HBR IdeaCast Why Many Companies Get Layoffs Wrong
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Feb 7, 2023 In this discussion, Sandra Sucher, a Harvard Business School professor and layoffs expert, sheds light on the often-overlooked downsides of workforce reductions. She points out that companies frequently underestimate the impact of layoffs on employee morale, engagement, and innovation. Sucher argues that maintaining institutional knowledge is crucial and highlights the long-term repercussions that can take years to mend. She emphasizes the need for a compassionate approach and shares strategies for executing layoffs more effectively and thoughtfully.
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Unusual Layoff Wave
- This layoff wave is unusual because overhiring is the main reason, unlike typical workforce cuts due to economic mismatches.
- Tech companies' rapid pandemic growth, like Meta's 80% increase, proved unsustainable, leading to these extensive layoffs.
Simultaneous Hiring and Firing
- Companies are simultaneously laying off and hiring, creating confusion among remaining employees who see colleagues leaving and new hires arriving.
- This practice disrupts corporate culture and workforce engagement, even if there are valid reasons for the restructuring.
Layoff Effectiveness
- Layoffs don't always effectively cut costs quickly. The direct costs and indirect costs often outweigh financial gains.
- Hidden costs include reduced engagement and innovation, negatively impacting long-term company performance.