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09 April 2020 / Report
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Copy LinkBusinesses are struggling during the extremely volatile period resulting from the global COVID-19 pandemic. The Conference Board predicts a deep contraction in Q2 and has a scenario of even extended economic weakness in Q3, suggesting that organizations should prepare for these worst-case scenarios, which have high probability. As some businesses shut down to slow the spread of the virus, many more have started various cost-cutting measures, and layoffs are often one of the first.
Businesses are struggling during the extremely volatile period resulting from the global COVID-19 pandemic. The Conference Board predicts a deep contraction in Q2 and has a scenario of even extended economic weakness in Q3, suggesting that organizations should prepare for these worst-case scenarios, which have high probability. As some businesses shut down to slow the spread of the virus, many more have started various cost-cutting measures, and layoffs are often one of the first.
However, despite relieving financial burdens temporarily, layoffs affect organizations negatively in many ways, some of which can be profound and lasting. Previous research shows that layoffs generally don’t increase financial performance or stock price of the company beyond one to two quarters.1 Instead, they often result in negative outcomes such as loss of skills, learning, productivity, and innovation; low employee morale; and brand reputational risks.2 As jobs are the critical factor in consumer confidence and essential for economic recovery, organizations that have laid off employees will have a harder time rebounding as they try to rehire employees.3 Having seen the pitfalls of layoffs conducted during the Great Recession, CEOs of many companies (e.g., Morga
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