top of page
Search

How Layoffs Give a False Sense of Employee Loyalty


With the threat of layoffs continuing, there is no surprise that these actions can take a direct hit on trust and loyalty with employees. However, there is an interesting push pull that can occur between trust and loyalty after a layoff, and it is not what one might expect. Our assertion is that while actual trust in the organization goes down, loyalty can sometimes go up following a layoff. But why is that? 


While trust of employees must be regained in order for organizations to move forward effectively and productively, loyalty may appear higher solely due to be manifested simply in employees staying until a better offer comes along. This may create a sense of positive sentiment to the relief of leaders, but it can also be a false sense of security as the loss of trust is what will drive employees to plan to stay or go at the organization.


Employee engagement surveys might show a paradoxical increase in employees' willingness to engage in extra-role behaviors, such as participating in voluntary programs or helping colleagues with their workload. This could emulate the loyalty appearance factor. Simultaneously, these surveys could show a significant decline in trust towards leadership's ability to make decisions that are in the best interest of employees.


This pattern could emerge as employees, fearing for their job security, attempt to make themselves more indispensable by taking on additional tasks. The decrease in trust towards leadership decisions reflects the erosion of confidence due to frequent layoffs and perceived lack of transparency and fairness in how these decisions are made.


To whit, we have dug into some key findings on impact of layoffs by examining several organizations based on employee reviews and other sentiment data:


  • A phenomenon known as survivor's guilt -- experiencing remorse that one has "survived" a layoff when your colleague didn't -- may drive a temporary increase in loyalty among retained employees, yet their trust may be eroded due to perceived unfairness and a lack of stability. 

  • The concept of "survivor's loyalty" can be applied here, where employees who remain after layoffs may feel a renewed sense of loyalty to the company, driven by gratitude for retaining their job or an increased sense of responsibility towards the company's future. This is a complex psychological response that can coexist with decreased trust, where employees are loyal not necessarily to the leadership but to the broader idea of the company and their colleagues.

  • Recalibration of expectations post-layoff, the employees who remain might recalibrate their expectations from their employer, accepting the new reality as a given and adjusting their loyalty accordingly. This doesn't necessarily mean they trust the company more, but rather that they have adjusted their expectations and are more willing to "ride out the storm."

  • In a post layoff setting, the tendency to experience organizational changes present a chaotic work environment, making employees feel undervalued and possibly disposable, impacting both trust and loyalty negatively.

  • While employers may try to offset lack of loyalty and trust using benefits such as good work-life balance, flexibility, and remote work options, fostering some loyalty, they are likely not enough to overshadow the larger issues impacting trust. This takes longer and more direct interventions to regain


Analysis of the Loyalty and Trust Dynamics


Loyalty appears to be conditional, potentially driven by circumstances rather than genuine allegiance. Employees might feel the need to rationalize layoffs to maintain a sense of purpose and belonging.


Trust is heavily impacted by the layoffs, with perceived breaches of psychological contract and skepticism towards leadership's decision-making capabilities.


Any loyalty that does remain is on shaky ground because it is without a foundation of trust. Trust needs to be addressed for loyalty to be meaningful and sustainable.


The Interplay Between Loyalty and Trust


Retained employees might display loyalty due to necessity, but it is likely a facade without trust. Such loyalty might lead to disengagement and quiet quitting.


Trust is a necessary precursor for genuine loyalty. When trust is damaged, loyalty can become transactional, based on the immediate benefits provided by the employer rather than a deep commitment to the organization. Our sentiment data concludes that while there may be an increase in loyalty post-layoff, layoffs can lead to a breach of the psychological contract, causing a profound loss of trust and a sense of insecurity among the remaining employees.


Rebuilding Trust and Loyalty


There is no question that the negative impact of layoffs can permeate into company culture for a very long time, especially without specifically addressing the trust and loyalty dynamics. In essence, the layoff aftermath is characterized by a fragile increase in loyalty due to the perceived necessity, which might not stem from true allegiance. Trust, on the other hand, has been significantly eroded by the way layoffs were handled, and needs to be rebuilt to regain genuine loyalty among retained employees.


To minimize the negative impact on trust and loyalty, organizations must focus on transparent communication, decision-making that is fair and consistent, and genuine efforts to offer psychological safety and align with core values.


Without rebuilding trust, loyalty among retained employees may be superficial and temporary.

 

So how can leaders address the balancing of both loyalty and trust after layoffs? Here are a few takeaways to consider:


  1. Prioritize psychological safety: Create an environment where employees feel safe expressing their concerns and ideas without fear of retribution. This provides significant ways to help restore trust and encourage open communication.

  2. Focus on clear and transparent communication: Ensure there are open lines of communication about the state of the company and future plans, which helps reduce uncertainty and builds trust. Gathering frequent feedback is a must from all levels.

  3. Commit to consistent and fair decision-making: Ensure that all decisions, especially those affecting employees directly, are made fairly and consistently, which can reinforce trust in leadership.

  4. Double down on authentic recognition and appreciation: Regularly recognize and appreciate the efforts and contributions of remaining employees. This can bolster loyalty and morale during uncertain times.

  5. Ensure and elevate ways to support professional growth: Ensure employees are aware and can access opportunities for professional development and growth. This shows a commitment to employees’ careers, enhancing both loyalty and trust.


Layoffs bring challenges to company culture, including employee trust and loyalty impacts. Therefore it is the responsibility of leadership to not assume the appearance of loyalty even if trust is lower. By seeking to understand and find ways to build back these important tenets are critical to move forward as an organization.

 

Dr. Pam Cohen, Chief Research and Product Officer, Aniline.ai

80 views

Comments


bottom of page