Five Myths and Facts about Layoffs

Reading Newspaper With The Headline New LayoffsIf your business is undergoing a layoff, you must understand what’s really going to happen. Don’t be misled by myths of what you think is supposed to happen.

Myth 1: Reducing “people costs” will result in an indirect organizational productivity gain the next week.


The surviving employees will not be more productive, in most cases. Don’t hope for the best without preparing for the worst. The remaining employees will undergo an emotional cycle triggered by the downsizing, before they can get back to their usual selves. They’ll feel hurt, fearful, resentful, and lost before they can begin coping with the change.

Myth 2: Once things go back to normal, the effects of the layoff will stop.


You’ll see signs of business stability long before feelings of job security return. It will take another six months — or a full year — before everyone recovers. Your employees’ productivity might have stabilized, but feelings of distrust and possible exit strategies are still going to be there.

Myth 3: Restructuring boosts profits.


Only 32 percent of the respondents in the 2001 Layoffs and Job Security Survey by the Society for Human Resources Management (SHRM), states that a downsizing improved their company profits.

Myth 4: Time is the best healer of wounds, even for employer-employee relationships.


Without the proper assistance of outplacement providers and professional career counselors, layoff survivors might hold on to grudges much longer than you expect. Passive aggressive behavior will grow among remaining employees, and a lack of trust will cause more employees to resign in order to find a better opportunity.

Myth 5: Downsizing only happens once per company.


If a company has restructured or downsized once, you can bet they’ll do it again. According to the same survey by SHRM, about two-thirds of firms that restructured in a year will do so again the next year.

What do you believe about restructuring and downsizing?

Have you ever conducted a restructuring, only to be surprised by the unforeseen results? Email me your story.

Know anyone planning to downsize or restructure their business? Pass this on to them. Help them make an informed decision.