Whiplash and anxiety: harsh realities facing today’s working people

First there was the whiplash. Then came the anxiety.

As we reached the end of 2022, there was little doubt that we were all facing what seemed like a broader and deeper array of existential threats than ever before. Interest rates, climate change, post-pandemic ripples and geopolitical conflict have combined to create a particularly worrisome cocktail of concerns.

If there was anything we could count on to provide a measure of hope, it was the fact that the global labour market was creating jobs and employers were gobbling up skilled talent at a record pace. For the first time in a long time, skilled workers seemed to have the upper hand in the employee-employer relationship and were using it to drive new career opportunities and gaudy paycheques.

In October 2022, more than four million Americans quit their jobs, just below the all-time monthly record of 4.5 million seen in November 2021. These voluntary separations were a clear sign that despite concerns about inflation and interest rates, job postings and hires remained robust.

And then, starting at the beginning of 2023, came the whiplash.

Job creation, job postings and — not surprisingly — voluntary resignations in the U.S. started to slow significantly. Job postings, which had outpaced job seekers by ratios of two-to-one, started to even out.

Suddenly and without a lot of warning, the same companies that had demonstrated a nearly limitless appetite for talent started reducing their head counts. Employers that had known only growth in the last three years were suddenly paring back. Some of the recent hires that came via the Great Resignation found they were once again out of a job.

The tech sector served as a harbinger of what was soon to come.

By the end of 2022, there had been more than 80,000 layoffs in tech, many in the e-commerce sub-sector that had performed so brilliantly during the periods of social and economic pandemic restrictions. But that was only a small taste of what was to come.

Starting in January, layoffs became more frequent and started affecting organizations of all sizes, from some of the largest and most iconic companies to mid-size employers, as well. According to layoff trackers, as inflation and interest rates continued to peak and economic growth continued to slow, employers began to respond with significant reductions in the size of their workforce.

The numbers don’t lie: there were more layoffs in the first three months of 2023 than all of 2022. And there are signs we’re really seeing only the tip of the iceberg in industries such as tech, financial services and insurance.

This sudden turn from hiring to firing had dire consequences for people on both sides of the layoffs.

HR professionals certainly felt the whiplash as they pivoted from hiring frenzy to downsizing in the blink of an eye. It was not unusual to hear stories from them about leaving work one day thinking their organization was in growth mode only to arrive the next morning to learn the employer was seeking “efficiencies.” Working people were caught like deer in the headlights of an oncoming and unexpected labour-force trend.

As you might expect, the whiplash effect was particularly harsh for the people losing their jobs. Many of the affected employees took to social media to ask some tough questions of their former employers: how they could suddenly be out of a job after being heavily recruited, particularly when all evidence continued to point to a global skills shortage?

These social-media flares were the first sign of the unprecedented levels of anxiety that came next.

This sudden change in career fortunes for millions of workers around the world arrived at a time when many of us were still trying to recover from the existential threats we faced over the previous few years. COVID-19, and the profound impact it had on when and where we did our work, had a devastating effect on our mental and physical health.

Polls found a spike in mental-health concerns at the outset of the pandemic, with about a third of Americans reporting they were dealing with anxiety and/or depressive disorders. Even though the pandemic has receded to a significant degree (the World Health Organization recently declared it no longer qualified as a global health emergency), and economic conditions improved dramatically, the number of people reporting those concerns now remains roughly the same. What could be helping to sustain all these afflictions?

The Edelman Trust Barometer, one of the most common tools used to measure attitudes and mindsets, shows that job loss is now the No. 1 concern across the globe. In fact, Edelman found that fear is now higher (89%) than it was at the beginning of the pandemic, and exceeds those about climate change (76%), inflation (74%), and nuclear war (72%).

These fears are not misplaced. A March 2023 survey for LHH by Censusswide found that half of HR leaders reported their organizations were planning or had already conducted layoffs since the beginning of the year. Another third said that layoffs were a strong possibility. That means more than three-quarters of employers we surveyed are either laying off people or thinking about it. That is already having a devastating effect, as “layoff anxiety” takes hold as an identifiable psychological condition that is currently being measured on a city-by-city basis in the United States.

