The shock of mass lay-offs is only the beginning for companies

“After almost 8.5 years working at Google, I received notice this morning that I was impacted by the workforce reduction and no longer have a role at the company . . . I envisioned spending my entire working career at Google, so this news has been particularly hard to absorb.”

LinkedIn is awash in posts like this from Google workers who suddenly lost their jobs this month via email. Some had devoted decades of their life to the company. Google’s parent, Alphabet, is among the tech giants slashing their workforce by thousands. The sector overall has shed about 200,000 jobs in the past year.

One fired Google employee told the Financial Times: “The company motto is ‘respect the user, respect the opportunity and respect each other’. Who are they trying to kid?” Distressing as it is to sack entire teams — and however counter it is to companies’ public image and management style — there are good reasons why mass lay-offs have to be swift. The abruptness of the firings might be attributed to an effort to protect intellectual property and client relationships, prevent staff from transferring data and other security reasons.

After the initial shock has passed, however, are employers aware of the long-term consequences of their actions? Sandra Sucher, co-author of The Power of Trust: How Companies Build It, Lose It, Regain It, points out that research shows lay-offs have a detrimental effect on employees and corporate performance. “The reason why mass lay-offs don’t end up paying off is that they destroy trust within an organisation,” she says.

Companies that have spent years and huge amounts of money training staff are letting not only institutional knowledge, but their networks of relationships, walk out the door.

A friend at a major tech company was on a Slack chat with 15 colleagues, working to solve a bug. Then 12 of the group were fired. The Slack chat died and the problem went unresolved. “You don’t just replace that history, that conversation, that expertise,” he says.

The so-called survivors, like my friend, are now less likely to trust their employer and will be anxious about future lay-offs. This remaining workforce may resent having to take on a heavier workload in more trying circumstances — which in turn will prompt further staff exits. Downsizing a workforce by just 1 per cent can lead to a 31 per cent increase in voluntary staff turnover the next year, according to researchers at the University of…