In an economic environment of widespread layoffs and company downsizing, many employees are holding tight to their positions. Yet, according to some experts, these cuts may create a surprising domino effect – driving some remaining workers to voluntarily quit their jobs.
A study published in the Academy of Management Journal in January 2023, in which researchers applied a proprietary framework to study 1,620 retail stores during the course of 22 months, in order to predict human capital outflow showed that company-wide layoffs were 10 times more likely than quits following voluntary quits. And while post-layoff resignations spiked among all employees, the trend was more pronounced among high-performing workers, rising from around 1.5% to 2% in the six months after job cuts were announced – a 75% spike.
Experts say they have indeed seen similar trends play out across sectors. Many workers survive a headcount reduction, to find that the psychological blow from layoffs in general can rock confidence and trust. Often, a crisis of faith in their employers, under-resourcing and industry instability means workers jump – before companies push them out.
“We see that people don’t tend to wait for job losses to kick in before they go – turnover increases immediately after layoffs are first announced,” says Sima Sajjadiani, assistant professor at the University of British Columbia’s Sauder School of Business, based in Vancouver. “The cue seems to be, ‘I don’t have time here, I need to run’.”
In general, turnover is often contagious. Sajjadiani says one employee resignation can swiftly follow another, as colleagues often copy behaviours. Unlike voluntary quits, however, layoffs create a sense of urgency.
A wave of wide-spread job cuts can convince unaffected workers that their role is next to be axed. “In announcing redundancies, the signal is that the organisation is no longer a safe place to work,” says Sajjadiani. “Employees see the news, or even their colleagues packing up their belongings and leaving, and it feels like an emergency – it’s emotional.”
As they see their colleagues get laid off, some workers are deciding they want to walk voluntarily (Credit: Getty Images)
In many cases, layoffs often shake up workers’ loyalty and sense of purpose at an organisation. “Job security is crucial for someone to be willing to go the extra mile for an employer,” says Sajjadiani. “Ultimately, employment is a transactional relationship: it’s a contract between employer and employee. If one party doesn’t commit to it, it soon falls apart.”
Indeed, layoffs “can sow seeds of doubt for employees”, says Jim Link, chief human resources officer at the Society for Human Resource Management (Shrm), based in Virginia, US.
Next, employees losing colleagues, friends and close working relationships in one fell swoop can compound these feelings. “It’s the concept of job embeddedness: when people work together, it creates an invisible web of social connections between co-workers,” adds Sajjadiani. “When that’s broken apart as a result of layoffs, that creates a psychological impact.”
Subsequently, job cuts can leave remaining workers burdened with feelings of remorse, loss and uncertainty. Practically, workers are also left with the stress of being expected to do more with less, adds Link. “They may also worry about being under-resourced, and left with greater job responsibilities following layoffs: friends and colleagues go away, but the work doesn’t.”
As peers face redundancy, one reason the highest-performing workers may particularly run to other roles, says Sajjadiani, is that “departmental cuts often mean that top performers and managers lose their jobs. It sends the signal to high-performing colleagues to seek opportunities and secure employment elsewhere” – especially as they may have better labour-market prospects.
This manifests similarly for voluntary quits, she adds. “But compared to resignations, the process with layoffs is intensified. They think, ‘I’m next, I need to save myself’.”
Of course, not every employee who wants to leave after a round of layoffs can. Yet the instinct to go will still be there for many workers. And this means they’ll keep an eye out for other opportunities – even if they can’t leave as urgently as they’d like, especially in sectors that are experiencing wide-scale headcount reductions among many companies.
“Thinking about leaving [after layoffs] is an almost inevitable response – they may just not be able to act upon it,” says Sajjadiani. “But actually leaving depends entirely on whether there are opportunities in the job market. They’ll certainly be on the lookout.”