Layoffs, quitting, firing: How workplace departures impact those left behind

A man works in an empty office. (Getty Images)

Layoffs increase the likelihood that workers – particularly the good ones – will quit their jobs, according to new research out of the University of British Columbia.

Dr. Sima Sajjadiani, an assistant professor at the Sauder School of Business, says the study is a first-of-its-kind look at the ripple effects of layoffs, resignations, and terminations-for-cause. In particular, it looks at who decides to leave an organization and why in the wake of their colleagues' departures.

"Layoffs are the worst," she said.

The effect of layoffs, Sajjadiani says, is "strong and immediate" particularly among "high performers" who are defined as people who not only do a good job but who also contribute positively to workplace culture.

"We theorize that it is happening because they feel a sense of urgency," Sajjadiani says, adding that the impression they are left of their workplace is that it is unstable and lacks loyalty.

"We see a huge increase in voluntary turnover of high performers because they cannot trust the organization. High performers are the first to go."

Sajjadiani says that particularly when other "high performers" are laid off, there is a violation of what she calls the "psychological contract" between an employer and its workers. The expectation, she explains, is that hard work and solid job performance will be rewarded. Witnessing layoffs undermines their expectation that their contributions will shield them from staffing cuts.

"It is important when organizations make these types of decisions to understand that losing human capital will not end with layoffs. There will be some subsequent voluntary turnover, things that they have not planned for," she explains.

"This is something we don't see organizations taking into account," she continues, adding that "low performers" are less likely to leave of their own accord when they see their colleagues laid off.

The research also looked at workplace fallout after high performers decide to leave their jobs. As with layoffs, this also leads to the departure of other high-performing employees, albeit at a lower rate. The signal it sends, Sajjadiani says, is that there are other, potentially better, opportunities elsewhere. In addition, high-performers tend to gravitate toward one another and departures have the impact of destabilizing those workplace networks which can decrease people's job satisfaction.

Although voluntary quitting is not something employers can straightforwardly control, its consequences can be significant.

"Organizations, I think, should think carefully about their reasons why their employees may decide to voluntarily quit and try to prevent that and be proactive about these cases and make sure that, especially their high performers, are happy. Because they can take many more high performers with them," Sajjadiani says.

On the other hand, when high performers quit, their lower-performing counterparts are relatively unaffected.

"It's almost twice as bad because people that the organization wants to leave are staying and those that they don't want to leave are leaving," she says.

Workers being fired, the research found, had the least impact on remaining employees. Those who are dismissed, Sajjadiani said, were perhaps unsurprisingly often those classified to be low performers. That label can encompass anything from someone who is not carrying their weight to someone who is disruptive, abusive or toxic.

"After this decision is made, there is a decrease in subsequent quit rate," she said.

Those likely to quit after someone is fired for cause tend to be other low-performers, which Sajjadiani says is in part due to the perception that there are significant consequences for bad behaviour or poor performance.

Overall, Sajjadiani says, the research shows the consequences of workers leaving – voluntarily or otherwise – are being "vastly underestimated" by executives, managers, and others who make staffing decisions.