Why layoffs can be the catalyst to retain an organisation’s best talent

Like a crumbling house of cards, the wave of tech layoffs around the world is showing little signs of abating. In 2023 alone, more than 106,000 employees have reportedly been laid off from US-based tech companies such as Meta, which will reduce 25% of its global workforce from the peak headcount of about 87,000 employees in 2022.

While many employees are understandably concerned about how this may portend a larger scale of layoffs across multiple industries, organisations may also be at risk of losing the employees they want to keep.

When layoffs are made, employees do not give employers a free pass because of positive employee experiences that were previously created, said Tony Tran, Lead People Scientist, Culture Amp.

Speaking with HRM Magazine Asia, he explained, “Our data suggests that having many committed employees prior to a layoff doesn’t necessarily decrease the risk of increased turnover (as measured by commitment) post-layoff. Another study found that even a 1% downsize can result in a 31% increase in turnover.”

To mitigate some of the unanticipated consequences of layoffs, organisations can start by prioritising employee engagement, which Culture Amp defines as the levels of enthusiasm and connection employees have with their organisation.

Tran continued, “It’s a measure of how well organisations motivate their people, a sign of how committed employees are to staying with the organisation, and how willing employees are to advocate for the organisation as an employer.”

The biggest challenge facing many leaders, perhaps, is maintaining a high level of employee engagement when layoffs are unavoidable.

Keeping employees motivated and engaged during layoffs

When layoffs take place, it is perhaps inevitable that commitment, motivation, company confidence, and pride are negatively impacted. Employees are also unlikely to be convinced that their organisation can really succeed over the next three years, said Tran.

“To address this, leaders need to be transparent and clear on how the layoffs will impact the organisation’s bottom line and widely share plans to address and increase profitability. Layoffs can’t be seen as a band-aid solution to the problem – employees need to understand how the difficult decision to layoff employees is connected to the strategy of how leaders intend to make the organisation successful.”

He also highlighted how employees may not only lose faith in leaders but blame them entirely for layoffs. After all, why are leaders immune from the layoffs when everyone else is at risk of losing their jobs?

“To address this misperception, share with employees the sacrifices leaders make, such as pay cuts and increased hours, so they understand they aren’t the only ones struggling,” advised Tran.

With Culture Amp research identifying the lack of development as the number one reason for employees to leave an organisation, assuring employees that they will still be afforded opportunities to grow and develop their careers should also be a priority.

Tran said, “While organisations may not be able to promote employees and increase compensation for employees during this time, people and culture can work with leaders to better enable them to learn more about each employee’s development aspirations and reassign work accordingly. It might be a good idea to consider ‘catching up’ on employees’ salaries once the economy improves and to clarify that you intend to do so.”

Invest in employee engagement to gain organisational success

Beyond the looming specter of a global recession, organisations are beginning to recognise the vital role employee engagement is playing in talent retention and overall organisational success.

“Organisations need to make sure that they understand the employee experience and take action on the moments that have the biggest impact on engagement.” – Tony Tran, Lead People Scientist. Culture Amp

Recommending that organisations measure employee engagement through motivation, long-term commitment, short-term commitment, pride, and advocacy, Tran said, “On the organisational level, evidence from industry and scholarly studies suggest that employee engagement levels are strongly linked to staff turnover, absenteeism, inventory shrinkage, innovation, productivity and profit.”

READ: Creating a winning EX formula to retain your best talent

Identifying the focus on psychological safety, the impact of remote and hybrid work, and feelings of belonging as some of the factors that have fundamentally changed how organisations approach employee engagement, he added, “As we navigate through these times of uncertainty, organisations need to make sure that they understand the employee experience and take action on the moments that have the biggest impact on engagement.”

Lastly, provide leaders with the right information to eliminate unnecessary assumptions and make better decisions in supporting employees. “We know people are critical to the success of an organisation so you need to empower leaders with information on their talent in the same way leaders would need information on the financial health of their teams, departments, and division,” Tran concluded.

To find out more about employee engagement, join Culture Amp at the Power Talk Stage  (11.40am SGT) and Reimagine Theatre (3.30pm SGT) at HR Tech Festival Asia 2023,  or visit booth 59 to speak to a Culture Amp representative.