“Some of the mass tech layoffs will cool, and we will instead start to hear about other sectors downsizing” — one of the five 2024 workplace predictions Chapter tOO made in early January. Recent headlines are validating this prediction, as layoffs in sectors beyond tech, such as retailer Macy’s closing 5 stores and laying off 13% of its corporate staff, are on the rise. Additionally, companies like international packaging company UPS, banking and financing conglomerate Citigroup, and American Airlines have announced significant cuts of 12,000, 20,000, and 8000 (customer service positions) respectively.
With these layoffs, should we panic? Is the U.S. economy in bad shape? Not exactly. According to Yahoo News, “The U.S. economy seems to be humming along just fine. In January, 353,000 new jobs were added, a surprisingly large gain that beat forecasts of an increase of 185,000. Unemployment is near the lowest level since the 1960s.” However, beneath the headlines lie many factors reshaping the workforce. Changing market and consumer demands, rising interest rates, coupled with the aftermath of pandemic-induced over hiring, are driving the need for organizations to rebalance their workforces. Higher interest rates make it more expensive for businesses to borrow money to expand operations, hire new employees, or invest in new technology and equipment. This can lead to a decrease in job creation and wages, prompting companies to reassess their workforce needs.
Are there signs of business instability or impending layoffs employees can watch for? Indications such as hiring slowdowns or freezes, deferred initiatives, loss of clients, or substantial budget reductions could all serve as precursory indicators of organizational restructuring. Employees should familiarize themselves with company policies on severance and review processes to better understand their standing within the organization. Proactive measures such as maintaining an updated resume and cultivating and nurturing a strong professional network, including recruiters, can be empowering forces.
For leaders tasked with making layoff decisions and then delivering the news, be thoughtful about the business decisions you make today because they will have long term implications beyond tomorrow. Getting caught up in short-term market conditions and basing long-term business decisions on them, as we saw in the tech sector’s hiring trends in 2020-2022 and then subsequent reversal via layoffs in 2023, is not a sustainable business strategy if organizational culture and employee engagement are priorities because that approach is riddled with problems.
When it comes to delivering the news, prioritize transparent (proactive) over honest (reactive) communications. You MUST also have a well-thought-out communications plan in place that goes beyond notifying employees. Too often we have seen headlines about employees being notified via email, access cut off instantly, and weeks later still not having any additional information about severance or payment terms. Additionally, and most critically, acknowledging the emotional toll of layoffs on employees and prioritizing support mechanisms mitigate adverse effects on morale and organizational culture. Finally, and worth repeating, organizational leaders must exercise due diligence upfront in workforce planning, avoiding impulsive hiring practices or overreacting to momentary cultural trends in favor of developing and adhering to sustainable growth strategies.
Well thought-out communications plans are a MUST and lifeline for any organization.
Navigating layoffs is not easy, neither on the employer nor employees, as there is impact for all parties. However, in a world that is constantly changing, adaptability, and remembering to P.A.U.S.E before acting become even more critical. By discerning precursory signs, adopting proactive career management strategies, fostering compassionate leadership, and learning lessons based on the mistakes of others, individuals and organizations can be better prepared to navigate layoffs.
Are you an employee, or leader worried about how layoff trends might impact you? Connect with us to learn how our advisory, coaching, and training services can help!