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Commentary: Mass layoffs are creating a quit-friendly workforce

As large-scale firing becomes standard business practice, researchers are finding unexpected consequences, says Pilita Clark for the Financial Times.

Commentary: Mass layoffs are creating a quit-friendly workforce

What if layoffs have become such a standard business practice that they are changing the nature of the workforce? (Photo: iStock/SARINYAPINNGAM)

LONDON: When Arthi Raghu was suddenly laid off from her sales development job the other week, she went straight on to LinkedIn to write a guide to surviving the first crushing 48 hours of losing your job.

So far so normal, except for one thing: The company laying off Raghu - and more than 700 of her colleagues - was LinkedIn.

As one of the thousands of people who saw her story wrote, being laid off from LinkedIn and posting about it on LinkedIn was “sort of a boss move”.

I guess it was, but her case is just one in a sickening wave of mass layoffs that has been ripping through industries. Tech companies alone have cut 194,000 jobs so far this year by one estimate - more than in all of 2022.

This raises two large questions: How are these losses shaping the workforce of the future and what are the odds that being made jobless has any remotely plausible upside?


There is of course plenty of evidence that the human toll of being laid off can be dire. The research shows it can increase the chances of illness and even suicide, while those spared the axe often face more work with less help, plus the anxiety of wondering if their head will be next.

But what if layoffs have become such a standard business practice that they are changing the nature of the workforce? That is what academics at the University of Wisconsin suggested in a 2015 paper that raised what they called the “new, and rather ominous, concern” of a more quit-friendly workforce.

“Our study suggests, all else equal, that commonplace layoffs may be contributing to a vast population of employees who are less likely to remain with their subsequent employers,” they said.

In other words, getting rid of hundreds of people at once might offer short-term cost-savings for an individual company but wider problems for others trying to hang on to flightier staff.

That finding chimes with the work of others such as Stanford Graduate School of Business professor, Jeffrey Pfeffer. He has written extensively about evidence showing layoffs are toxic for workers and not necessarily good for business because they often do not cut costs, raise share prices or boost productivity.


Yet layoffs persist, which is why it is mildly heartening to see signs that for some workers, suddenly losing your job or suffering other bad luck at work might not be the disaster one might think.

This is what researchers at France’s Audencia business school found when they recently asked nearly 700 managers who had studied at an elite business school how chance had affected their careers.

Academics tend not to study luck’s role in career paths, but the French scholars found the careers of most of the managers they surveyed had been strongly affected by some sort of chance event.

This had mostly been positive. One person bumped into their CEO and showed off work that led to a promotion. Another had chatted to a neighbour in her stairwell whose niece offered invaluable career advice.

But a significant share had also suffered rotten luck - a toxic new manager or a job loss due to restructuring, downsizing or a business closure.

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Unexpectedly, more than 70 per cent of the unfortunate said the blow had led to a positive outcome.

A man fired from a prestigious finance job in London during the financial crisis took a more lowly job in leafy Aix-en-Provence where he was promoted to a bigger role and a salary “I would never have hoped for in London”.

A woman whose firm suddenly closed decided to switch gears and passed a national exam that opened up a raft of new opportunities.

Research co-author, Professor Christine Naschberger, cautions that this study is based on a select group of highly qualified managers, and others might find it harder to find a new job - especially older workers.

Still, for those suddenly thrust into the ranks of the redundant, it is worth remembering two things: It is harder than ever to manage a career today but an unexpected reversal at work may not be a permanent disaster.

As Naschberger says, “a career is not always linear, things can turn out differently”.

Source: Financial Times/el


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