Layoffs Make You More Likely to Quit Your Next Job

Topic(s): employee satisfaction, trust, turnover
Publication: Journal of Applied Psychology
Article: Creating a more quit-friendly national workforce? Individual layoff history and voluntary turnover
Authors: P.R. Davis, C.O. Trevor, and J. Feng
Reviewed by: Lia Engelsted

New research indicates that employees who have experienced past layoffs are more likely to leave their subsequent jobs. Researchers (Davis, Trevor, & Feng, 2015) found that people are 56% more likely to leave a job voluntarily when their career history includes one layoff, and their likelihood to leave a job increases by 39% for each additional layoff. For instance, employees who have experienced six layoffs are about six times more likely to quit compared to employees who have not experienced any layoffs. However, the rate of voluntarily quitting appears to plateau once the number of layoffs is greater than six instances. In other words, individuals are no more likely to quit a job if they have been laid off seven times than if they have been laid off twelve times.

Interestingly, the association between previous layoffs and subsequent quitting was even greater when the individuals had job offers. Each layoff increased the likelihood of quitting in order to accept an unsolicited job offer by 88%, and increased the likelihood of quitting in order to accept a solicited job offer by 63%.

PSYCHOLOGICAL REACTION TO LAYOFFS

Why does this happen? The authors say that voluntary turnover increases with past layoffs because the negative psychological effects of getting laid off spill over into the post-layoff employment relationship. This leads to weakened ties between the employee and employer. While not directly examined in the study, the authors posited that a history of layoffs reduces the levels of trust and feelings of job security, as employees with a history of layoffs bring negative expectations into their subsequent employment relationships. In addition, the authors say that the quality of post layoff jobs may be lower. By working at inferior jobs and experiencing underemployment, individuals are more likely to be dissatisfied. This lower level of job satisfaction may also lead to turnover.

ORGANIZATIONAL IMPLICATIONS

In conclusion, with approximately 30 million American employees laid off between 1994 and 2010, it is important to understand the long term psychological effects of downsizing and layoffs on the workforce. Given the findings of this study, it appears that this substantial number of layoffs is leading to a workforce that is less likely to remain with their future employers. However, hiring professionals can take certain actions to reduce post-layoff turnover, such as working to build trust and attempting to restore perceptions of job security.