It’s almost a daily event these days: a company announces a round of layoffs. The first, the second…the ninth? Who knows? As a job seeker you immediately scratch them off your target list figuring that if they are laying people off, they won’t need the likes of you. But not so fast, Buckwheat…! It turns out that companies frequently don’t take into consideration the effects of their layoffs and end up letting too many people go. For instance, after a layoff, as a recent CareerBuilder survey found, over a third of the employees left behind were spending more time at the office and, in some cases, taking on the work of two people. Not surprisingly, 34% of respondents said they were burned out. And when that happens people start looking elsewhere. As a result, there are numerous voluntary resignations, many more than the geniuses in the C-suites planned for. Two University of Wisconsin-Madison professors, Charlie Trevor and Anthony Nyberg, wrote a seminal paper on the subject not long ago entitled, “Keeping Your Headcount When All About You Are Losing Theirs: Downsizing, Voluntary Turnover Rates, and the Moderating Role of HR Practices”. Their findings confirmed the CareerBuilder survey; in fact, they were able to quantify the phenomenon:
“Perhaps the most striking finding in this study of quitting rates in some 200 companies was the considerable exodus that even a small downsizing could set off. For example, companies that laid off a mere 0.5% of their workforce sustained, on average, a turnover rate of 13%, a rate that was 2.6 percentage points higher than the average turnover rate of non-downsizing firms. In other words, an extra 2.6% of the workforce left of their own accord, more than five times more workers than were laid off.”
One of the mitigating factors in the increase in the numbers of workers leaving, they found, was the presence of an HR department that promoted fairness in the treatment of employees. When there was trust, there would be loyalty. When not, there would be a stampede out the door. Conclusions: 1) Just because a company you’re interested in has a layoff doesn’t mean there won’t be openings in the future, and maybe sooner than you think; and 2) you might include HR in your list of questions as to how a company is run. The existence of an ombudsman, for example, or other built-in processes to handle employee grievances would suggest that it would be a good—and fair— company to work for. Either way, be careful not to take things at face value these days.