HBR On Leadership
The Hidden Costs of Layoffs
Dec 13, 2023
In this discussion, Sandra Sucher, a Harvard Business School professor and expert on layoffs, delves into the unseen repercussions of workforce reductions. She highlights how layoffs often lead to lost institutional knowledge, lower employee engagement, and decreased innovation. With compelling examples from Twitter and Nokia, she advocates for more compassionate approaches to handling layoffs. Sucher also stresses the importance of rebuilding trust and addressing the emotional toll on both employees and managers, urging thoughtful decision-making in these challenging times.
30:57
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Quick takeaways
- Layoffs have hidden costs, including lost institutional knowledge and weakened employee engagement, which can take years for companies to recover from.
- Simultaneous hiring and layoffs in the tech industry can negatively impact corporate culture and workforce engagement, requiring more creativity in reassignments and maintaining institutional knowledge.
Deep dives
Hidden Costs and Impact of Layoffs
Professor Sandra Sutcher, who has studied layoffs for 15 years, highlights how layoffs often have hidden costs that companies overlook, including the loss of institutional knowledge, decreased engagement, higher turnover, and lower innovation. She presents real-world examples from Twitter, Nokia, Airbnb, and Fidelity Investments to demonstrate the adverse effects of layoffs on companies. Sutcher emphasizes that it can take years for companies to recover from these setbacks and offers better ways to approach and measure the impact of layoffs.
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