Don't Expect Layoff Survivors to be Grateful (Survivor’s Guilt After A Downsizing)

Leadership IQ studied more than 4,000 employees who survived a corporate layoff and discovered that their productivity, quality and engagement all declined significantly

If your company is undertaking a layoff, be forewarned: Your surviving employees are not going to work harder out of gratitude. This study by Leadership IQ discovered that 74% of employees who kept their job amidst a corporate layoff say their own productivity has declined since the layoff. And 69% say the quality of their company's product or service has declined since the layoffs. We call this Layoff Survivor Stress (aka Survivor’s Guilt). There is a great myth that following a layoff or downsizing, the surviving employees will be so grateful that they still have a job that they'll work harder and be more productive. But as this study shows, the opposite is usually true (and that layoffs place a heavy burden on surviving employees). Here are some of the key findings...

  • 74% of employees who kept their job amidst a corporate layoff say their own productivity has declined since the layoff
  • 69% say the quality of their company's product or service has declined since the layoffs
  • 87% of surviving workers say they are less likely to recommend their organization as a great organization to work for
  • 64% of surviving workers say the productivity of their colleagues has also declined
  • 81% of surviving workers say the service that customers receive has declined
  • 77% of surviving workers say they see more errors and mistakes being made
  • 61% of surviving workers say they believe their company's future prospects are worse

STUDY METHODOLOGY
Leadership IQ , a research and leadership training company, compiled these results after surveying 4,172 workers who remain employed following a corporate layoff. These subjects were drawn from 318 companies that have undertaken layoffs in the past 6 months. Employees answered nearly three-dozen questions about productivity, product quality, workforce issues and management effectiveness.

FINDING #1: 74% of employees who kept their job amidst a corporate layoff say their own productivity has declined since the layoff

As we might imagine, the stress of going through a layoff can have a drastic impact on one’s personal productivity. The emotional energy spent wondering “am I next?” or “why me?” can take a significant toll on productivity. Additionally, emotions like guilt and anxiety are well known to decrease productivity and personal effectiveness. As you can see in the chart below, 74% of people say that their personal productivity has declined since the layoff happened. If we’re looking for tangible negative impacts of survivor’s guilt and survivor’s remorse, this chart provides just that.

FINDING #2: 64% of surviving workers say the productivity of their colleagues has declined

While it’s certainly easier for an employee to assess their own productivity, the productivity declines of everyone around them are apparently large enough that others will notice. And as you can see in the chart below, 64% of people say that the productivity of their colleagues has declined following the layoff.

FINDING #3: 69% say the quality of their company's product or service has declined since the layoffs

It’s reasonable to expect that if we leave 100% of the work for 80% of the workers, quality is likely to decline. Much of the time when a company undertakes a layoff, it’s because they’ve run out of other options. And that, in turn, means that they’re probably a bit rushed and frantic. In that hectic state, it’s to be expected that operational assignments will get missed, workloads won’t be carefully reassigned, and the potential for mistakes will be high. And in addition to all of that, it’s also likely that emotional fatigue and survivor’s guilt will also contribute to a degraded work product. That’s why, in the chart below, you can see that 69% say the quality of their company's product or service has declined since the layoffs.

FINDING #4: 81% of surviving workers say the service that customers receive has declined

Similar to the above finding, we can see that 81% of surviving workers say the service that customers receive has declined. It’s likely that this is due even more strongly to survivor’s guilt and the emotional fatigue experienced by surviving employees. Customer service typically requires a high level of emotional labor (i.e., the extent to which we have to regulate and display certain emotions to achieve our goals). It’s easy to imagine that a job requiring empathy or sensitivity to customer needs might be extremely difficult when we’re feeling guilty, anxious or angry. And those are very common emotions following a layoff.

FINDING #5: 87% of surviving workers say they are less likely to recommend their organization as a great organization to work for

There are many factors that drive employee engagement (e.g., whether an employee will recommend their company as a great organization to work for). But one such factor will be the extent to which an employee believes that the company values them and their work. While a downsizing is sometimes unavoidable, it’s likely to leave employees feeling like they’re not valued by the company. Additionally, if a reduction in force was a complete shock, or not communicated with empathy and transparency, that can further erode employee engagement. All of those are reasons why 87% of surviving workers say they are less likely to recommend their organization as a great organization to work for.

FINDING #6: 61% of surviving workers say they believe their company's future prospects are worse

Even when a downsizing is conducted to right size the organization and better prepare it for the future, it’s still likely to be a shock to employees and shake their confidence in the company’s future prospects. And that’s likely why 61% of surviving workers say they believe their company's future prospects are worse. Of course, the more leaders know how to motivate employees and can clearly explain the rationale behind their decisions, the less likely it is that employees’ confidence will be damaged.

FINDING #7: 77% of surviving workers say they see more errors and mistakes being made

There is ample evidence across industries that as employee stress and employee burnout increase, so too will errors and mistakes. And as this report has shown, employees are often suffering emotionally following a downsizing. So it’s not surprising that 77% of surviving workers say they see more errors and mistakes being made. And, as noted previously, it’s also likely that some of these mistakes and errors are occurring simply as a result of not effectively redesigning the workload across a smaller workforce.

FINDING #8: The three most common feelings that employees have after a layoff are Anger, Anxiety, and Guilt

Through an open-ended question, surviving workers were asked to describe their personal feelings following the layoffs. As you can see in the word cloud below, the three most commonly used words were Anger, Anxiety and Guilt.

FINDING #9: Workers that gave their managers high scores for Visibility, Approachability and Candor were 72% less likely to report a decrease in their productivity

The study did identify a bright spot when workers were asked questions about their manager. Workers that gave their managers high scores for Visibility, Approachability and Candor were 72% less likely to report a decrease in their productivity and 65% less likely to report a decline in the quality of their company's product or service.

FINAL THOUGHTS ABOUT survivor's guilt after a downsizing

In order to reduce survivors guilt (or layoff survivor stress) following a downsizing, leaders not only need to know how to conduct a layoff with candor and compassion, but it's also vital that they know how to manage their workforce following a layoff. Managers need to be highly visible to their staff, approachable even when they don't have anything new to say, and candid about the state of things in order to build their trust and credibility.

If your company has to conduct a layoff, it is imperative that you train your managers how to both manage that process and deal with the highly debilitating aftermath. And that means that leaders need to know how to manage people, how to increase employees’ coping skills, how to motivate employees and provide morale support. This isn’t a case of providing a one-time morale boost but rather addressing all of the deep issues highlighted in this study.

Layoffs won't deliver real cost savings if companies  mismanage the layoff process. Offering terminated employees severance packages and outplacement assistance is wonderful, but it misses the most important group of employees; the survivors. You have to keep the surviving employees engaged and productive, or your company won't ever recover.

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