Noer Consulting

Ten Layoff Myths and Realities


Myth: There is a direct relationship between reducing “people costs” and organizational productivity.  A layoff on a Friday will result in productivity gains on the following Monday.

Reality: The overwhelming consensus of downsizing research is that layoffs do not achieve their “going in” productivity goals.  Survivors of most organizations are angry, depressed, anxious and fearful.  They are not able or willing to take risks or focus on increasing customer service.  At the very time organizations need them to be the most creative and energetic; they hunker down in the trenches, absorbed in their own toxic survivor symptoms. 


Myth: Survivors – people who remain in organizational systems after downsizing – will work hard because they will be grateful that they were lucky enough to keep their jobs.

Reality: Layoff survivors are not motivated by luck. In fact, evidence is clear that the opposite happens – they are demotivated by survivor guilt and its cousins: anxiety and depression.


Myth:  Organizational leaders should not tolerate any whining and complaining.

Reality: Without the healthy externalization of layoff induced anger, fear, and anxiety, employees will remain crippled by layoff survivor sickness.  In fact, research shows their symptoms will get worse.


Myth:  During downsizing, managerial communication needs to be clear, planned, objective, and structured.  Expressing uncertainly, ambiguity, or dealing in feelings and emotions is not useful.

Reality:  Feelings and emotions are the currency of the managerial realm. Surviving employees are attempting to deal with a toxic brew of productivity hindering emotions and need to feel authorized to talk about them.


Myth:  Time heals all wounds.  Layoff survivor symptoms may flare up initially, but quickly disappear a few weeks after the reductions take place.

Reality: Without planned interventions, layoff survivor symptoms not only linger, they intensify.  Research conducted in one organization five years after the initial layoff showed survivor symptoms not only intensified, but many employees were demonstrating passive-aggressive behavior – faking it and “going through the motions” in some contexts, and expressing increased anger and hostility in many others.


Myth: In tough times, the most effective managers “suck it up,” are tough minded, brutally honest, and don’t tolerate “touchy-feely” distractions. 

Reality: “Sucking it up” is precisely the wrong strategy for dealing with downsizing, change, and transition.  It is a defense mechanism - a form of evasion that anchors behavior in the past and prevents productive engagement and personal growth.


Myth: Once things get back to normal, the epidemic of downsizings will stop and job security will return.

Reality:  We are experiencing a fundamental shift in the psychological contract that connects employee to employer.  When the economy becomes more positive, the frequency of mass layoffs will diminish, but long-term, lifetime employment with one organization is a thing of the past.


Myth: Employees who keep their jobs – survivors – are better off than those who must leave - victims.

Reality:  Both those who stay and those who leave are, in a sense, “victims” of the paradigm shift to the new psychological employment contract.  Despite, often significant, economic issues, some who leave are able to re-frame their job loss, move away from victimhood, and discover a wake-up call. 


Myth:  Downsizing erodes loyalty, motivation, and commitment.

Reality:  In the new reality, employees will be loyal to their profession and motivated more by the work itself rather than the organization where they perform that work. 


Myth:  Despite the current epidemic of downsizing, organizations need to find ways to tie in employees over the long term.

Reality:  The best strategy for organizational survival in the new reality is to attract employees because of the work.  In the new paradigm the best and most talented employees will have options; they will choose their employers because they want to be there, not because they have to be there.