Three Positive Societal Side Effects from Layoffs

Layoffs are never easy. Whether they are done in small or large numbers, they call for a lot of planning—from both objective and psychological standpoints. Layoffs can significantly bring down employee morale, which may even require counselors to come in and help ease the process.

The task is not an easy feat for the team that is driving the layoff process either. They need to keep in mind several things: making the right decision as to where the restructuring should be done, timing it right, deciding on the right numbers, keeping it a closed decision during the planning process, working closely with the HR team, communicating well, and monitoring and controlling the post layoff repercussions.

Despite the overwhelming tasks that comprise the layoff process, the need for layoffs is sometimes a no brainer. Organizational restructuring, cost reductions, and realigning focus are often the most compelling reasons, even for healthy companies. For troubled organizations, layoffs are a potential way to survive.  

While there can be negative effects at the organizational level, layoffs can potentially have a positive impact at the societal level. Specifically, there are three things to consider:

1. The release of talent from one company that other companies can then utilize: While employee turnover is common in organizational operations, sometimes the stickiness factor can hold employees back for a longer period of time than what it is ideal. What is the right number of years for a person to stay in one organization is a debatable topic. Microsoft’s recent large-scale layoff will likely release a lot of talent into the Washington technical pool.
2. A career jumpstart for complacent employees: Letting go of slackers is often quite a challenge. Layoffs are a perfect opportunity for the company to release them and for such employees to get a forceful jumpstart in their careers.
3. The potential for more money to be in circulation: Layoffs often translate into severance packages for employees. Depending on the person’s seniority and performance, they can range anywhere from a few months' to a few years' salary. The result is more cash in circulation, which could help people start new businesses, buy homes, buy automobiles, etc. after hopefully making an educated decision.

While there are definitely financial and morale downsides for affected employees during layoffs, these positive societal side effects are welcoming and should not be overlooked.

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