Company-wide layoffs lead to many more workers quitting, study finds

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Layoffs add a sense of urgency as staff who aren’t let go may consider leaving, while separate research shows they can adversely affect stock prices over the long run

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Not only do layoffs lead to more resignations, but they add a sense of urgency among staff who aren’t let go to consider leaving and separate research shows they can adversely affect stock prices over the long run, even though they are typically used to boost them in the short term. For example, among employers that offer strong benefits plans, hiring practices and more flexibility, the increase in resignations after a layoff is reduced to 14 per cent. Those that don’t provide those perks, however, can see as much as a 65-per-cent increase in voluntary turnover after a round of job cuts.

Ms. Sucher says organizations typically pursue layoffs to boost their stock price in the short term, but empirical data suggests layoffs are neutral at best and more likely to be a net negative over the long run, because of hidden costs like retention, engagement and morale.

 

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