Experts Chide HR: Layoffs Aren’t Answer

Unkindest Cuts: Fresh layoffs are announced seemingly every day. But as companies cut back on staff, they may suffer negative long-term consequences in the form of higher turnover, management experts say. A recent study in the Academy of Management Journal says that even moderate layoffs can trigger an exodus of key employees that wipes out any cost savings. After analyzing “quitting rates” at about 200 companies, researchers say firing even less than 1 percent of their workers causes companies to experience sustained turnover averaging 13 percent, or 2.6 percent higher than the average turnover rate of firms that aren’t downsizing. Imposing additional layoffs only increases the long-term turnover rate. Also noteworthy: a long-held belief that providing employees with professional development doesn’t guarantee a boost in retention, as many companies use the tools and newfound knowledge to seek employment elsewhere.