What would you do if one of your colleagues told you they were thinking about leaving their job? If your first instinct would be to quit along with them, you’re likely not alone.
According to a new study from the University of British Columbia’s Sauder School of Business, employee turnover — whether due to layoffs or voluntary departures — can cause other employees to quit as well.
The study was co-authored by Sima Sajjadiani, an assistant professor in the Sauder School of Business, and published in the Academy of Management Journal.
How do layoffs affect remaining employees?
With a recession likely on the horizon, thousands of Canadians have been laid off from their jobs this year as companies try to tighten their purse strings. At the same time, changes to workplace policies in the wake of the COVID-19 pandemic have led to many other employees quitting in search of more flexible options.
It’s evident that many workplaces are experiencing high levels of turnover — but how does this affect the employees left behind? The researchers behind this study were interested in learning whether layoffs, voluntary departures, and dismissals can cause the remaining employees to leave their workplaces as well.
To do this, the team analyzed data from nearly a million employees spanning more than 1,600 retail stores that had experienced high levels of turnover. They looked at when and why employees left, as well as whether those employees were classified as low or high performers prior to their departures.
They found that large layoff announcements had the strongest impact on remaining employees, with many workers not affected by the layoffs quickly choosing to leave their jobs on their own terms. This perhaps isn’t too surprising, as layoffs can indicate to an employee that jobs in their workplace aren’t secure.
“[This is] very bad news for organizations, especially if they are laying off high performers, because if those positions get eliminated, both high and low performers start quitting,” Sajjadiani explained in a press release.
“It’s a signal that people’s jobs aren’t secure, and the organization doesn’t care about them, no matter how hard they work. So they think, ‘I should leave as soon as possible’.”
Calling it quits can have unintended consequences
The team also found that when employees choose to quit their jobs voluntarily, their former colleagues are likely to want to quit as well. This is especially true when high-performing employees decide to quit, as this can indicate to other employees that there are better job options elsewhere. In this case, however, it can take a bit longer for remaining workers to quit, as they’re likely searching for new opportunities before leaving their current positions.
When it comes to employees being fired from their jobs, the impact on their former colleagues is less definite. When low-performing employees are fired, for example, their remaining colleagues typically don’t leave their jobs — in fact, this can actually encourage employees to stay at their current workplaces.
When high-performing employees are fired, on the other hand, their remaining high-performing colleagues tend to call it quits as well. The researchers found that this was especially true when the reason for the original dismissal wasn’t obvious to the employees left behind.
Companies need to communicate clearly
Overall, these results offer valuable lessons for companies when it comes to how they manage their employees. Letting go of team members — or not giving them reasons to want to stay in their current positions — can have unintended consequences on the rest of the workforce.
Sajjadiani concluded that “[c]ommunicating clearly and compassionately, justifying these decisions [to let go of employees] and trying to avoid the most severe course of actions are better for organizations than simply cutting people.”
