No matter what language organizations use—layoffs, restructuring, downsizing or reorganization—whenever employees are let go, a sense of disengagement and loss of trust can develop among the remaining employees.

While organizations have traditionally focused on investing in resources and support for those who have lost their jobs, new research suggests that, following a reorganization, employers should consider the health and well-being of both departing employees and those who remain.

Psychologically damaging
Michael Conlon, executive director of the Association of Administrative and Professional Staff, a professional organization for management and professional staff at the University of British Columbia, has witnessed first-hand the impact of numerous layoffs. He sees similar reactions from most laid-off employees.

“They contact us for counselling and support. The overwhelming feeling is a sense of grief and shock. Even in situations when, in retrospect, they could have seen it coming, there is often a sense of grief about  losing their role, their colleagues and their way of life.”

One of the Shain reports for the Mental Health Commission of Canada outlines practical ways for workplaces to mitigate the risks to employees’ psychological health. While the report does not specifically refer to layoffs, it suggests that, on a routine basis, workplaces should identify psychological and physical job hazards that could lead to risk. Considering this in the context of a restructuring workplace, employers can no longer afford to ignore the negative impact of downsizing. They will need to consider not only how layoffs, such as those of the past decade, affect survivors’ mental health, but also how they can create mentally resilient employees who may have to deal with restructuring in the future.

“For [the remaining] colleagues, there’s a sense of guilt about surviving,” says Conlon. “They also have a sense of sadness as well as vulnerability. They often feel, If it could happen to John or Jane, it could happen to me. So that sense of anxiety comes up regularly.”

Affecting all employees
A 2012 research briefing from the British Columbia Human Resources Management Association describes how restructuring has an impact on three different employee groups: victims, survivors and executors (those required to implement the restructuring). The paper examines how layoffs negatively affect these groups, and how organizations that initiated layoffs often did not experience a rise in financial performance over the long term, calling into question the overall financial impact of such moves.

Consider these three groups through a mental health lens. All are at risk of experiencing situations that can contribute to mental illness, likely leading to an increase in prescription drug usage rates, long-term disability claims and absenteeism.

  • Victims of layoffs must typically deal with the stress of job searching, the anxiety of financial uncertainty and feelings of loss.
  • Survivors may start to envision themselves as “the last employees left standing” and face feelings of guilt, uncertainty about their job duties and fear of being laid off in a future restructuring.
  • Executors may experience similar guilt and uncertainty, as well as the pressure to lead in an anxious workplace climate. They also often experience contentious relationships with survivors, since executors are seen as responsible for the changes—when, in truth, they may have had little control over them.

All of these groups are likely to develop feelings of stress and anxiety, which various research studies have indicated as a major risk factor for mental illness. According to the 2002 Canadian Community Health Survey, for example, men in high-strain employment roles were 2.5 times more likely—and women 1.6 times more likely—to have experienced depression than others in low-strain employment.

Studies also point to the importance of investing in support for the mental and physical health of employees who remain after a reorganization. According to a 2003 study from the Institute of Behavioral Science on the physical and mental effects of reorganization on survivors, higher levels of role ambiguity and lower levels of job security led to greater alcohol consumption and higher levels of depression. These situations, in turn, were linked to worsening physical health and more workplace injuries over the long term.

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