Layoff Survivor Syndrome. What Companies Need to Do. (Hint: it involves more than donuts.)

Ever noticed how something becomes such a big thing that it’s given a catchy name – like The Great Resignation and Quiet Quitting? Well, here’s a new one for you: Layoff Survivor Syndrome.

As a result of the general slowdown in the global economy, especially post-pandemic, companies have been letting people go in record numbers. While there usually are resources, including severance, for those who are let go, the remaining employees are often left to fend for themselves while picking up additional work and facing the uncertainty of “am I next?” Leaders send generic memos and buy a few boxes of donuts assuming everything is copasetic for the survivors. Sound familiar?

While the bottom line may be strengthened immediately by cutting jobs, there are financial impacts that go unaccounted for in a layoff strategy. A recent study by Leadership IQ finds that:

• 74% of employees who kept their jobs say their own productivity has declined
• 69% say the quality of the company’s products or services has declined
• 87% are less likely to recommend their organization as a great place to work
• 77% see more errors and mistakes being made
• 61% believe their company's future prospects are worse

Most CEOs and CFOs are missing these inputs into the equation when they evaluate the financial impact of mass layoffs. This leaves survivors, who are likely top performers, to languish under the assumption that they should feel lucky to still have their jobs. Given these impacts, we shouldn’t expect layoff survivors to be “grateful.”

What if there’s a better way? We think there is. According to Josh Bersin, a thought leader on talent trends, we need to move out of the Industrial Age – hire to grow, then lay people off when things slow down. We are now in the Post-Industrial age of fewer skilled people available to meet the demands of the business. To achieve the productivity and financial gains projected by a layoff, companies must redevelop and redeploy the remaining employees for growth.

Plenty has been written about how surviving employees can help themselves, including this great piece in Harvard Business Review (HBR). But what can companies do to minimize the impact and support survivors? Here are a few simple steps:

1)   Put as much time in planning communication for survivors as you do those who are exiting.

Often, extensive planning goes into the layoff process, but no one really plans for the survivors … except to order those donuts. Create a plan for managers to spend one-on-one time with their remaining employees. They should listen and genuinely respond to how employees are feeling, not just recite the pre-approved talking points.

Many leaders shy away from these open conversations for fear of igniting a “gripe” session, but they do so at their own peril. Ignoring the team’s uncertainty and anxiety can make things worse. Research suggests that manager transparency and vulnerability is essential to creating trust in times of adversity. That trust is the lynch pin to talent retention following a layoff.

2)   Make sure the Total Rewards and Talent Management Teams are at the table from the beginning.

For survivors, there’s likely a sea change in job expectations. Compensation, job responsibilities, manager changes, and more. Prior to layoff announcements, remaining positions need to be organized in a clear framework of job families, levels and career paths (job architecture) that delineates skills needed for those positions with commiserate ties to pay progression. This doesn’t necessarily mean an immediate raise for survivors. But it does mean that survivors are cared for and understand their place in the organization on day one of the change.

According to WorldatWork, “If you have career paths that look realistic, people can really start working toward that and it improves morale and engagement because people know what they are working toward.” You don’t want voluntary resignations, especially since you likely kept your key talent. And you don’t want productivity to suffer any more than necessary.

3)    Bring your Communications or Culture team to that table.

Don’t share the plan for layoffs with your internal and external communications team the day before they happen. These teams often have their fingers on the pulse of the organization and can help leadership not just navigate, but anticipate bumps in the road — including the impact on remaining employees and company reputation as cited in HBR. Your business leaders, as well as your HR teams, should have a strategic relationship with both internal and external communicators.

4)    Clarify new or expanded responsibilities.

Managers should set up meetings to explain the responsibilities their employees will need to absorb in the streamlined organization. There’s usually anxiety among survivors about how they’re going to do their old job as well as the new duties they are taking on. Research suggests that, when handled well, an expansion in responsibilities may lead to employees doubling down on their commitment to the organization. The key is to link their new responsibilities with more autonomy, learning opportunities and meaningful work, which can be even more powerful than monetary recognition according to HRB's findings.

5)    Talk about the path forward.

This includes the inevitable questions around career paths:  Do surviving employees need to expand their skill set? If so, how will the organization support this? What is the potential impact of AI or other new technology on their role? Are their opportunities for them in other parts of the organization?

Careful consideration and attention to these questions will go a long way. A study by MIT Sloan School of Business found that employees who received a message of career relevancy and security in a company’s reskilling efforts “were, on average, 4.7% more open to broader career options and 4.9% more likely to consider reskilling compared with employees who had received the other messages.”

Finally, be prepared for the inevitable question: are there more layoffs coming? Just be honest with them about the facts. In this hyper-fast digital age information flows today at the speed of light — and it’s moving far too fast for leaders to contain it. Employees will inevitably see the reality of a given situation. Communicating transparently from the start engenders trust in leaders and avoids the mishap of eroding trust when employees discover contradictions in the story.

Summary

Many businesses are short-sighted in simply looking at what job cuts can do for their immediate bottom line. Without thoughtful consideration of these five points, organizations risk not achieving the desired financial goals of a reduction in force. At Acera Partners we help organizations navigate this change by envisioning what the new organization could be and laying out the job architecture and compensation approach to achieve it.

‍