Layoffs Last Resort In Most Cases, Report Says

Compiled By Traci Purdum Layoffs are a last resort for many companies according to recently released survey results from the Society for Human Resource Management (SHRM), Alexandria, Va. The SHRM 2001 Layoffs and Job Security Survey examined reasons organizations resort to layoffs, how layoffs are conducted and the subsequent effects on remaining staff. Data collection for the survey ended Sept. 7, 2001, and therefore does not reflect conditions following the Sept. 11 terrorist attacks. However, SHRM says the results provide valuable information on employee response to layoffs and insights that may help assuage the stress of future staff cuts. "The majority of [companies that] can't avoid layoffs are offering severance packages that include a variety of benefits," explains Helen Drinan, SHRM president and CEO. "But it appears that most organizations are missing an important opportunity. They could and should do more to boost morale for employees remaining with the organization to stem further turnover and to increase productivity." Other survey findings include:

  • Most organizations took preventative steps before resorting to layoffs. Indeed, 63% trimmed the workforce by attrition, 49% implemented an employment freeze, 21% did not renew contract workers and 20% encouraged employees to take vacations.
  • If layoffs were necessary, they evoked mixed consequences. Thirty-two percent of respondents reported improved profits, 25% noted improved productivity, 54% reported increased gossip, 58% mentioned decreased morale, 41% reported decreased loyalty and 27% noted a rise in resignations.
  • Of employers who offered severance packages (80%), 95% paid for unused vacation time, 73% included an continuation of pay for a certain period of time and 43% provided outplacement services. Nearly 600 human-resource professionals responded to the survey.
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