The Effects of a Layoff on Employees

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Outplacement services ease the stress of layoffs.
Outplacement services ease the stress of layoffs. (Image: parachute image by sylvie BRELOT-FORMENTO from Fotolia.com)

Employee layoffs might be inevitable due to recession, overseas competition or any number of business factors that affect a company's bottom line. No matter which term the employer uses — from downsizing to reduction in force, retrenchment or redundancy — forced personnel cuts affect the separated employee and the survivors. Anticipating employee reactions to layoffs, being honest and completing the task with kindness could preserve valuable company resources, minimize uncertainty and keep company productivity at optimum levels.

Affected Personnel

Whether the person you lay off is someone just starting with your company or a seasoned worker with seniority, a layoff will affect your employee's self-esteem. The employee might feel slighted and less valuable than workers that you retained. In addition to the blow to his ego, the laid-off employee faces the prospect of being separated from meaningful work, coworkers and the worst possible financial scenario — lack of steady income. Some react with anger, resulting in damage to company property or to the messenger who delivers the news. Others take the news in stride but grieve publicly and disrupt company productivity.

Soften the Blow

Because it is impossible to predict how employees will react at the time of a layoff, tell them privately and in person. Thank them for the contribution they have made to the company. Offer the affected employee a severance package and outplacement services or referrals for training opportunities before the last day on the job. Give affected employees the opportunity to say goodbye to coworkers and to remove personal items from the workplace with as much dignity as possible. Be honest about future employment prospects and procedures that the employee can use to stay informed about future employment.

Layoff Survivors

Reactions of your surviving staff can range from fear and uncertainty to guilt about still having a position while coworkers lose theirs. The majority of survivors can identify with the affected employee's diminished self-esteem and looming financial distress. Fear of becoming the next layoff victim affects the morale of survivors and has the potential to cripple productivity, according to the Oklahoma Department of Commerce. Survivors can become competitive instead of cooperative, destroying teamwork and collaboration. Uncertainty about the future can also cause remaining employees to seek other employment opportunities, openly or furtively.

Maintaining Morale and Productivity

Be candid about the company's bottom line and discuss options that could prevent additional layoffs, such as job sharing and furloughs. Give your employees opportunities to get training to reinforce skills or upgrade them if you know that more layoffs are imminent. Kindness and empathy, along with honesty and openness, will reduce employee stress. The more proactive your company is with surviving employees, the less likely they will be to misuse company time and resources to pursue job security or jump ship prematurely, taking valuable skills and knowledge with them.

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