Layoffs can cause contagion that pushes workers who are left behind to quit
- Studies have shown that quitting is contagious.
- Now new research suggests that layoffs might be correlated with the same phenomenon.
Researchers have known for some time that quitting is contagious.
When one employee leaves, the departure can have a ripple effect on others on the same team; suddenly those remaining workers, too, are more likely to head for the exit. It's a phenomenon that might help explain the staying power of the Great Resignation, a period in which workers have been quitting — and changing jobs — at record levels.
Now new research suggests layoffs are correlated with the same behavior. Visier, a human-resources analytics company, found that when employees were laid off or terminated, the likelihood that their direct colleagues would quit was 7.7% higher than if those employees had remained. Visier published a study about turnover contagion following resignations and later detailed its finding related to layoffs in a LinkedIn post.
Layoffs are piling up in corners of corporate America — Twitter is said to have let go of 200 employees over the weekend in addition to the 7,500 that the social media giant axed last year; meanwhile, other tech giants including Google and Microsoft have also shed workers this year, as have Goldman Sachs and Disney. The findings have implications for firms that have recently let go of large numbers of employees or are considering it: The layoffs might push other workers out the door.
'A layoff can be an information signal'
"Our recommendation is: Beware," Andrea Derler, a principal researcher at Visier, told Insider. "If you're doing layoffs, you might as well add 7% to 8% to your count who are likely to leave as well."
Using Visier's database of 17 million anonymized employee records around the world, researchers found that when employees were let go, their team members were more likely to follow suit. The increased likelihood began on day one of the peer's layoff or firing and increased sharply 45 to 105 days after the other worker's termination, with a peak at around 75 days. The research pool involved cuts that happened between February 2019 and June 2022.
There are, of course, many reasons people might choose to quit their job: They might get assigned a new manager they don't care for, or they're offered an exciting opportunity, or they have a change in their family's circumstances that require a move.
It's also understandable why employees who survived a layoff might also quickly decide to leave of their own volition. Layoffs are deeply unsettling. If somebody on your team is cut, for instance, it's only natural to worry that you might be next. Quitting, in that case, might be an act of self-preservation.
"A layoff can be an information signal," Elena Obukhova, an associate professor of strategy and organization at McGill University, told Insider. "It's a sign of your company's solvency or future direction."
Social ties might also be a factor. You might feel guilty that you were spared or miss your newly departed colleague so you decide to look at other options.
"People have wondered whether the pandemic has made social ties less important — there's a thought that since we've moved to a more digital world, we don't need the water-cooler chat or the office gossip," said Obukhova, an economic sociologist whose research explores how culture and social relationships shape markets.
"But even post-COVID, people still need that social embeddedness and social support."
How managers can stem domino departures
Gallup has estimated that voluntary turnover costs American businesses $1 trillion a year. And in a still-tight labor market like this one, it's especially hard and expensive to hire. (That alone might prompt executives who are mulling layoffs to reconsider.)
But for companies that have already cut staff, leaders must be mindful of the consequences and take action to decrease the possibility of further resignations, Obukhova said. "Make sure that the layoffs do not completely destroy people's sense of belonging and community."
After all, managers might not be fully aware of their team member's social ties, particularly if employees work remotely or have a hybrid setup. Bosses might be on team Zoom calls, but they don't see, for instance, that their team members regularly text each other on and off the clock.
Derler suggested managers talk to their remaining employees. "Managers might avoid this because it's hard to have those kinds of tricky conversations. But they need to think about their team member's salary, growth, and market value.
"Ask them: 'How do you feel?'"
An earlier version of this story appeared on January 19, 2023.
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