CHICAGO — Layoffs are never pleasant, but do mass staff reductions deal a particularly painful blow to employee morale?
To the contrary, says neuropsychologist Richard Chaifetz, ripping off the Band-Aid is kinder to employees than eliminating positions in dribs and drabs.
“My philosophy is you do it all at one time,” said Chaifetz, CEO of ComPsych, a Chicago-based provider of employee assistance programs. “You anticipate what you need to do, you announce it, you get it done. And you announce that this is it.”
Knowing that the cuts are all over with gives people a sense of stability and comfort, he said. Some employers believe that if they reduce staff slowly, people won’t realize it, but secrecy just fosters insecurity and pushes people to look for other job options.
“The worst thing you can do is create an environment of trepidation,” Chaifetz said.
Chaifetz, whose firm serves 29,000 companies, said the inconsistency with which employers manage staff reductions “never ceases to amaze me,” though their circumstances drive their decisions.
Companies that are consolidating, like Kraft Heinz and Walgreens Boots Alliance, should be able to calculate how many people they will have to eliminate. But when the cuts are driven by poor company performance, as at McDonald’s, or an acquisition involving a company or business unit in need of a turnaround, layoffs may be more piecemeal because decision-makers don’t know where the bottom is.
Mitigating the psychological fallout of layoffs is important as the labor market tightens because employees have more choices, Chaifetz said. That includes identifying and encouraging the stars who remain so that they have a sense of where they can go in the organization and don’t flee to competitors.
Connie Fuller, professor of business psychology at The Chicago School of Professional Psychology, notes that recently announced job cuts seem to eliminate layers of management, and a “flattening” of a company’s structure leaves fewer options for people to move up the ranks.
No matter how they are executed, mass layoffs shake employees’ confidence and can have a particularly deep impact at big companies that may have attracted workers because of the security they afford, she said.
“Immediately, it breaks the unspoken contract between the employer and employee,” Fuller said. “The people who are still there will be looking over their shoulders.”
Fuller, who spent nearly 30 years as an organization development consultant, said bosses can make a big difference for those affected by minding a few best practices.
For example, the people laid off deserve one-on-one conversations with their supervisor explaining why it is happening and why they are included, “so that there’s a purpose in making the cuts, there’s a reason you’re on the list.”
She abhors the practice of forcing people out of the building the same day, not giving them time to say goodbye to their friends, which she said is “the most degrading thing you can do to another human being” and “makes them feel totally, totally worthless.”
Companies that fear sabotage or leaking of proprietary information by letting laid-off workers stick around “are the ones that haven’t treated their employees right.”
Because many of the recently announced layoffs seem to affect management, other wrinkles arise, including fear that it will be harder to find a new job as an older worker, and shame around collecting unemployment, Fuller said. Companies can bring unemployment providers into the office for people to fill out forms on site and get it over with, she said.
For the survivors of layoffs, who go into mourning after their friends pack up and go, it helps for co-workers to arrange informal get-togethers outside of work with the people who were cut, once the dust has settled, to reminisce about the good memories.
“There needs to be some ceremonial type of closure,” Fuller said.
Survivors of layoffs rarely get much sympathy, though they suffer guilt and the pressure of heavier workloads as they pick up the slack, she said. Empty cubicles serve as sad reminders, so she recommends rearranging seating to bring remaining employees close together.
Layoffs are also tough on those who have to deliver the bad news.
When she was human resources manager at a manufacturing plant being shut down by its parent company, Fuller and her team had to lay off 1,500 people over the course of the year. They would spend their days telling workers they were no longer needed, holding their hands or absorbing their anger.
“Then we would go into a private conference room, lock the door and we would just cry,” she said.