Layoffs are the impact sector’s abandoned child
About the author
Hamoon Ektihari is the CEO of FutureFit AI, a finalist in the CareerTech Challenge Prize. FutureFit AI uses AI to help companies and governments rethink workforce transitions and layoffs. Hamoon can be found online on LinkedIn.
It’s time for philanthropy and impact investing to step up in reimagining layoffs.
“They gave us no notice’: (Darling Tech Giant) lays off 3,500 employees via a three-minute Zoom call”
“2,000 layoffs by [Fortune 100 Company] will devastate local economy”
These are the headlines we see in the news this year that have now become daily defaults in the aftermath of COVID-19.
The impact on workers is not only destructive to their economic livelihoods, but to their overall health and well-being.
Confused. Lost. Ashamed. Crushed.
These are the words we hear from workers impacted by layoffs, many of whom break into tears as they tell us about one of the most devastating experiences of their lives. On top of a psychological burden, 83% of laid of workers have a higher chance of health conditions, and sadly, are even more likely to commit suicide.
The impact of layoffs also extends well beyond the time of being handed the pink slip. Research from Harvard shows that 20 years later, laid off workers still have 20% lower incomes than their peers, and behavioral scientists have concluded that it takes longer to recover from the pain of unemployment than from losing a loved one.
An even less spoken about reality is the impact a round of layoffs has on workers who remain with the company. Remaining workers end up with 41% lower job satisfaction, 20% lower job performance, and 31% higher voluntary turnover. Layoffs often have a negative ripple effect on morale, productivity, and retention that leads to a massive hit to the bottom line.
Every one of us knows intuitively that layoffs, as they happen today, are broken and often inhuman. We are also now realizing that with increasing business disruption and automation, layoffs are not going anywhere and may even increase in frequency in intensity. The Brookings Institute predicts that a quarter of the workforce are vulnerable to being laid off due to increased automation efforts, which have only been further accelerated by companies during the pandemic.
So the question is — in a world where business leaders are reimagining every part of their employee lifecycle, why are layoffs still as destructive and inhuman as 30 years ago?
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