“After nearly 8.5 years at Google, I received notification this morning that I had been affected by workforce cuts and no longer had a role in the company . . . I had envisioned spending my entire career at Google, so this news was particularly hard to digest.”
LinkedIn is flooded with posts like him of Google workers who suddenly lost their jobs this month via email. some dedicated contracts of their life to the company. Google’s father, the alphabet, among the tech giants who have cut their workforce by the thousands. The sector overall shed about 200,000 jobs last year.
“The company’s motto is ‘respect the user, respect the opportunity and respect each other,'” one fired Google employee told the Financial Times. “Who’s trying for a baby?” As sad as it is for entire teams to be laid off – however contrary to corporate public image and management style – there are good reasons why mass layoffs should be swift. The sudden interruption in launches may be attributed to an attempt to protect intellectual property and customer relations, preventing employees from transferring data and other security reasons.
But after the initial shock has passed, are employers aware of the long-term consequences of their actions? Sandra Sucher, co-author of The Power of Trust: How Companies Build It, Lose It, and Get It Back, points out that research shows that layoffs have a detrimental effect on employee and company performance. “The reason mass layoffs don’t pay off in the end is because they destroy trust within the organization,” she says.
Companies that have spent years and huge funds training employees allow not only corporate knowledge, but their networks of relationships, to slip through the door.
A friend at a major tech company was in a Slack chat with 15 colleagues, working out a bug. Then 12 of the group were shot. Slack chat died and did not solve the problem. “You don’t just replace that history, that conversation, that experience,” he says.
So-called survivors, like my friend, are now less likely to trust their employer and will worry about layoffs in the future. This remaining workforce may resent having to handle a greater workload in more difficult circumstances – which in turn will cause more employees to walk away. Reducing the size of the workforce by just 1 percent could lead to a 31 percent increase in voluntary employee turnover next year, according to for researchers at the University of Wisconsin-Madison and the University of South Carolina.
Good intentions are fragile. Most people who succeed at work do more than they are told. Mass layoffs send the message that instead of hiring a person for all they bring to work and future potential, they are just a cog in the machine.
Workers who choose to stay, knowing that hard work and good performance will not guarantee employment, may be more likely to do minimal work or be less innovative when the company needs it most. All of this hits profits in the long run.
Companies like Alphabet are doing the right thing in the short term: redundancy pay, bonuses and remaining vacation days plus six months of healthcare, access to employment services, plus immigration support. But those laid off may be affected for life, as they were after the 2008 financial crisis. They may suffer a blow to their health as well as their financial resources. A new job often doesn’t come with equal or higher pay right away.
Mass layoffs are a shock to both those who leave and those who are left behind — and that matters in the long run. Companies can learn from what happened: they must grow more sustainably and hire more disciplined. As Sawyer says, if executives are serious about employee well-being, they need to plan for future changes in the workforce on an ongoing basis and navigate challenging periods. Vacation payments, withholding bonuses, pay cuts and voluntary layoffs are options. If the pandemic has taught companies anything, it’s that there are other ways to move forward through tough times.