Human Capital & Careers

In Layoffs, Image is Everything

Companies `are not handling layoffs well and, in fact, may be eroding their brand,' Andersen survey suggests.
Stephen TaubNovember 9, 2000

The technique a company uses in handling layoffs affects its corporate brand, as well as that company’s future ability to attract employees. This is Andersen’s primary finding in a recent survey conducted with Vault Inc.

“The survey results show that companies are not handling layoffs well and, in fact, may be eroding their brand and their reputation as an employer,” insists Chris Ryan of Andersen’s human capital practice in Chicago, in a press release. “Ex-employees will be more likely to buy products from the company, [or] recommend the organization as a good place to work or rejoin at a later date, if the company communicates the reasons for the layoffs effectively and handles them in a manner that treats departing employees with respect and dignity.”

Here are the key findings from the national online survey of more than 1,200 workers who were recently cut:

  • 86 percent reported no opportunity to apply for other positions in the company.
  • 71 percent blame company leadership for the layoff.
  • 70 percent of the workers would not recommend that others work for the company.
  • 67 percent would never work for the company again, even if extended a job offer.
  • 54 percent said that they would not recommend the company’s products or services to others based on the way the layoff was handled.
  • 49 percent of those surveyed felt that the layoff was done in a manner inconsistent with the company’s values.
  • 44 percent did not think the company effectively communicated the rationale for the cuts, yet effective communication about the job cuts was more important to those surveyed than additional benefits such as job-search support or extended health care.
  • 15 percent have considered taking legal action against the company.
  • 11 percent have considered speaking to the media or a public source about their experience.

“Given the shortage of talent we are bound to experience again when the economy rebounds, companies that downsize need to consider the repercussions on their ability to attract and recruit new talent in the future,” said Ryan.

According to Andersen, former employees felt especially dissatisfied when they:

  • Felt the company did not effectively communicate the reasons they were being laid off.
  • Were subject to the company’s security measures, such as having locks changed or being escorted by security personnel.
  • Believed the responsibility for the layoff rested with their immediate supervisor.
  • Were given no severance.
  • Were not given the opportunity to apply for other open positions in the company.
  • Were asked to reapply for their current job.
  • Felt the reason they were let go was salary-related.
  • Were laid off via a telephone call.

Andersen claims that employees who were laid off under these circumstances were more likely than others to take legal action or consider other ways of hurting the company.

On the other hand, employees felt more positive about the situation if they believed the reason for the layoff was the economy or their personal performance.