When organizations are forced to lay off staff, it can be understandably difficult to keep morale high.  Research from Washington State University suggests, however, that if organizations invest in their workforce then the remaining employees were more likely to feel like they are treated fairly, with morale subsequently maintained far better.

This investment could come in a range of forms, including training, team building, or generally striving to improve the culture of the organization.

“Whenever possible, cost-cutting is best combined with signals that people remain the firm’s most prized asset,” the researchers explain.

Cost-cutting measures

The researchers analyzed 137 previous studies into the impact of cost-cutting measures and people-focused investments on job attitudes.  Each of the studies followed employees for up to two years, thus providing the researchers with a glimpse into changes in attitude over time.

The results suggest that various cost-cutting measures, such as layoffs and offshoring, can have a much bigger impact than organizations think, with this impact lasting longer than we imagine.

Indeed, employees often report lower levels of loyalty and job satisfaction for at least two years after the cost-cutting event, which has obvious implications for things such as productivity and employee turnover.

Harming the relationship

The various cost-cutting measures significantly harmed the relationship between employer and employee, with workers often feeling that their employer didn’t care about them and didn’t treat them particularly fairly.  The only exception to this general rule was when companies upgraded their technology in order to reduce costs.

When companies invested in the workforce, however, this instead resulted in employees feeling valued and cared for by the organization, which resulted in a boost to job attitudes that endured for some time.

The interesting finding comes when investing in employees was combined with cost-cutting.  In these circumstances, job attitudes remained pretty stable, with the support for those employees that remain helping to reestablish the bond between employer and employee.

“The prevailing attitude is that cost-cutting is really bad for employees’ attitudes in the short-run, but in the long-run, employee’s attitudes will return to the baseline,” the researchers conclude.