Beware the Layoffs

Posted on August 03, 2023 by Alison Dixon, One of Thousands of Life Coaches on Noomii.

Workers are being laid off.

With the recent press about low unemployment and the tech skills gap, it seems unfathomable that nearly 16,000 tech workers worldwide were let go in May. Layoffs are an inevitable part of working in a corporate setting, we just didn’t anticipate them with everything else going on in the hiring landscape.

Many of these layoffs are occurring in startup companies that hit unicorn status as a result of the pandemic. The funding that is keeping many of these companies afloat is pulling back to consider market volatility, a possible recession, and other economic issues. Without that funding, the companies can’t continue paying their staff, resulting in layoffs.

Larger companies are also laying workers off and even worse, rescinding offers days before their start date.

With hiring slowing and layoffs happening, are workers losing the bargaining power they found during the pandemic?

According to the Wall Street Journal, workers still have power, especially in certain industries where talent gaps exist. Biotechnology workers still have jobs to choose between when making a switch. Tech workers with hard to find skills also have multiple offers to juggle.

Companies need to be careful how they handle layoffs regardless of the hiring environment. Josh Bershin, President of Bersin & Associates, cautions that poorly planned and executed layoffs will harm your organization and your brand. Each time you reduce staff through layoffs, your organization goes into shock. Productivity and engagement suffer. Top performers may opt to switch jobs. Employees who were let go will post about it on social media, poisoning the hiring pool for that company moving forward.

One woman, who had an offer rescinded by Walmart, explained that she would still consider an offer from them because the company is “recession proof”, and she is still in contact with the hiring manager. She had been one of 2500 employees laid off from Carvana in May. Some people were escorted off the premises and others were notified through Zoom. Because of this, she says that she would not consider taking another job with them regardless of what compensation was offered.

Bersin urges companies to treat each employee with respect and if possible, provide them an exit package to ease their transition. Make sure your process is fair, transparent, and well communicated. Each person that is terminated is a human with dreams and goals and family and they deserve a thoughtful process that treats them as such.

Wayne Casio has researched the impact of layoffs, covering 15,000 layoff announcements in over a dozen countries over 31 years. His team found that there was an overall negative effect on stock market prices, regardless of country, type of firm, or period of time. Layoffs are not a panacea.

Workers who have been laid off are finding jobs. What some might call a loss of power for workers can also be viewed as a shift in priorities. Those who jumped into a startup for the perks and great salary may decide that other factors are also important, such as a company’s ability to withstand a financial downturn and a hiring strategy that emphasizes sustainable hiring practices with an eye on the future.

In past recessions in 2001 and 2007 – 2009, employees did lose much of their bargaining power. Things may be different this time. There are still two job openings for each person looking for work. Until that balance shifts, employees are still holding the cards, and candidates who hold hard to hire skills will continue to be in demand, even in a recession. Companies who have no choice but to lay off workers need to understand this and carefully plan and implement their layoff strategy to keep the doors open to new talent and possible rehires later.