How layoffs impact culture, team dynamics and those left behind

Meta’s chief executive Mark Zuckerberg declared that 2023 would be the “year of efficiency” at his organisation.

So far, ‘efficiency’ has translated to hiring freezes and mass layoffs.

Two rounds of cuts over the past six months have impacted around 21,000 jobs, and the company implemented a hiring freeze for almost all new roles (Guardian).

These experiences are not exclusive to Meta.

With looming economic uncertainty and organisational overhaul, it’s difficult to read the news without seeing announcements of downsizing. Companies in the United States experienced nearly 90,000 layoffs in March, a sharp increase from the prior month and a staggering acceleration from a year ago.

In periods of mass layoffs, those who are let go are often taken care of through financial compensation, benefit extensions and even outplacement assistance and coaching. But what about the ‘lucky ones’ who didn’t make the cut? What’s the impact on those left behind?

Good fortune doesn’t make for good performance- at least not in this situation

Layoffs are hugely disruptive, with repercussions that can be detrimental to an organisation’s bottom line and culture in the long term.

When you throw a stone into a lake, the ripples go much further and much deeper than you can see. The position of the water forever changed. Chances are, when in a period of layoffs, you’re experiencing a heightened level of employee dysfunction, even if you don’t see it yet.

The surviving employees are not going to work harder out of ‘gratitude’. In fact, according to a BizReport survey conducted in November 2022, approximately 70% of “layoff survivors” say their motivation at work has declined since the layoff. Additionally, 66% report they feel overworked since the job cuts, and a third of those who survived a layoff believe that things will worsen for their company in the future.

Ultimately, employers who fail to give remaining employees proper support after trimming their headcount can expect to see a loss of productivity, dips in employee morale, increased disengagement and even a voluntary exodus of employees.

What does this mean on an individual level?


Increased workload, responsibilities and expectations

More often than not, those employees who survive layoffs are expected to pick up projects, roles and responsibilities left over by colleagues who were let go.

These sudden workload increases can result in overwhelm at work, not only causing a decline in job performance, engagement levels and work quality, but also leaving employees feeling resentful and burned out.  

It’s a bit like being thrown into deep end without a life jacket.

This sentiment is evidenced in a Leadership IQ survey of more than 4,000 employees who survived layoffs which found that 77% of respondents reported seeing more errors and mistakes being made following a downsizing. Similarly, 66% said the quality of their company’s services had declined. This is hardly surprising. If you leave 100% of the work for 80% of the workers, the quality is more than likely to decline.

Ultimately, when the workload isn’t effectively redistributed to accommodate a smaller workforce, it’s a breeding ground for errors and burnout.


Professional Stress, Personal Stress, Mental Stress

Even the most confident of employees are vulnerable to anxiety and negativity when they see the carpet pulled from beneath their long-term colleagues.

The emotional energy spent questioning ‘am I next?’ is a huge mental burden. These worries can lead to trouble concentrating at work, triggering further stress about lost productivity and resulting a self-perpetuating cycle of stress, anxiety and guilt.

74% of employees stated their personal productivity has declined since the layoff happened and 64% claim the productivity of their colleagues has declined.

These stresses aren’t just felt on a personal level. Periods of uncertainty often result in strains and tensions within teams as everyone muddles through. Indeed, the three most common feelings that employees have after a layoff are ‘anger’, ‘anxiety’ and ‘guilt’. 

In some cases, employees feeling insecure in their jobs and experiencing higher levels of stress can result in them quitting out of frustration.

Survivors guilt following layoffs is evident, and it shouldn’t be brushed aside.


Decreased productivity and increased pessimism

Employers may be inclined to believe that employees who survive layoffs will work harder at their jobs to prove their worth. But in reality, this is far from the truth.

While surviving employees do report feeling an increased pressure to impress after headcount reductions, those feelings of fear don’t translate to increased productivity or work quality. In fact, many are pessimistic about their company’s future prospects and can often become disengaged.

Workplace disengagement is an expensive problem, costing employees across the globe $7.8 trillion in lost productivity in 2022, according to Gallup’s State of the Global Workplace 2022 Report.

It’s the paradox of layoffs, engagement drops at a time when you need it most…


What is the solution?

As mass layoffs become more and more normalised, employers need to understand how subsequent decreases in employee motivation can affect their bottom line. To counter these negative sentiments, experts say leaders need to communicate the organisation’s near-term goals and plans very closely with front-line managers and demonstrate to the remaining workforce one key message:

You are valued.

Managers need to proactively support employees, both professionally and emotionally, in the adjustment to their new norm, simultaneously calming the imminent fear and survivor’s guilt that comes along with seeing colleagues’ jobs be cut.

Organisations will often preach ‘our people are our greatest asset’, but in times of uncertainty and stress, this sentiment can feel like betrayal, broken promises and empty words.


Enter, Insights Discovery…

How can Insights help companies support the employees that are spared from layoffs?

To successfully navigate a layoff, communication is key.

Insights Discovery enables companies to support their employees by providing them with a greater understanding of their own and their colleagues’ communication styles, preferences and behaviours.

How does this benefit teams experiencing layoffs?

Introducing a shared language of colour facilitates open and honest communication, fostering a positive culture of collaboration, empathy and respect.

Using a foundation of awareness, Insights Discovery helps teams navigate change and uncertainty, builds relationships and enables teams to define roles and visualise where they bring value to the team.

Are you struggling to navigate a period of uncertainty? Get in touch today.