As employers across the country consider and implement layoffs, Harvard Business School Professor Sandra Sucher writes that “[R]esearch shows that layoffs continue to have detrimental long-term effects on individuals and companies.”
In a recent Harvard Business Review article, Professor Sucher and her colleague, Dr. Marilyn Morgan Westner, explain how the “short-term cost savings” from layoffs are outweighed by “bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation — all of which hurt profits in the long run.” This is especially true today, the authors argue, because (1) word travels fast in our connected, hyper-technical world, (2) business leaders are under a microscope, and (3) the COVID pandemic showed that employers have other options.
If an employer really must make changes, the authors argue, the employer’s actions should be evaluated against a backdrop of trust. “Your company will weather the storm of layoffs more successfully if you can maintain trust with three groups who will determine your success in the future: employees you let go, employees you retain, and employees who don’t yet work for you.” To gain or maintain trust, employers should consider all of their options, then make fair decisions, provide affected employees with a “soft landing,” attend to the needs of remaining employees, and “be prepared to publicly apologize.”
You can read the the full Harvard Business Review article here.