Why layoffs hurt both companies and employees

Getting that pink slip is never an enjoyable experience.

But it turns out workers aren't the only ones who suffer when it comes to layoffs companies can be harmed too, says Jennifer Newman, workplace psychologist.

Companies layoff workers to deal with competitive pressures of the economic market and to cut expenses. But Newman says there can be long-term damaging effects.

Impact on business

While staff suffer loss of income and become more susceptibleto headaches, backaches and mental health issues,most do end up finding another job.

"The general attitude towards workchanges for employees once they have been laidoff all that enthusiasm that one might have had for work,itbecomes easy to becynical and angry," she said.

"The problem comes for the new employer," she said. "The rebound effect is on the new employer."

"Workersare less loyal to their next employer," said Newman.

This leads to workers adopting a policy of only staying with a company for just a few years while they look for other opportunities, leading to increased turnover costs, she said.

"You are having to hire, having to bring people in to do testing and selection which costs a lot of money," said Newman.

"Then you have supervision and orientation for new staff. And if you keep doing thatevery three years, you are going to feel it."

Dealing with layoffs as a worker

"It's hard not to take that personally," Newman said, pointing out thatmany people keep asking if they did something wrong.

But it's often not about performance, as layoffs seem to be part of the business landscape, said Newman.

She suggested employees learn to become more adaptable to change.

"Beable to adapt, to be able to move, learn fast," said Newman.

To hear the full interview listen to the audio labelled Jennifer Newman: Lay-offs hurt both companies and employeeswith Stephen Quinn on CBC's The Early Edition.