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Layoffs Increase Voluntary Turnover Rates

The past month I have found myself in a couple of conversations that went something like this...

Me: Have you considered doing an employee-satisfaction study?
Executive:  It doesn't make any sense to do that right now. We just had a layoff: let go 5% of our staff.  These people are lucky to have jobs.
Me: Did you just pick 1 out of 20 people at random to let go?
Executive: What?! Of course not, we picked the poor performers.
Me: So you wouldn't want any of the remaining staff to leave, would you?
Executive: Where are they going to go? No one else is hiring either.
Me: Good point.

Yeah, since I'm retelling the conversation I should insert a nice esprit de l'escalier, but I still don't have one at hand.

What I should have said was that after a layoff is a particularly good time to conduct an employee satisfaction study.  You can take the pulse of the workforce and find out what HR issues you need to address.  You can figure out how to do a better job the next time you need to let staff go.  You can start to determine what percent of your staff might be motivated to find work elsewhere.

In a recent post, "Are Layoffs Really Worth It?", Karen O'Leonard of Bersin & Associates observed:

Companies that laid off 10% of their workforce sustained, on average, a turnover rate that was 5 percentage points higher than the average turnover rate of non-downsizing firms.  In other words, an extra 5% of the workforce left of its own accord following the downsizing.  And these are the people that the company wants to keep - many of them the best and brightest, since these employees have the most opportunities to find jobs elsewhere.

Here's how George Colony, founder and CEO of Forrester Research, summed up the same problem:

Avoid the "Dead Sea effect."  As IT consultant Bruce Webster has noted, the Dead Sea has an inlet, but no outlet, so most of the pure water evaporates, leaving brine. Don't let your best people evaporate in a recession.

Don't look at layoffs as a reason not to conduct employee-loyalty research:  look at them as an added reason to do such research.