Layoffs tend to trigger a wave of critical reviews and drop in ratings, which can take years to recover, according to a Sept. 16 report by Glassdoor.
In an analysis of Glassdoor ratings in recent years, layoffs led to a loss of .13 stars out of 5. Even current employees — who survived a layoff — had a .16 star drop in their reviews. Sub-ratings for company leadership, career growth and culture/values took the steepest hits.
“Our research tends to support conventional HR wisdom, e.g. that it is best to cut deep and only cut once, as repeated layoffs have compounding short-term effects on current employees,” Chris Martin, a lead researcher on Glassdoor’s economic research team, wrote in the report.
“Employers should weigh these impacts carefully when considering a layoff and recognize that their decision will impact their employer brand for years to come,” he wrote. “It takes years to build a successful employer brand, and the companies with the strongest employer brands have the most to lose in a layoff.”
After a layoff, ratings from current employees take more than two years to recover, Glassdoor data indicated. Ratings drop immediately after a layoff announcement and remain lower for a year, only beginning to recover in the second year — but not yet fully recovering after 24 months.
Notably, ratings dropped twice as far for highly rated companies. Those with the best ratings dropped by .22 stars in the first six months, as compared to those with median (.18) or poor (.02) ratings before layoffs, and didn’t show any signs of recovery during the two-year window.
Multiple rounds of layoffs hurt ratings even more, according to the analysis. Repeated layoffs doubled the impact on reviews, particularly in the first four months after the second layoff. The highest drops in ratings occurred among key talent, managers and new hires.
Overall, Glassdoor estimated, companies lost more than $20 billion in the first year after layoffs due to current employee disengagement and higher voluntary turnover. Layoffs led to a 26% increase in active disengagement and 40% increase in employees looking for jobs on Glassdoor, disproportionately affecting key talent.
“Serial layoffs,” or multiple rounds of layoffs a company conducts over a short period of time, have become common over the past year, according to Careerminds — meaning the effects recorded by Glassdoor may be especially prominent right now.
Notably, after layoffs, a majority of layoff survivors said they’ve felt unprepared or made costly mistakes due to a lack of retraining, according to a report from Kahoot. Workers said that a structured re-onboarding would have eased the transition, but most said they received little support, which led to mistakes, increased pressure and plans to quit.
