While layoffs have become a common workplace phenomenon as any other, it is important that companies realize that their employees are their truest asset. The short-term goals while easier and cheaper to achieve will have consequences that may not work favourably in the long run.

In January, Amazon.com Inc. laid off more than 18,000 employees and 9,000 positions were said to be further reduced. Dell plans to cut approx 6,600 jobs. The parent company of Google has recently announced the largest round of layoffs of 12,000 jobs. Meta announced roughly 1000 layoffs and the list goes on. As companies around the world continue to implement mass layoffs, the conversation surrounding the potential economic recession has taken centre stage. However, what is not being talked about enough is the potential mental health recession that will follow. The impact of losing a job, or even the fear of losing a job, can have devastating effects on an individual's mental health. With anxiety, depression, and other mental health issues on the rise due to the current climate, it is more important than ever to have discussions about how to support those affected by mass layoffs. These are not just statistics, but actual people we are talking about.

The analogy of a sinking ship and layoffs explains the situation well. Imagine the feelings of uncertainty, fear, and panic that individuals on a sinking ship may experience - employees in a workplace where serial layoffs are occurring may experience similar emotions due to the potential loss of their jobs. Employees who have been through multiple rounds of layoffs can experience a lingering sense of dread about losing their job. This fear may be accompanied by feelings of guilt or responsibility towards former colleagues who were let go. This is similar to the way passengers on a sinking ship may feel, a constant fear of drowning and feeling responsible for the safety of others on board. While the impact of layoffs is often discussed in terms of the employees who lose their jobs, the experience of those who remain is very significant. The survivors of layoffs are living under constant fear and gloom of ‘what next’ and it most definitely takes a huge toll on their mental health. Employees interpret layoffs as a “psychological contract violation,” giving rise to resentment and fear.

After the axe falls: Picking up the pieces

As a company endures multiple rounds of layoffs, the remaining employees are left to grapple with an array of personal and professional obstacles. What exactly does this mean for those who must soldier on?

1. Increased workload: With fewer employees, those who remain may be expected to take on additional responsibilities and work longer hours. This can lead to burnout and physical and mental exhaustion.
2. Uncertainty: The remaining employees can be left feeling uncertain and anxious about their job security. The fear of being laid off in the future can be a constant source of stress and anxiety.
3. Lack of trust: Survivors may lose trust in their employer and its leadership, particularly if they feel the layoffs were handled poorly or unfairly. This will negatively impact their motivation, productivity, and commitment to the organization.
4. Low morale: Survivors may feel demoralized, resentful, and disengaged from their work. In a work environment where job security is not guaranteed, employees may become less invested and committed to the company's goals and values. This sets a course for significant job dissatisfaction.

The Domino Effect: How Serial Layoffs Can Cause a Culture Collapse

Apart from individual employees’ well-being, mass layoffs can also lead to a more difficult work culture.

1. Employees who survive multiple rounds of layoffs may become more risk-averse because they may fear making mistakes that could jeopardize their job security. When employees feel uncertain about their job security and are burdened with an increased workload, they may become less willing to take risks and think outside the box. This can stifle creativity and innovation, which are crucial for companies to stay competitive and adapt to changing market conditions.
2. Additionally, the loss of colleagues and the constant fear of future layoffs can create a sense of mistrust and tension among employees. This can lead to a breakdown in communication and collaboration, which can ultimately harm the company's productivity and success. In order to secure their positions, the survival instinct of employees may lead to unhealthy politics within the organization.
3. The culture of the company may also shift towards one that prioritizes short-term gains over long-term growth and sustainability. A decline in the company's overall performance and reputation in the industry can further trigger a desperate search for jobs in other organizations. When employees are collectively trying to find jobs outside their current organization, the job search process can create a sense of mistrust and competition among employees as they vie for the same job opportunities. This can lead to a breakdown in communication and collaboration. Additionally, the process of searching for jobs can be emotionally draining for employees. They may feel overwhelmed by the uncertainty and pressure of finding a new job, especially in a competitive job market. This can lead to increased stress, anxiety, and even depression.

While layoffs have become a workplace phenomenon as any other, it is important that companies realise their employees are their truest asset. The short-term goals while easier and cheaper to achieve will have consequences that may not work favourably in the long run. It is worrying to even imagine that the layoff culture has become a norm in most workplaces today, and there seems to be no end in sight. Studies have shown that unemployment can change people's personalities. However, it would be worthwhile to think about what happens to those who are juggling on the brink of uncertainty (survivors). The workplace environment can be poisonous and very harmful if active steps are not taken by the leaders to deal with the same. Rebuilding what was broken down will take time, but the genuine intention and effort from the employers would make all the difference. Remember, we are talking about humans here, not simply resources, that one can use and throw as per convenience.

This article has been authored by Prof. Moulika Mandal, Faculty of Psychology, FLAME University.