First, let us take a look at what the data tells us.
After a layoff, survivors experienced a 20% decline in job performance.
According to a study by Harvard Business School, the impact of restructuring goes way beyond the drop in the workforce. Drop-in moral, anxiety due to the uncertainty and reduction in productivity is very common amongst the “Survivors” and a key factor that leaders should keep in mind.Charlie Trevor of University of Wisconsin–Madison and Anthony Nyberg of the University of South Carolina found that downsizing a workforce by 1% leads to a 31% increase in voluntary turn over the next year. This increase in talent attrition can severely impact financial performance and in the long term overweight the short term cost-benefit.
A 2002 study by Magnus Sverke and Johnny Hellgren of Stockholm University and Katharina Näswall of the University of Canterbury found that after a layoff, survivors experienced a 41% decline in job satisfaction, a 36% decline in organizational commitment, and a 20% decline in job performance.
Another aspect particularly important to consider for tech companies is the impact of creativity and innovation: A study of one Fortune 500 tech firm done by Teresa Amabile at Harvard Business School discovered that after the firm cut its staff by 15%, the number of new inventions it produced fell 24%. For companies that rely on new products to keep their competitive advantage, this could have a dramatic impact.
With this in mind, leaders should above all ensure they have a comprehensive plan to mitigate these risks and invest in looking after their remaining staff. Amongst others, investing in your workspace is a strong driver of staff satisfaction.