While the immediate suffering from layoffs lands on the people left without a job, research shows that survivors and organizational performance are typically hammered as well. Remaining employees are often left with survivors’ guilt, weakened trust in leaders, and less commitment to the organization. Often, how the layoff is handled is perceived as evidence that purported organizational values are forever suspect.
In addition to the economic peril people feel during layoffs, they also feel psychologically traumatized. Painful events can undermine people’s sense of efficacy and leave them feeling powerless. Leaders can ameliorate these psychological effects to some degree in typical layoffs by helping remaining staff understand both the rationale and the limits for the action. For example, if a program was being eliminated, those not associated with that program could be helped to feel more certainty about their future. If a certain budget reduction was required, leaders could reassure people once the process was complete that no further layoffs were envisioned.