Employers that lay off workers often see an increase in voluntary turnover among employees they wanted to retain after the layoffs, according to a study in the Academy of Management Journal.

The study found that even small levels of downsizing can increase voluntary turnover. The study found that among companies that laid off a mere 0.5 percent of their workforce, the average turnover rate was 13 percent, which was 2.6 percentage points higher than the average turnover rate of firms with no layoffs. In other words, the employers saw more than five times more workers leave on their own accord than were laid off.

 "The downsizing-turnover relationship suggests a sad irony in that employees are laid off by companies that may subsequently find themselves understaffed," write the study's authors, Charlie O. Trevor and Anthony J. Nyberg of the University of Wisconsin, Madison. "Moreover, to the extent that turnover rates hinder organizational performance, the performance of downsizing companies may well suffer further through the leaving behavior that the layoffs generate."
 
The study found that companies sustain higher rates of quitting the more layoffs they impose. For example, a company that reduces its workforce by 2 percent sees an average turnover rate of 14.1 percent. Meanwhile, a company that reduces its workforce by 5 percent sees an average turnover rate of 14.9 percent. The authors note that the average turnover rate at companies with no layoffs was 10.4 percent.

The study identifies HR programs that can buffer the effects of downsizing on turnover, including:

• Defined-benefits plans, sabbaticals, on-site childcare, hiring for organizational fit, and flextime.
• Practices that provide employees with a means of addressing perceived injustices on the job
• Career-development practices that provide workers with tools and strategies to get ahead in the company.

The study appears in April/May 2008 issue of the Academy of Management Journal.