AITA for Laying Off All Your Colleagues?

• Sentiment in companies like Carvana fully recovered within one year after a mass layoff event, while companies like Peloton continued to struggle with low employee morale.

• Six months after the announcement of a mass layoff, surviving employees are more likely to discuss benefits, team, and balance in their positive reviews.

• Employees do not seem to forget the negative effects of layoffs. Layoffs is the most frequently discussed issue in negative reviews provided by remaining employees six months after the announcement of the layoff.

In our last newsletter, we showed that employee sentiment starts to recover in the fifth month following the announcement of a mass layoff event. Within one year after the announcement, employees' overall ratings even surpassed their initial levels. This week we delve further into the positive and negative reviews provided by surviving employees about their companies after a mass layoff, aiming to explore the factors contributing to the recovery in sentiment.

Among the companies that experienced mass layoffs in 2022, which ones successfully recovered employee sentiment? Revelio Labs workforce insights reveal that Carvana achieved the most significant recovery in employee sentiment. One year after the layoff, the overall rating was 63% higher than it was at the time of the layoff. Meanwhile, Peloton’s sentiment never recovered. The overall sentiment is 22% lower than it was at the time of the layoff.

Next, we examine reviews provided by surviving employees six months after the announcement of mass layoffs. We find that employees who survived layoffs often highlight factors such as benefits, team dynamics, and work-life balance in their positive reviews. Interestingly, culture is also positively discussed among surviving employees, potentially explaining the reversal of the negative sentiment trend in the fifth month after the announcement of the layoff.

However, employees seem to never forget about the layoff event. They persistently discuss layoffs in their negative reviews even six months after a mass layoff event. Additionally, their negative reviews touch upon issues like contract, knowledge, customer-related concerns, and onboarding, our workforce insights show.

Surviving employees may forgive their companies for layoffs and restore their sentiment in the company’s trajectory. However, our data indicate that forgiveness doesn't imply forgetfulness; surviving employees still harbor resentment towards senior leadership responsible for the decision to let go of their colleagues. The deterioration of sentiment around company culture and senior leadership seems to be a lasting effect of mass layoffs.