How unceremonious layoffs impact employee trust

There seem to be distressed and anxious employees all around us. What with big giants such as Amazon, Twitter, Netflix, Facebook’s parent company Meta, Microsoft and many others in the tech space deciding to fire employees in big numbers. As per industry experts, almost three lakh jobs have been impacted in the last two months.

In fact, such layoffs have become so frequent of late that they have ceased to shock readers. Of course, it causes a lot of financial stress to the laid-off staff who are rendered jobless overnight, stuck with loans to pay off and no funds to fulfil the needs of their homes and families. Another significant repercussion, however, is that employees lose their trust in employers.

The Edelman Trust Barometer, which has been studying trust in companies and institutions, has found that employees across ranks and files tend to not trust the leadership of their respectively companies. Less than a quarter believe that their CEO is ethical! Why?

The reasons are many. Internal politics, discriminatory HR policies and double-faced attitude of the HR department are some significant ones. However, the biggest cause for this distrust is the ‘hire and fire’ attitude of companies / employers.

“Unceremonious layoffs will definitely make it difficult for the companies to attract talent in the future”

Sharad Sharma, CHRO, Pramerica Life Insurance

Human resource leaders point out that this widespread layoff phenomenon is not new. In the past too, companies have fired employees during economic downturn. “This leads to employees losing trust in their employers,” agrees Ravi Kumar, chief people officer, Page Industries.

Clearly, it is a cyclic trend. Companies that are firing employees today were the ones that were hiring in big numbers two years ago. In fact, many even boasted about the fact that they were hiring in big numbers instead of laying off people. Reality hit these very companies rather hard when the downturn came.

“Most of these companies were in a rush to hire when the demand was high. Even worse, they hired with little planning when it came to the right number of people required,” says Sharad Sharma, CHRO, Pramerica Life Insurance.

The manner in which companies lay off their employees is also a matter of concern. For instance, people still cannot forget how Vishal Garg’s Better.com fired 900 employees all of a sudden, over a zoom call. It created a huge uproar on social media. The layoffs at Twitter are yet another example of unceremonious firing, where the impacted employees were informed of their employment being terminated by an e-mail from the HR. Within a matter of seconds they lost access to official accounts and laptops. No empathy was shown from the employer.

Talking to HRKatha, Devarshi Deb, former CHRO, Asahi India Glass, agrees that heartlessness on the part of employers is increasing these days. Earlier, companies focused on building cultures and values but now, the relationship has become very transactional. “All the ‘best places to work’ certifications appears like marketing gimmicks. When the time to show real empathy arrives, they become ruthless,” observes Deb.

“Just because of a handful of companies, other employers also earn a bad name”

Ravi Kumar, chief people officer, Page Industries

He goes on to say that resorting to layoffs in the larger interest of the company’s welfare and sustainability is not wrong. It is how the layoff is conducted that needs some thought. The exercise should not force the employees to leave with a bitter taste.

This happens when companies fail to realise that the employees being shown the door will join the same talent pool from where they will be scouting for suitable candidates when they look to ramp up hiring, during better growth periods.

“Unceremonious layoffs will definitely make it difficult for the companies to attract talent in the future,” believes Sharma.

Are such acts by few tech companies leading to a negative outlook in people towards employers in general? The HR leaders respond with a unanimous YES.

When big names such as Microsoft and Amazon cut jobs left, right and centre, it does make the intent of other employers questionable as well. “Just because of a handful of companies, other employers also earn a bad name,” tells Kumar.

It is natural for anxious employees to be wary of working with sectors or companies that are booming right now, opines Sharma.

“They will be riddled with fear while considering offers. ‘What if a few years down the line they start firing people?’ will be the question plaguing their minds,” enunciates Sharma.

“All the ‘best places to work’ certifications appears like marketing gimmicks. When the time to show real empathy arrives, companies become ruthless”

Devarshi Deb, former CHRO, Asahi India Glass

In the current scenario, it is mostly the tech talent that is getting laid off. We are all aware that tech talent is in demand across sectors, since digitalisation is at an all-time high. “Again, this set of talent will be a highly confused lot, unable to decide whether to work in their own familiar industry or to switch sectors. The level of anxiety will be high, and understandably so. That is why, other sectors will also find it challenging to draw such talent,” explains Sharma.

With such lack of trust amongst employees, trends such as moonlighting and quiet quitting will be on the rise. The demands of employees have surged and gone beyond just money. Employees of today seek work–life balance, psychological safety and their own well-being. Can this trust be won back? That’s the million dollar question to which a clear answer doesn’t seem to be in sight.