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Hiring still outpaces tech layoffs, but cuts leave scars

Employees affected by tech layoffs should have good job prospects given the strength in hiring, but the experience could make them less loyal at their next place of employment.

The tech industry continues to shed jobs, but hiring still exceeds layoffs. Affected workers will likely be in demand, especially by other industries that need their skills.

But laid-off workers who land new jobs might be less loyal and a retention risk. More grimly, according to research, layoffs have a negative effect on the health of those affected.

This week saw significant layoffs for tech. Amazon cut 18,000 employees -- 8,000 more than previously planned in November -- with most of the cuts in its HR organization and stores, and Salesforce eliminated nearly 8,000 workers after it acknowledged it had hired too many.

Many of those who lost their jobs were likely working in tech occupations. For instance, Amazon's HR organization, called People Experience and Technology Solutions, was recently advertising for software development managers; applied scientists with a master's or doctorate degree in computer science, statistics and other skills; and technical program managers.

The rehiring prospects for these workers could be strong. The technology industry added 17,600 jobs last month, part of the 223,000 jobs the U.S. government said Friday were added to the economy last month, according to an analysis by CompTIA. Moreover, the industry group said employers throughout the economy added some 130,000 tech workers in December.

A moment of hope, a word of caution

Salesforce's layoff announcement Wednesday turned into an opportunity for Plative Inc., a Salesforce and NetSuite consultancy. On the same day, Greg DelGenio, Plative's chief revenue officer, quickly posted open roles in sales, solution engineering and consulting on LinkedIn.

The ecosystem has your back.
Greg DelGenioChief revenue officer, Plative

"The ecosystem has your back," he wrote on the career platform.

In an email, DelGenio said he received several replies and messages from people frustrated and shocked by the layoff news. But there is also "optimism and hope," he added, because companies like his are "quick to jump in and offer open roles to those impacted."

Still, those affected by layoffs often take the experience into their next job.

Employees who have gone through a layoff are 65% more likely to quit the job that immediately follows a layoff than the same employee without a layoff experience. They are also an increased retention risk for jobs beyond their first post-layoff employment, according to researchers at the Wisconsin School of Business at the University of Wisconsin-Madison.

The data comes from a survey of nearly 2,500 workers across all industries whose work histories were followed for just over 30 years, according to Charlie Trevor, one of the researchers and a professor of management and HR at the Wisconsin School of Business.

"[The] psychological ties that bind individuals to organizations are weakened by the experience of a layoff," the researchers wrote in their 2016 study.

HR managers can take steps to reduce the retention risk of an employee who has been through a layoff, including adopting HR policies "that bolster trust [and] job security perceptions," the researchers noted.

The opposite might also be true. Although there is no research on the job performance of workers hired after a layoff, they could be more motivated to perform than those without a layoff history, according to the paper's authors.

The quit rate of workers has been above normal since the COVID-19 pandemic started, and that's expected to continue through the year.

Jeffrey Pfeffer, a professor of organizational behavior at Stanford University's Graduate School of Business, has studied the increased mortality risk associated with layoffs. This risk is due to the economic effects of the experience, as well as the loss of health insurance; the increase in stress and associated unhealthy behaviors such as smoking, drinking and overeating; and the link to depression.

"Employers could lessen effects by facilitating more social support and maintaining employee health benefits," Pfeffer said.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget Editorial. He's worked for more than two decades as an enterprise IT reporter.

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