What they found
University of Utah researchers have made an interesting discovery in regards to how layoffs affect company culture. While downsizing may seem like a detriment to overall production, this study may have proven that a round of layoffs could actually amp up efficiency while keeping production fairly steady.
How they found it
Traditionally, expectations of doing more with less haven’t been realistic when it comes to company production, however, the pressure of company layoffs could have an effect that proves otherwise. According to data compiled by the David Eccles School of Business and Stanford University, layoffs could be a powerful motivator for the employees that survive them.
“The people who are left after the layoffs happen tend to be working a lot harder and producing more output.” Stated Assistant Professor of Finance Christopher Stanton.
Stanton and the research teams at the two universities made this observation after looking at productivity rates of employees in service firms across the country.
Stanton went on to say “Individuals in areas of the country where the unemployment rate increased the most became more productive than individuals in areas of the country where the unemployment rate didn’t increase as much.”
What it means
While unemployment rates in Utah never got as high as in many other states, workers were still able to do more work than ever before. The explanation? Workers who are fearful of losing their jobs are willing to do more.
Although some believe that these findings tell us that a firm will see results by simply hanging the fear of layoffs over their office, this tactic has a high risk of backfiring. What we here at NaviTrust have learned is that fear does not lead to loyalty. The increased workload and worry associated with layoffs often influence workers to start seeking employment elsewhere. The moral of the story? While these findings may have confirmed the suspicion that layoffs increase employee productivity, fear shouldn’t be your first choice in motivating your team.
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