The Ripple Effect: Layoffs And The Mental Toll On Remaining Employees

Keywords: Layoffs, redundancies, mental wellbeing, sustainable organisations

Author: Lisa Munro

Updated: 11 March 2024, Worklife Digital

Latest statistics suggest that so far in 2024 182 tech companies have laid off 46,066 workers. Some of the big names this year include Snap, Zoom, PayPal, Salesforce, Microsoft, eBay, TikTok, Wayfair, Google, Electronic Arts, Sony, Expedia, Meta, Amazon and Bumble. EY, PwC, Deloitte and KPMG have also all slashed jobs in recent months, following a glut of hiring in the deal boom that followed the pandemic.

While the focus understandably often falls on the immediate impact on those who lose their jobs, a lesser-discussed consequence is the psychological toll it takes on the employees who remain. Layoffs worldwide create a significant ripple effect and organisations need to consider the mental wellbeing of those who weather the storm.

Understanding the Scope: A Global Phenomenon

The psychological impact of layoffs transcends national borders. Studies conducted during the 2008 recession, for instance, revealed a significant increase in mental health issues among employees who remained in companies that underwent workforce reductions. This phenomenon, termed "workplace survivor syndrome," highlights the hidden costs of layoffs.

The Emotional Fallout: Fear, Insecurity, and Decreased Morale

News of layoffs can trigger a cascade of negative emotions in remaining employees. Fear of job insecurity often takes center stage, leading to heightened anxiety and stress. Employees may experience feelings of guilt, questioning their own value to the company. This can manifest as a decline in morale, reduced motivation, and an overall sense of unease within the workplace.

The Burden of Increased Workload

Workforce reductions often lead to a redistribution of tasks among remaining employees. This translates to an increased workload, leaving many feeling overwhelmed and stretched thin. The pressure to maintain efficiency while juggling additional responsibilities can lead to burnout, further impacting mental wellbeing.

Diminished Trust and Loyalty

Layoffs can also erode trust and loyalty between employees and the organisation. When colleagues are unexpectedly let go, it shatters the sense of security and stability employees have built. This can lead to cynicism towards management decisions and a decline in overall company morale.

Strategies for Mitigating the Mental Health Impact

While layoffs are a harsh reality of the business world, companies can take steps to minimise the negative impact on the mental wellbeing of remaining employees:

Transparency and Communication: Open and honest communication during difficult times is crucial. Management should explain the rationale behind the layoffs and provide clear information about the future direction of the company.
Workload Management: Carefully evaluating and redistributing workload after layoffs ensures remaining employees are not overwhelmed. Offering flexible work arrangements can further help manage stress.
Support Systems: Offering mental health resources like Employee Assistance Programs (EAPs) allows employees to access professional help and address their anxieties.
Focus on Morale: Fostering a positive work environment through team-building activities and recognition programs can help combat feelings of isolation and boost morale.
Investing in Remaining Employees: Investing in upskilling and reskilling initiatives demonstrates the company's commitment to its remaining workforce and empowers them to adapt to potential future changes.

Building Resilience in Uncertain Times

Layoffs are a complex issue with far-reaching consequences. While the focus often lies on the immediate impact on the laid-off employees, the mental well-being of those who remain deserves equal attention. By fostering open communication, providing support systems, and prioritising employee well-being, companies can navigate difficult periods while minimising the psychological toll on their workforce. Building an environment of trust and resilience is vital for organisations to weather economic storms and emerge stronger.

WorkLife Digital is a global mental-wellbeing consultancy driven by the mission to improve the sustainability of businesses. Our psychological wellbeing tool, Worklife Quotient (WL-Q), is modelled on cutting-edge scientific research and provides organisation-wide measurement and intelligence on the mental wellbeing levels and psychological resilience of staff. WL-Q also assesses the impact of organisational practices (i.e. people and culture, leadership styles, organisational purpose and values, social impact) that have a direct influence on staff wellbeing and provides strategic recommendations on addressing risks and promoting strengths.

For more information, get in touch at lisa@worklife.digital