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The struggling economy has many businesses coping by initiating layoffs. Staff reduction is one way for businesses to trim the budget when times are tough, but it’s a move that may have unintended consequences.
One Fortune 500 company analyzed its costs after a major downsizing effort, and found a shocking increase in their healthcare and workers’ compensation costs. Why?
There are a number of reasons that costs shot up. When less staff perform more work to make up for those laid off, they tend to become more stressed physically and mentally because of the extra workload and threat of layoffs. This leads to an increase in legitimate medical claims and workplace accidents – and an increase in false claims.
Some workers see the threat of downsizing as a sort of “last call” for health benefits or workers’ comp paychecks. They may seek medical attention for an issue they’ve been putting off, just in case they lose their job and their healthcare coverage. They may also file a false workers’ comp claim to ensure that they have some kind of income coming in if they lose their job.
The lesson here for businesses is clear: downsizing may seem like a great way to cut back, but in reality the costs incurred by overworked and nervous employees may erase any savings.
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