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Layoffs & Psychology: which impact for those who stay?

Today I'll put my shrink hat on to discuss the latest research about layoffs. What did we learn about the psychological impact of layoffs?

This article follows a conversation we had on the Recruiting Brainfood live.

A layoff is mostly perceived as a treason-first, by the people who’ve been let go.

It’s about breaking trust.

And what is interesting is that it’s not time-sensitive: if you surprise the people with a layoff, you break their trust. If you leave them enough time to prepare, they’re terrified and their anxiety, anger and all the emotions they could feel go up to the roof in anticipation of what may or may not happen.

So it’s broken trust either way.

And even regarding the people who are not being let go, if they survive the layoffs while their colleagues didn’t, the psychological cost is terrible as well.

We often talk about the effects of layoffs on the employees who are indeed let go, and these effects are petty obvious, it’s pretty bad.

However we don’t discuss enough the impact on the mental state of the people who stay.

So that’s an interesting topic to dig in, because employer brand comes from within first.

And I don’t know if that’s because 2023 was unfortunately an important year for layoffs, but there has been a tremendous amount of research published in the last 2 years.

What did we learn about the psychology of layoffs?

The more insecure you feel, the more you just surrender to your circumstances.

You enter a state of "succumbing", meaning that employees, due to job insecurity and the threat of layoffs, experience a sense of defeat. This is leading them to give up and surrender to their circumstances.

This condition is characterized by a lack of effort to overcome obstacles, driven by a belief that their actions will not make a significant difference.

Can you imagine the impact on their mental health?

It's not about quiet quitting. It's about quiet dying inside.

Do HR and Managers enjoy firing employees?

First, a disclaimer.

I have the deep conviction that nobody likes to do to bad things to other people. Sure, there is suffering. And there is responsibility, there is no denying that. There's even idiocy. But there is no evil.

You can do bad things and morally not care about it. But your moral grounds have been built up.

What I want to say is that despite 17 years of contact with HR directors and Managers, contrary to the stereotypes perpetuated by the various media, I have yet to meet someone who enjoys firing people.

Sure, some people enjoy having power, or even abusing it. But that's just it: they're abusing power like if they were abusing drugs: it procures them something to fill a deep space in them, make them feel good about themselves.

So it's about them, not about the people they are firing.

I'll close this part which is my own opinion, and go back to our topic and related-research:

What is the psychological impact on the manager of the HR person who delivers the news?

Well, research suggests that how you feel as a manager is deeply connected to how you perceive the layoffs morally.

So there’s no real prediction, it is lived and perceived on a very individual scale, like, it can have a high moral cost to you or no cost at all.

But if you don’t believe in the downsizing, this creates a cognitive dissonance.

Imagine that you’re supposed to do something and be responsible for this thing, while you deeply think this is a bad thing.

Well that's a tough thing to swallow.

So in order to make this more acceptable for themselves, research shows that managers tend to shift their view, and they gradually adopt a more positive vision of the downsizing.

This is just a psychological mechanism: a dissonance-reduction method.

So even if they don’t believe in the layoffs, they might end up believing it’s for the greater good, because if they don’t then how are they supposed to look themselves in the mirror?

So 2 important takes about how to deal with layoffs

=> About the Managers (& HR)

For managers, whereas it’s direct managers or HR people, if you want them to deliver the layoffs news, you have to help them make the most sense of it. Not just ask them to play the good lieutenant, because all the energy they will save on not having to make this believable to themselves, they’ll be able to put it in their communications with the people being laid off.

=> For the people who stay

As a company you have to take a stand and clear any doubts.

Doubts and anxiety are never a good experience.

If you make a decision to let people go, you have to also consider the decision that you chose to keep the other people, and to let them know.

Don't only communicate to the people who are being laid off to tell them why and how they're being laid off.

Prepare yourself to communicate to the people who are not being laid off, to inform them, to reassure them, and to explain to them why they're not part of the layoffs.

Otherwise, they just feel that they’re the next in-line, and there's a high-risk that they will just let go of everything.

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