The Invisible Costs of Layoffs and the Alternatives


If you've attended 1 of my workshops, seminars, read any of my articles or spoken with me lately, you've heard it more than once how the cost of employee turnover is outrageous and not going to go down in the future because of workforce shortages, yes both quantity and quality.

During other two sections of seven years, major scientific studies have conducted to unravel the mysteries of employee turnover. Afterwards items negatively impacted by high turnover and churning are not combined or listed using your P & L, method.e., poor employee morale, high scrap rates, increased overtime, increased workmans compensation expense, declining Supervisory attitude, etc. In fifteen national studies around turnover price an $8.00 per hours employee, while using average of three highly respected organizations, SHRM, AMA and the DOL, the common cost was $4277.68, or 25.7% of it employee's annual wage. (if you is wishing for a copy the upshots of these 15 studies, send me an e-mail at the e-mail address on this page. Moving up the salary structure, the figures a little more horrifying: Entry Level/Secretarial/Administrative: 50%; Service and Production: 60%; Skilled and Professional: 100%; Supervisors, Middle Management: 125%; Engineers, IT Specialists: 200%!

Perhaps it's time explore where these estimate come from, then neighborhood retailer believe benefits you arrive up with your own personal figure. And believe me you will likely to be shocked in the results will likely be tried this before.

A 2000 study from the University of Melbourne figured outplacement costs that top performers who survive company layoffs don't feel as faithful to the company anymore. Another study by the University of Colorado confirmed that employees were a whole lot more likely give up jobs in companies possess repeated downsizing. These as well as other studies underscore the general depressed employee morale connected with working in a company after layoffs. Wayne Cascio, professor of business at the University of Colorado and author belonging to the book,"Responsible Restructuring," says men and women leave downsizing companies his or her leaders fail to communicate why and how things obtain better. Christopher Zatzick and Roderick Iverson of Simon Fraser University report that layoffs in "high-involvement workplaces" can be a lot more damaging for the company than in the average company, because they are viewed being a violation among the psychological contract between the company and its employees, creating a decrease of trust and other stress, which in turn negatively affect productivity.

What is the impact that layoffs placed on a company's performance? Since some of the most effective and most experienced staff is either fired or quit, workplace productivity declines, primarily based on a New york Times report called "The Disposable American". The report concluded that company performance suffered significantly in a post-layoff mood. The report went on to say that over an 18 year period the S&P 500 companies that didn't rely on layoffs to improve performance outperformed those that relied on layoffs. A good article in Inc.com magazine, author Carole Matthews states that the costs required with a business to ramp up after an economic downturn may exceed those saved by layoffs. Finally, there is the public, or customer perception of layoffs. For anybody who is buying due to a company that treats its employees badly, you would like to buy out of your company that does not.

In some cases, your former company will hire you to create a change and make use of the firm of the choice, providing the cost is the similar. Contact the human resources department, make sure they know you're unhappy with the agency, and you'd prefer to find a replacement.

If the corporate won't allow for a swap, see if they'll contact the designated firm in your behalf, indicating that you're displeased. If enough sufferers are dissatisfied that isn't service publicize your former employer aware of it, that is definitely an impetus for the particular contract with another table dresser. You won't know if you don't attempt.

As a last resort, you could opt to accummulate the tab for outplacement services your venture. It'll be money well spent whether it helps you get a job sooner.