Layoffs actually kill people says Jeffrey Pfeffer (professor at Stanford Business School) in an interview.
The interview started with the finding that in 2022 alone, 4 Big Tech players laid off over 120,000 people.
Here are his arguments in a few key points:
1) layoffs do not improve the performance of companies:
-the additional financial effort to fund severance pay.
-the morale and productivity of those still with the company are affected. “Could I be fired too?” syndrome at work
-layoffs negatively affect the stock market performance of companies
-layoffs are always followed by periods when everyone is hiring in a highly competitive environment at higher prices
2) layoffs increase mortality by 15-20% in the next 20 years. In fact dismissals:
- increase stress for both those who are laid off and those who stay with the company
- increase the risk of depression
- increase the risk of becoming addicted (smoking, alcohol use, drug use, excessive food consumption)
- increase the risk of suicide
JP also talks about the contagion of layoffs.
Competition and FOMO play a role when this phenomenon becomes contagious.
JP mentions 3 companies that have had success approaching the problem differently:
3) possible solutions:
-Southwest airlines - after 9-11 Sep. (2001), the company was the only one in the commercial aviation market that did not make layoffs
-Lincoln Electric - instead of laying off 10% of the workforce, they agreed to cut wages by 10%, while management accepted more significant wage cuts
-SAS Technology - they never fired anyone; they use recessions to hire talented people laid off by other industry players
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* link to article:
https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/
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