Layoffs might cause workers who are left behind to quit

When one employee leaves or gets cut, the departure can have a domino effect on others on the same team.

Martin Barraud/Getty Images

• Researchers have known for some time that quitting is contagious.
• Now researchers have found that layoffs might be correlated with the same phenomenon.
• As layoffs creep upward, the findings have implications for firms that have let go of employees.

Researchers have known for some time that quitting is contagious. 

When one employee leaves, the departure has a ripple effect on others on the same team and suddenly those remaining workers, too, are much more likely to head for the exit. It's a phenomenon that might help explain the staying power of The Great Resignation, a period in which workers have been quitting — and changing jobs — at record high levels. 

Now new research suggests that layoffs are correlated with the same behavior. The findings by Visier, a human-resources analytics company, found that when employees are laid off or terminated, the likelihood that their direct colleagues will quit is 7.7% higher than if that employees had remained. Visier published a study about turnover contagion following resignations, and later detailed its finding related to layoffs in a recent LinkedIn post.

At a time when layoffs are piling up in corners of corporate America as companies scramble to get ahead of a possible recession, the findings have implications for firms that have recently let go of large numbers of employees, or are considering it: The layoffs might push other workers out the door.

'A layoff can be an information signal'

So, should companies that have recently conducted mass layoffs — looking at you, Amazon, Salesforce, Compass, Goldman Sachs, and, now, Microsoft — expect a raft of resignations? 

"Our recommendation is: Beware," Andrea Derler, principal researcher at Visier told Insider. "If you're doing layoffs, you might as well add 7 to 8% to your count who are likely to leave as well."

Using Visier's database of 17 million anonymized employee records around the world, researchers found that when employees are let go, their team members are more likely to follow suit. The increased likelihood begins on day one of the peer's layoff or firing, and increases sharply between 45 to 105 days after the other worker's termination, with a peak at around 75 days. The research pool involved cuts that happened between February 2019 and June 2022.

There are, of course, many reasons why people might choose to quit their job: They might get assigned a new manager they don't care for, or they're offered an exciting opportunity, or they have a change in their family's circumstances that require a move.

It's also understandable why employees who survived a layoff might also quickly decide to leave of their own volition. If somebody on your team is cut, for instance, it's only natural to worry that you might be next. Quitting, in that case, might be an act of self-preservation.  

"A layoff can be an information signal," Elena Obukhova, an associate professor of strategy and organization at McGill University, told Insider. "It's a sign of your company's solvency or future direction."

What's more, if your team's headcount decreases, that could mean your workload increases. That also might make you inclined to tender your resignation letter. 

Social ties might also be a factor. You might feel guilty that you were spared or miss your newly departed colleague so you decide to look at other options. 

"People have wondered whether the pandemic has made social ties less important — there's a thought that since we've moved to a more digital world, we don't need the water cooler chat or the office gossip," said Obukhova, an economic sociologist whose research explores how culture and social relationships shape markets. 

"But even post-Covid, people still need that social embeddedness and social support."

How managers can stem domino departures

Gallup estimates that voluntary turnover costs American businesses $1 trillion a year. And in a still-tight labor market like this one, it's especially hard and expensive to hire. (That alone might prompt executives who are mulling layoffs to reconsider.) 

But for companies that have already cut, leaders must be mindful of the consequences and take action to decrease the possibility of further resignations, said Obukhova. "Make sure that the layoffs do not completely destroy people's sense of belonging and community."

After all, managers might not be fully aware of their team member's social ties, particularly if employees work remotely or have a hybrid setup. Bosses might be on team Zoom calls, but they don't see, for instance, that their team members regularly text each other on and off the clock.

Managers need to talk to their remaining employees, added Derler. "Managers might avoid this because it's hard to have those kinds of tricky conversations. But they need to think about their team member's salary, growth, and market value. 

"Ask them: 'How do you feel?'"

Read the original article on Business Insider

Contributer : Business Insider https://ift.tt/uNPZD0T

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