“The ubiquity of layoffs has convinced a generation of managers that there’s no other way to do business — that periodic downsizing is necessary, even beneficial to companies.
But it’s not. Regular layoffs are a perfect example of a widespread yet deeply corrosive business practice. They hurt people, companies and society.
The people who get axed suffer psychological and financial distress, of course, but there also are costs to organisations that regularly lay people off.
Managers become lazier about the difficult work of hiring, coaching and giving feedback — just bring on a bunch of warm bodies and let HR cut anyone who doesn’t work out.
Among layoff survivors, morale and engagement sink and turnover increases. Researchers estimate these effects linger for about three years, when another layoff will likely come along.
And downsizing rarely has the hoped-for financial effect. Profitability suffers, as do measures of innovation, quality and safety. Although investors may greet layoffs with higher stock prices for a day or two, in the long run, layoffs are associated with flat or declining share prices, particularly when they don’t reflect a shift in corporate priorities.
An economy that grows numb to mass layoffs experiences a decline in trust. “Layoffs break trust by severing the connection between effort and reward,” as Sandra Sucher and Marilyn Morgan Webster of Harvard Business School put it. The result is a deep cynicism about the value of loyalty.”
https://www.deccanherald.com/opinion/mass-layoffs-shouldnt-be-routine-2881434