It’s important to remember that although the current wave of layoffs may be due to mostly economic conditions, the quickening pace of digital transformation — particularly involving AI — is making a contribution, as well. Even with an economic slowdown, many organizations will be looking to shed workers with outdated skills.

Where does all this leave us now?

Consider this: at a time when we were already worn down and stretched thin by a host of existential threats, working people have suffered a sudden, almost violent change in career fortunes. The comfort we experienced simply by holding a job, or knowing that another job just as good or better was out there waiting for us, has been replaced by blinding fear and hyper-anxiety.

That fear and anxiety pose a threat not only to individual workers, but also to employers. Organizations that mismanage layoffs are going to come out of the current economic crisis with severely, maybe permanently, impaired employer brands.

Complicating matters is the fact that the career transition industry — the trusted partners who have helped the world’s employers reduce head counts with dignity and empathy — is going through its own seismic change.

The world of work has changed and may never be the same again. It is into this unprecedented maelstrom that employers are now sending millions of people through layoffs. And the stakes for both individual and organization could not be higher.

The only real question was: how would the industry respond to this unprecedented array of challenges?

The pandemic and the great reckoning for the career transition industry

The world’s best employers have always found comfort in the knowledge that, when times get tough, they could always rely on the support of the global career-transition industry to support laid-off workers and protect employer brand.

Recently, however, there has been a major pivot in the industry that has eroded that assumption.

In the past three years, many of the world’s largest career-transition firms bet heavily that the Great Resignation and accompanying hiring frenzy had not only become the new normal, but that it would remain that way for years to come.

Some of that ultimately unfounded confidence was based on the assumption the world had rebounded from the pandemic into an era of unending economic growth. Government supports for workers and businesses, along with heroic efforts by employers to keep people in their jobs, kept companies in a buy mode in the global talent marketplace.

Many of the world’s best-known career-transition firms responded by pivoting towards other areas of the human-capital industry — such as recruiting, talent management, and career development — while drastically reducing both the size of their career transition operations and the suite of solutions they offered.

The consequences of this pivot were significant. Some of the household names in career transition shuttered regional offices and abandoned franchises altogether. Others are involved in spinning off their career-transition units as separate businesses. When a company puts out an RFP for career-transition help, there are fewer firms to answer the call.

Think about that: at a time when companies are facing unprecedented uncertainty around talent-management strategies, many of the biggest players in career transition are packing up and going home.

At many of the firms that remain, service levels have been significantly affected. Forced to adjust to the pandemic realities of social and economic restrictions, in-person assistance was largely replaced by online portals. Support offered to candidates in transition became limited to the basics: resumé preparation, interview techniques and some help navigating online job boards.

Unfortunately, many of the career-transition firms that have responded to current economic conditions did so by withdrawing and retrenching into other solutions. This strategy ignores the reality that given all the collateral economic forces at play right now, career transition is needed more than ever before.

How to conduct layoffs, preserve engagement and save your employer brand

It has always been a tricky scenario, rife with risk: reducing head count by any number, at almost any time, tends to provoke strong emotions. Those affected by layoffs can feel betrayed, and those left behind fearful. If a layoff is not conducted in the most respectful, most empathetic way possible, the betrayal and fear can linger. Sometimes for years.

To avoid long-term or even permanent damage to an organization’s employer and customer brand, a CT strategy must account for the needs of four main groups of stakeholders.

For many years now, employers have been encouraged to invest in the development of emotionally intelligent leaders who bring healthy measures of empathy, compassion and self-awareness to their daily interactions with direct reports.

And there is no getting away from the reality that organizations that heeded those suggestions — and invested in things such as coaching and leadership development — will find they are in a much better position to manage the trauma and disruption that often accompanies layoffs.

Simply put, if your leaders are not equipped to relate to your employees on an emotional level, then the risk of lingering resentment from layoffs — both from departing workers and the ones who remain — will increase exponentially.

