Enthusiasm for work drops forever as employees watch their colleagues get the axe

Just 50 per cent of staff stay committed to their employer after their colleagues are retrenched and engagement with work takes a permanent hit, the findings of a study show.

Culture Amp chief people officer Justin Angsuwat.

Companies are struggling to keep employees engaged after axing their colleagues, finding staff are increasingly losing faith in and commitment to their bosses.

Experts say once engagement drops, it rarely increases among existing employees, and engagement scores only increase when new staff are employed.

The findings, from human resources technology platform Culture Amp, come as tens of thousands of tech workers have already been sacked, just one month into 2024.

PayPal and Square, a subsidiary of Jack Dorsey’s Block, have laid off a combined 3500 people this year, with a number of Australian staff affected.

Culture Amp chief people officer Justin Angsuwat told The Australian that engagement rates took anywhere from 18 to 24 months to recover.

However, recovery depended on the hiring of new staff, with those who had witnessed lay-offs not typically increasing ­their ­engagement.

There was also a direct correlation between a company’s culture and engagement, he said.

“In fact, the stronger the culture was going into the lay-offs, the larger the drop in engagement there is, which is something you might not intuitively expect to see,” he said.

A total of 355 Culture Amp customers laid off staff in 2023, providing the company with ample data.

Companies that sacked staff last year now face a 6 per cent lower engagement rate than competitors, the data suggest.

Lay-offs also affected the ability of staff to see a future with their companies, with present commitment dropping to 50 per cent and future commitment dropping to about 58 per cent.

“The largest drops are understandably in company confidence and leadership confidence … People (are often left) wondering, is this the right place for me? Can I continue to grow my career here?” Mr Angsuwat said.

About 19 per cent of Australian workers are currently considering or actively seeking a new role, while 11 per cent see themselves shifting employers over the next two years, Culture Amp found.

The three factors likely to affect a workers decision to stay are appropriate resourcing, whether the employee sees a possibility to “succeed” in their position in the next three years, and higher quality day-to-day decisions being made, it found.

Mr Angsuwat said Culture Amp’s advice to companies considering lay-offs was that if they were going to do it, only do it once – or risk further falls in engagement. “Do it as a last resort,” Mr Angsuwat said. “No matter how big or small the lay-offs are, lay-offs have an equal-sized impact on engagement.”

Not even Culture Amp was immune from lay-offs, with the firm cutting 9 per cent, or about 90 staff, in April last year. At the time the company said it made the decision because “we are not seeing any evidence that the conditions for our customers will improve in the near term”.

It was the second time the company has laid off staff, the first being in 2020 when the pandemic struck and it laid off 8 per cent of staff.

Culture Amp’s latest data signal that companies that laid off staff in 2023 and early 2024 may take a larger hit and a longer time to recover.

The data suggest employees are less forgiving of employers who lay off staff in a post-Covid world, with recovery in engagement taking up to six months more.