Don’t expect layoffs will improve employee productivity

If 2022 was all about people resigning from their jobs, 2023 is lining up to be about people being laid off from them.

But former American Express CEO, Ken Chenault, recently issued a strong message for companies thinking about conducting layoffs when he spoke at the Forbes Future of Work Summit.

He said: “I’ve got to tell you – the announcements coming out the last few weeks from [many] tech companies, are that they blame people for not working hard enough.” But, he added, statements like this are “bulls—t.”

The epitome of employee blaming comes, of course, from Elon Musk at Twitter. In a mid-November email to employees, he stated: “Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore. This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”

Coming after a major round of layoffs, the implication in that email is that Twitter employees haven’t been working hard enough and that the only way the company will succeed going forward is with long hours at high intensity.

The problem is that people don’t generally respond well to threats, fear, and intimidation, especially during or after layoffs. In Leadership IQ’s study, Don’t Expect Layoff Survivors To Be Grateful, we made some shocking discoveries about what happens to employees following a layoff.

Productivity suffers

Of the more than 4,000 layoff survivors we studied, nearly three-quarters (74%), said their personal productivity has declined since the layoff.

It’s not hard to see why. Amidst the rampant stress and fear of widespread layoffs, concentrating on work becomes increasingly difficult.

Just thinking about it for a minute. Coming into work every day, not knowing if you’ll be part of the next round of layoffs, is not a recipe for efficiency. Nor is saying goodbye to coworkers, picking up tasks that fell through the cracks, and polishing your resume.

Productivity was already suffering in 2022. In Leadership IQ’s recent report on employee engagement surveys, it was revealed that more than three-quarters of leaders believe their employees’ productivity has suffered because of burnout.

Add layoffs to already high employee burnout and you’ve got a recipe for a corporate culture disaster.

Customer service suffers

The same layoff study also found that 81% of surviving workers say customer service declined too, with 77% saying more errors and mistakes are being made.

Again, it’s not difficult to see why this might be. Unless there is a picture-perfect work redesign effort to accompany any layoffs, it’s inevitable that tasks will fall through the cracks, handoffs will get missed, and follow-through will suffer.

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Remember, in far too many layoffs, 100% of the work is left for 50% of the workers.

It’s also worth noting that if a company that’s getting rid of people provides a service requiring empathy towards customers (or emotional intelligence more generally), it’s tough to see how employees will be operating at full strength after the emotional drain of losing colleagues and friends.

Long-term confidence suffers

Most CEOs frame layoffs as a way to strengthen the company moving forward; it’s usually some version of “while these layoffs are regrettable, they will ensure the company is better positioned for the future.”

However, that message doesn’t resonate with a majority of employees, as the Leadership IQ study found that 61% of surviving workers believe their company’s future prospects are worse.

As Chenault further noted during the Forbes conference, “If you’re trying to build an enduring company – and if you’re trying to build trust – your existing people are going to be looking at how you treat people who leave the company.”

Layoffs may sometimes be necessary, but just as necessary is carefully considering what happens afterwards.

Both data and common sense suggest that failing to consider workforce ramifications can drastically undercut any potential financial gains from a reduction in force.

 

Mark Murphy is the CEO of Leadership IQ and a New York Times bestselling author. His books include Hiring For Attitude, Hundred Percenters, HARD Goals, and Managing Narcissists, Blamers, Dramatics and More. Mark’s groundbreaking leadership studies have appeared in The Wall Street Journal, The New York Times, Fortune, Forbes, Bloomberg BusinessWeek, and U.S. News & World Report. Mark has also appeared on CNN, NPR, CBS News Sunday Morning, and ABC’s 20/20. He’s trained leaders at the United Nations, Harvard Business School, Microsoft, Mastercard, and hundreds more.

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