The Hidden Costs of Company-Wide Layoffs
Roberta Matuson
Strategic Advisor on Talent | Global Executive Coach | Public Speaker I Brand Ambassador | HBR Contributor I Helping organizations attract & retain the best people.
You’re watching companies all around you lay people off.?
Should you follow suit??
Not so fast!
Consider the following:
Impact on Long-term Growth
Recent corporate layoffs at companies like Meta, Blue Origin, and Estee Lauder will likely have significant negative impacts on their long-term growth, despite the short-term financial benefits companies seek. However, these companies have tons of cash behind them to ride out most economic storms.
Can your company afford a downturn in profitability even if you believe it might be a short-term dip?
If you’re unsure, pause and look for other ways to reduce costs. Better yet, seek ways to increase your revenue.
Productivity Loss
After a layoff, survivors are often left stunned and afraid, which can dramatically impact productivity. For companies with high reliance on R&D, layoffs can significantly hamper innovation capabilities at a time when continued research and development is crucial for future competitiveness.?
Think about where you’re at in terms of new products and services.
If you have ongoing projects related to new offerings, reconsider reducing your workforce.
Increased Employee Turnover
Managing talent after a layoff can become more difficult as existing staff resigns.
Unwanted employee turnover can cost your organization anywhere from one to two times an employee’s salary. While that may not seem like a lot, do the math.
For small businesses, losing one or two employees can be devastating.?
For larger companies, losing hundreds of valuable employees can be overwhelming, especially when they’ve significantly reduced their HR departments, and these individuals are the ones the company had hoped to retain.
Impact on Your Company Brand
Product and service quality may decline as remaining employees focus on productivity to preserve their jobs. Customer service in many organizations is already at an all-time low.
Think about your own customer service experience. Have you stopped shopping at certain stores because of long checkout lines or a lack of sales personnel? Have you sworn off certain products (and shared your feelings on social media) due to disappointment in the quality of a recently purchased product?
Likely, it’s taken years to build your company brand. Are you willing to destroy it overnight to save money in the short run?
Effect on Your Employer Brand
Remember how challenging it was to go from an unknown to a company people want to work for? Some of you have spent thousands of dollars (or even millions) to position your company as an employer of choice.
With one bad and highly publicized move, your efforts and investment could all be for nothing.
Currently, it feels relatively easy to pull in talent, regardless of your company’s reputation. However, the pendulum will soon swing the other way due to the demographic shift.
As more people hit retirement age, companies will find filling open roles with experienced workers extremely challenging. ?
Preserving your employment brand today is paramount, as what’s written on the Internet never disappears.
Forward-thinking leaders must recognize that while layoffs may temporarily appease shareholders and stakeholders, building resilient organizations requires preserving the human capital that drives innovation.?
Today's layoff announcements may well become tomorrow's cautionary tales of short-sighted leadership.
You have a great opportunity to manage your workforce in a different way and to be better at this than other companies.
At the end of the day, keeping your team intact might just be the smartest move you can make. ?
Don't let short-term gains compromise your long-term success. Reach out now and start building a resilient organization that will outperform the competition for years to come.
Talk soon!
Roberta
Product Management | CRM & Martech | Prod. Growth | Retention | Loyalty | Telecom (MVNO) | Restaurant (F&B)
3 小时前Layoffs might seem like a quick fix, but the long term damage to morale, innovation, and brand reputation can be devastating. But if someone is not taking the job seriously and aren't playing the role efficiently, then he should face the consequences.
7-Figure Agency Exit | 8-Figure Agency Advisor | Helping 100 agency owners Stop the Grind through Operational Excellence | Official Dark Chocolate Connoisseur
7 小时前Yea, especially in agencies like I work with, which are knowledge based businesses, layoffs hit hard because of that client and process knowledge goes out the window. When do you think it's appropriate to lay people off?
Reinforce Your Financial Foundation | I help high-performing professionals and mid-career individuals understand how insurance fits into long-term wealth preservation Auto?? Life ???????? Home?? Liability ?Business
8 小时前Roberta Matuson, absolutely, investing in people leads to sustainable growth. innovation thrives on a stable and engaged team.
Senior Vice President of Global Information Security & Risk | CISSP, CRISC, CISA | Compliance & Risk Management | Security Frameworks, NIST, HiTrust and PCI Compliance
8 小时前Having experienced various roles in different companies throughout my career, I fully understand the significant implications and hidden expenses associated with layoffs or offshoring positions. These decisions not only affect the brand but also have a profound impact on the company as a whole. From a client's standpoint, such actions often raise concerns and can greatly influence the client-company relationship.
C-Suite Advisor | Global Executive Coach | Keynote Speaker | Award-Winning Author | Brand Ambassador | Guiding leaders to make their strategy real and actionable
8 小时前Well said, Roberta. Like you, I advise executives to first, think strategically about the business - take "people" out of the equation to consider what capabilities are most needed both right now *and* for the future. Then think about people. There's a cost to staff turnover. There's also a cost to not having the people and skills on hand, actively identifying and ready to capture opportunities as they arise. And just think of the lasting benefit of simply treating your people with respect for their contributions to your success - in good times and bad. #strategy #leadership #talentmanagement