HBR On Leadership The Hidden Costs of Layoffs
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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.
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Unusual Layoff Wave
- The current wave of tech layoffs is unusual due to overhiring during the pandemic.
- Simultaneous hiring and firing create confusion and damage company culture.
Hidden Layoff Costs
- Layoffs often don't yield expected cost savings due to hidden costs like knowledge loss and reduced engagement.
- Companies that conduct layoffs often underperform for two years afterward.
Twitter and Fidelity Layoffs
- Twitter's 50% layoff exemplifies poor layoff planning, failing to consider the post-layoff workload.
- Fidelity Investments rehired laid-off workers weeks later after market recovery, damaging trust.