Leaders need to see the employees they are leading in a holistic context: skills, behaviours and emotions. They need to be able to communicate with empathy and compassion. They need to feel confident in any discussion, from the status of a big project to an employee’s overall mental and physical well-being. Without these skills, it will be infinitely more difficult to manage a significant downsizing.

Although they share some of the same obligations as all leaders, those in charge of an organization’s HR functions carry a special burden. They are the leaders who are supposed to worry full time about how to care for the mental and physical well-being of employees. So devoted are many HR professionals that they often neglect their own well-being while supporting others.

Now, after the enormous demands from the pandemic, the Great Resignation and an unprecedented period of recruitment, many HR leaders are being asked to oversee a significant layoff. Too many organizations just assume their HR assets are fully prepared to notify affected employees and communicate broader corporate strategies as they relate to head count. That can be a dangerous assumption.

A tailored, thoughtful transition strategy involves manager notification training and notification-day support. It also features special training on how to provide employee information sessions and broader communications strategy. These people are your primary messengers for any downsizing initiative; they must be supported.

Getting a layoff notification is an alarming experience. But getting a layoff now, on the heels of one of the most active hiring binges in recent memory, is an experience ripe for feelings of contempt, betrayal and even anger. It is essential that these people know they are not being thrown out on the street with no support. They need to know they are not alone in the challenge of finding another job.

Traditional career-transition support — interviewing techniques, resumé writing and personal brand building — will continue to be invaluable to anyone who has just lost a job. However, the current economic environment requires much more than just traditional support. It requires a career transition provider with proven, active connections to hiring managers and actual job openings.

This active support can involve coaching to help impacted talent identify new opportunities that connect to their true career aspirations. It can also involve providing access to the latest AI-inspired tools to help candidates find the jobs of the future.

It’s important to remember that now, more than ever before, aggrieved former employees have many more forums to express their rage about a clumsily managed layoff. At one time, the stigma of losing a job prevented many people from letting others know; social media has blown up that stigma and encouraged the laid-off workers to express their deepest thoughts and feelings.

Career transition firms and industrial psychologists have, for years, warned employers about the devastating impact of layoffs on the employees who are left behind. Although there will always be a measure of relief at not being let go in the midst of a downsizing, the psychological impact for retained talent is much more complex.

Recently, the term “layoff survivor sickness” has taken root among the ranks of psychologists and HR professionals as they attempt to convince employers that simply holding on to a job is not enough to maintain an activated and engaged workforce.

Progressive employers understand that those who remain behind after a downsizing need special supports. Fear of future layoffs needs to be replaced with an active career-planning conversation, where opportunities for retraining and upskilling, redeployment and career pathing replace the anxiety caused when an organization’s leaders go silent in the wake of a downsizing.

Conclusion

Layoffs have always had unavoidable, traumatic effects on an organization and its talent. However, while there is no way to avoid the impact, it can be managed with an eye towards mitigation.

The cold, hard truth for any organization considering a downsizing is that there is a right way and a wrong way to reduce the size of a workforce.

The former offers you an opportunity to demonstrate your compassion for departing talent and give them a leg up on finding a new job. In the process, you have a chance to turn impacted workers into employer brand ambassadors, people who would not only work for your organization again if the opportunity were to arise in the future, but encourage others to work for you.

The latter is a path to employer-brand disaster.

It’s time to acknowledge what your employees have been through in the last few years. They’ve watched with astonishment as hiring binges swelled employee ranks, and then suffered whiplash when organizations pivoted to downsizing. That whiplash has subsequently triggered a wave of hyper-anxiety, both for departing and retained talent.

Layoffs are, in many instances, an unavoidable consequence of the business world. But they don’t have to have a devastating impact on your ability to motivate your remaining employees, and attract top talent in the future.

However, insulating your organization from these ravages requires investment, both well in advance of layoffs and at the moment a decision has been made to downsize.

It can be done. But it takes the commitment of an entire organization to do things the better way.

Greg Simpson

Global SVP, Career Transition practice at LHH

If your organization is one of the 80% undertaking or considering layoffs this year, we are pleased to provide some complimentary resources on our 2023 Layoff Resource Hub. Alternatively, please get in touch for a confidential conversation.