Why Layoffs Undermine Confidence and Spark Mass Resignations

Recently I encountered a workplace story: a company dismissed two low‑performing employees, and within a month eight more people quit, leaving the general manager puzzled about why good performers were leaving.

Layoffs Cut Confidence

A friend’s company this year gradually let go of several bottom‑ranked colleagues. While many outwardly understood the decision, soon they heard whispers such as “Will it be us next?” “What are the real standards?” and “Will we be blamed for missed targets?” The layoffs not only removed staff but also sent a shockwave through the whole team’s morale.

"Fired" Alarm Rings, Employees Vote with Their Feet

From a psychological perspective, employees facing layoffs tend to assume:

1. Performance Reviews Are a Pretext

Many firms have opaque performance metrics and vague KPI settings, sometimes changing rules at year‑end. Even if the two dismissed employees performed poorly, the remaining staff may doubt the fairness of the process, fostering contagious anxiety like “Today it’s them, tomorrow it could be me.”

2. Loss of Belonging

Some companies use layoffs as a deterrent, hoping to motivate survivors, but this often backfires. Watching colleagues being abruptly removed creates a sense of coldness and insecurity, leading employees to feel reduced to mere numbers and eventually consider leaving.

3. Trust in the Company Is Depleted

Layoffs signal more than personnel changes; they raise doubts such as “Is the business unsustainable?” or “Is cash flow a problem?” This erodes confidence in management and can trigger a chain reaction of resignations.

Good Performance, Yet They Still Leave

From the general manager’s view, the eight who quit were not poor performers and often held key positions. Possible reasons include:

1. Opaque Layoff Logic

Employees perceive the layoff list as unfair, suspecting hidden factors like favoritism or departmental politics, which makes them fear becoming the next target.

2. Deteriorating Work Environment

After layoffs, work is redistributed, increasing workload without corresponding raises or incentives, leaving staff without hope and prompting them to seek better opportunities.

3. Cracks in Team Atmosphere

The fear of the next cut and the loss of camaraderie cause core team members to lose motivation, potentially leading to the collapse of the team’s cohesion.

Workplace Mobility Rooted in Trust

Layoffs are adjustments; resignations are reactions. Employees should proactively improve skills and build resources to retain choice, while managers must focus not only on who to let go but also on how to retain essential talent, fostering belonging and security to prevent a cascade of departures.