Article Spotlight: Be Careful With The Layoffs

by Business Centric Technology (BCT) on July 1, 2022 in Ask a Recruiter, Business Trends, Dallas IT Recruiting, Technology, Uncategorized


There has been a sudden shift in tech hiring trends. However, as major tech companies like Tesla announce layoffs and cancellations of job offers, the far-reaching consequences can hurt more than layoffs help the bottom line. In his article Be Careful with the Layoffs, expert Josh Bersin explains how some moves can have harmful, unforeseen consequences. Select highlights are shared below. 

Damaging Internal Culture

Bersin’s first point hits a bullseye, “Every time you have a force reduction, you damage your internal culture. There’s no way around it. People who leave are upset, and the survivors feel the shock. Many companies (Southwest, Intel, others) prefer to give people salary reductions or temporary furloughs to prevent this problem. But it is very likely to happen. As I discussed in this week’s podcast, the defense contractor industry learned this lesson. I met with the CHRO of one of the largest defense contractors many years ago, and she told me that every time they have a layoff, they find ex-staff in the job market saying, “not only will I never refer or recommend that company, but I will never-ever work for them again.”

Fairness, Communication, and Respect

On fairness, he adds, “These stories of CEOs ( laying people off on zoom just make me wince. These are human beings who spent their lives helping your organization grow. They deserve a fair, respectful, and transparent process.” Also, once word gets out, there’s no taking it back. “I have been through many layoffs in my career and it’s never easy. In one case the company “leaked out” information by accident and employees knew it was coming. You can imagine what happened that week while everyone was waiting for the Friday letters to come. People literally ran out of the building to avoid meeting up with an HR person, it was like a fire in the office.” And the trickiest item to remember is respect. Bersin adds, “…remember that every individual in your organization (even if they are a poor performer by someone’s judgment) is a human being with feelings, desires, and ego. They have to go home and tell their family and friends they lost their job, and it’s never easy for anyone. As you build your process and communications, be as generous as you can. It’s good karma and good business as well.”

Don’t Do It

Ultimately Bersin advises skipping it altogether. He concludes, “If you’ve been running your company carefully, you’ve been “hiring slowly” and carefully staffing up during the last growth cycle. This means you probably have lots of open positions all the time. Maybe you don’t need a layoff at all. And remember, it’s quick to let people go but slow and difficult to get them to come back. I encourage you to read Wayne Casio’s research on this topic. Over the years, Wayne has studied the impact of layoffs, and in almost every case, it has a “death spiral” effect. His team did a study of companies who announced layoffs, and believe it or not, studies covering 15,000 layoff announcements in more than a dozen countries over 31 years concluded that layoff announcements have an overall negative effect on stock-market prices. This remains true whatever the country, period of time, or type of firm considered. So don’t consider a layoff a “good thing.” 

Trent Lyons is a Technical Recruitment Lead at Business Centric Technology. If you are interested in learning more about how to get the best IT talent in the Dallas metroplex, contact Trent, who specializes in recruiting IT talent in Dallas, Ft. Worth, and North Texas. If you are looking for a rewarding career, contact us today.