Think Before You Do That Layoff

                       The Flight of Great Talent Post-Layoff

BusinessWeek (4/21/2008 - "Think Before You Fire") referenced an Academy of Management Journal study of 200 enterprises. The study showed that a layoff of 0.5% of one's workforce triggers an average turnover rate (attrition) of 13% versus a 10.4% turnover rate for firms that didn't do layoffs.

Professional service organizations must constantly prune underachievers/poor producers from their ranks as their continued payroll presence is a financial and morale drain on the company. Poor performers do more to demoralize their peers than any other single act by management save a massive layoff. Even in the face of massive PR problems, the people of Arthur Andersen were willing to publicly support their employer as they believed in each other and the firm.

Layoffs are toxic to morale and workers. That's very true and I'm surprised the variance in the study wasn't greater. One thing is for sure though, once a company lays off workers, the very best and brightest workers will leave for greener pastures. In fact, they'll leave first as they are the people that every other employer wants. Post-layoff, all a company has left are the lesser grade employees. The lesson from this is that layoffs are short-term fixes that create long-term/long-lasting distrust with the rank and file.