Layoffs shake the foundations of a workplace—but not everyone reacts the same way. Personality differences, trust in leadership, and the quality of HR communication all play critical roles in determining whether employees panic, adapt, or plan their exit.
Research shows that employee personality has a significant influence on how layoffs are processed. Individuals with proactive traits and leadership tendencies—often categorized as “Ruler” types—are more likely to view layoffs as opportunities for growth or advancement. In contrast, those in support roles tend to experience higher levels of stress, uncertainty, and fear, according to Judge et al. (1999). This divergence creates a hidden layer of instability: while some employees gear up to take on more responsibility, others quietly disengage.
Trust in HR is a key differentiator. Dirks and Ferrin (2002) found that employees are significantly more likely to accept difficult organizational changes—such as layoffs—when HR is seen as competent and confident. Without this trust, the emotional fallout spreads rapidly.
The psychological effects on remaining employees, often called “layoff survivors,” are severe. Sverke et al. (2002) demonstrated that layoffs increase job insecurity, driving up stress and lowering commitment to the organization. Elser et al. (2022) found that 52% of employees reported “survivor’s guilt” after layoffs, and many experienced heightened anxiety and burnout. A 2023 survey by Leadership IQ reinforced these trends: 74% of remaining employees saw their productivity drop, and 77% noticed an increase in workplace errors tied to post-layoff stress.
These emotional and cognitive disruptions take a toll on company performance. Layoffs are often intended to cut costs, but they rarely deliver long-term efficiency. Pfeffer (2022) reports that layoffs frequently backfire, leading to declines in morale, operational smoothness, and institutional memory. The Brandon Hall Group (2023) found that 59% of companies observed a major morale drop, while 47% saw a sharp decline in trust toward leadership. Nectar HR (2023) adds that 63% of employees who survived layoffs began looking for new jobs within three months—fueling further turnover and instability.
Layoffs do not end with the termination notices—they leave lasting marks on those who remain. For organizations, how layoffs are handled determines whether the company can recover or will be trapped in a cycle of disengagement and attrition. Transparent communication, strategic HR leadership, and attention to survivor experience are critical to avoiding long-term damage.