While layoffs may be an easy route to a more agile and responsive company operation, the Harvard Business Review warns that the long-term impacts to employee engagement and morale could be costly.
Large-scale layoffs have been a recurring headline this year, as the tech industry alone has cut more than 100,000 jobs, but research shows the long-term impacts may outweigh the short-term financial benefits.
Research from 2020 to 2022 found it took 12–18 months for engagement to rebound after layoffs. And for 2023 layoffs, the recovery is looking even longer, at 18–24 months, and that’s only if new employees are hired to backfill essential roles.
For employees who make it through a time of layoffs, their commitment to staying with the company drops over time, a strong predictor of turnover.
HBR warns that layoffs could actually set a company back a year or more on engagement and morale, something many businesses can’t afford in times of uncertainty and in a highly competitive employment environment.
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