoff culture starts with honest, proactive communication. Perceptyx research found that when organizations communicated openly during layoffs, 61% of employees were highly engaged, nearly 3x the rate seen at organizations where communication wasn't transparent. Beyond communication, organizations that rebuild culture effectively tend to:
Acknowledge the extra workload and stress on employees who remain
Offer well-being resources and normalize conversations about stress
Show employees a clear path for career growth, even when budgets are limited
Create regular, structured ways for employees to share feedback, then act on what they hear
Culture recovery requires consistent leadership behavior. Policy changes alone won't rebuild the trust that workforce reductions damage.
Workplace culture shows up in everyday moments: how a manager responds when an employee raises a concern, whether teams celebrate wins or quietly move on, how decisions get communicated across the organization.
A clear example is how companies handle layoffs. Perceptyx research found that at organizations where leaders communicated openly during staff reductions, 61% of employees were highly engaged. At organizations where communication was poor, that figure dropped to roughly one-third of that rate. The same business event produced very different outcomes depending on the values and behaviors leadership modeled. That gap is workplace culture made visible.
Workplace culture directly affects whether employees stay, how engaged they are at work, and how teams perform under pressure. Research from Deloitte found that 94% of executives and 88% of employees believe a distinct culture is important to business success.
The stakes become especially clear during difficult moments like layoffs. Perceptyx research found that when organizations communicated openly during staff reductions, 61% of employees were highly engaged. When communication was poor, engagement fell to roughly one-third of that rate. Culture directly affects how employees feel day to day, and it determines whether the organization can hold together when conditions get hard.