Job Losses

Impact of job losses for individuals, organisation & society

1. Individuals losing jobs (losing a position, an income, job function, title, responsibility, friends, access to information, status, respect, etc)

2. Individuals keeping jobs ('survivor syndrome', ie guilt feelings like 'why them, not me?', ie problems can include
"...job insecurity, perceptions of unfairness, depression, stress from increased workloads, fear of and resistance to further change, loss of loyalty, reduced risk-taking, unwillingness to go the extra mile, denial, negativity, increased productivity, insecurity......displeasure at the loss of friends..."
Ryk Croukamp, 2018;

This lowers morale and productivity; staff start looking for alternative employment; increased safety issues; increased distrust of management; fear of more retrenchments, etc.

Some ways to handle this situation include

- team building

- empowering middle managers

- mentoring/training programs to build personal and professional development like competencies, skills (hard and soft), emotional intelligence, etc

- maintain enhance communication (including feedback from staff - both positive and negative)

- performance recognition

- commitment to promotion from within

- restructuring of benefits to reflect the new situation

- develop career paths

- authentic dealing with negative impacts like burn out, frustration, pressure, anxiety, job gaps, working arrangements, cultural and moral issues)

3. Managers (can suffer feelings of guilt owing to impact on staff's livelihood and criticism of his/her actions; need to be professional when communicating bad news (as too often, managers isolate themselves); need authentic communication to handle rumours; need to break the cycle of mistrust; can suffer from stress and burn-out owing to expected higher performance from fewer staff; need to provide adequate counselling; need to keep a balanced performance and appearance; need to change the focus from survival to growth, and away from gaining efficiencies and reducing costs, etc)

4. Organisation (takes focus away from investigating other inefficiencies, waste, redundancies, areas that need improvement, etc; lowers productivity, engagement, morale; can negatively impact image - both internally and externally; in fact, the organisation can go through 3 phases, ie

    i) shock phase (once staff are aware that the company's survival is threatened; impact is
"...interpersonal relations become fragmented as individual employees start taking an inward look at themselves, caring more about their own well-being than that of others. Inter-group relationships may deteriorate, communication becomes more difficult and decision-making paralysed..."
Z. Karake-Shalhoub as quoted by Ryk Croukamp, 2018

    ii) defensive retreat phase (strict controls are implemented in order to survive, like cost savings, eg salary increases are suspended, budgets are cut, bonuses stopped, etc
"...The company becomes more centralised, information is restricted, and planning and goal setting becomes short-term orientated. Performance criteria may become more tangible..."
Ryk Croukamp, 2018

    iii) acknowledgement phase (ways of resolving the problems are being explored; improved communications; more participative leadership and decision making occurs; planning and goal setting become more long-term)

A new culture will most likely emerge with the following characteristics:
"...low levels of morale, loss of leader credibility, increased uncertainty and ambiguity, high levels of mistrust and insecurity, decreased participation and greater emphasis on control..."
Ryk Croukamp, 2018

Most quick fixes, like downsizing, fail.
"...The main reason was simply that the elimination of jobs, without changing the way people work, left huge voids in the basic processes..."
R. Ligus as quoted by Ryk Croukamp, 2018

However, technological advances, like automation, may mean fewer staff are required; thus productivity will increase. Generally, the relationship between staff and company is never the same again.)

NB  Because it costs over 200% of annual salary to replace a senior staff member (source: Jacqueline Kappers, 2022), there is a strong financial argument to find ways of keeping staff, ie people management.

5. Society (handle family's financial hardships for everyday living expenses like food, clothing, shelter, schooling, etc; get trapped in the 'poverty cycle'; possible anti-social behaviour like crime, etc)
"...work is a social activity with two main functions of producing goods required by society and binding an individual into a pattern of interrelationships from which society is built. Work can therefore be seen as a form of social cement in the society. Losing employment then has serious consequences for an individual's economic, social and psychological functioning......continuous unemployment and poor, in an affluent society, is a defeating and oppressing. Certain steps produce psychological fatigue, resulting in apathy, hunger, frustration and anger..."
M. Anstey as quoted by Ryk Croukamp, 2018

Often an unemployed person will feel rejected by society and may retaliate through crime; unemployment can contribute to psychological disorders like apathy, depression, suicide, etc.
"...circular relationship as the 'boomerang effect' where direct relationship between unemployment, poverty and crime may ultimately result in the destabilisation of society and the economy..."
S. Bendix as quoted by Ryk Croukamp, 2018

In patriarchical societies,
"...The retrenchment of many breadwinners leads to the foundation of these cultures being shaken to the roots..."
Ryk Croukamp, 2018

Quality of life impact on the community of unemployment can result in

- individuals withdraw from community life, ie diminished attendance at social events

- social bonds which is comprised the 'bricks' of the community are reduced

- people leave the community as its vitality diminishes

- less resources available for social welfare

- more people turn to crime

- families disintegrate, ie increase in divorce, increase in domestic violence, increase in child abuse, etc

- students taken out of school to support the basic family needs (furthermore, this reduces the educated skill base), etc

NB Increase in the ultimate withdrawal from society, ie suicide
"...it has been estimated that the multiplier effect of retrenchment in communities affected by large-scale layoffs can be as high as 1:14..."
Ryk Croukamp, 2018

 In summary

"...despite evidence to the contrary, workforce downsizing is still perceived as an effective means of reducing costs and improving competitiveness. Retrenchment as a cost-cutting exercise does not always work, and in fact tends to fail in addressing the causes of the illness of the employer that lie deeper, such as cultural and structural problems. Nevertheless, the strategies are pursued in the quest for ever-improving productivity and competitiveness that will hopefully yield increased profits..."
Ryk Croukamp, 2018

However, the interdependence and symbolic relationship between society and organisations should not be neglected. Organisations should not neglect their impact on society. This carries obligations, responsibilities, accountabilities, etc for organisations to respect the societies they work within.

When laying-off staff, the process needs to pass conscience test, ie done with unconditional belief in the worthiness and dignity of human beings, eg preserving the worth and dignity of the impacted human beings.