There's More Than One Way to Reduce Headcount
Despite a slowing in February, tech layoffs aren't expected to stop anytime soon.
Layoff tracking site Layoffs.fyi tracked 129 companies that laid off nearly 25,000 people in the month of February alone. Though that number is down from January, it's still higher than 10 of the past 12 months.
Corporate belt-tightening is going strong, and some organizations are looking for ways to convince people to opt out without having to let them go. With the cost of severance pay and the latest federal policy changes to the scope of severance agreements, it’s not surprising that companies would look for alternatives.
But as tempting as it may be, it’s not the right move.
How Companies Push People to Quit
The Wall Street Journal recently wrote about the ways organizations can shed staff in tough times.
Mandating a return to the office is one filter organizations can use to cull staff without backfilling positions role for role. We're seeing this unfold at many companies, including Disney and Amazon.
Other restrictions on remote work policies, like having to work within a certain vicinity of an office, are also ways to force the issue.
Then there are companies like Meta, which choose to up the stringency of their performance reviews, giving thousands of employees subpar ratings in the process. This, they know, is likely to push many out of the workplace.
And remember quiet firing? There’s that, too. Companies may reassign employees or make their work environment less desirable, all in an attempt to shrink its payroll.
Full-on relocation is another strategy. When Walmart and Tyson Foods consolidated some of their regional offices into larger headquarters or hubs, they required that most of that staff relocate as well. In Tyson’s case, they asked people from their Chicago offices to move to their headquarters in Northwest Arkansas. Hundreds of people said they were likely to leave as a result.
While these tactics may seem clever on the surface, if taken too far, they can be portrayed as constructive dismissal, which can be grounds for a wrongful termination claim.
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Self-Selection Doesn’t Work
At face value, the strategies listed can work out as intended. Some of these organizations may be on the hook for unemployment but for the most part, employees will self-select out of the organization and leave without making any noise. And those who are talented and have options will be quick to find other opportunities at other companies.
Sounds like a win-win? Not quite.
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While the company's payroll costs may be reduced, its talent problems have only just begun. It’s a micro version of brain drain, where the organization shifts labor costs to people with less experience or skills than the ones it's lost.
The problem is that for companies that truly need to shed costs, there are typically other factors at play that are disrupting the business. And those organizations are the ones that most need the best talent — the very talent they're pushing out the door.
Even in the case of performance reviews, your brightest employees are going to see right through the process when formerly well-rated co-workers suddenly no longer meet expectations — not to mention that these changes might not be uniformly applied across the board, thus showing intent.
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What to Do Instead
No leader wants to be in a position where the only way forward is by reducing or redistributing the workforce — especially not when that move involves losing key players.
But trying to figure out how to get people to leave the organization on their own doesn’t work. It leaves too much up to chance and feels like a cop-out.
If you need to cut staff, an old-fashioned layoff with best practices and workforce planning built into the process is actually the best course of action. It allows for honesty and transparency, and gives high performers a chance to stick it out if they choose to.
Announcing the layoff in conjunction with hiring freezes (or even targeted hiring for areas of the business you are continuing to grow) is key to asserting control, even if it comes with the discomfort of accountability.
It's also the right thing to do. And that may be as important as anything else these days.
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About the Author
Lance Haun is a leadership and technology columnist for Reworked. He has spent nearly 20 years researching and writing about HR, work and technology.