Layoffs: A Hatchet Job - a Result of Unhealthy Growth & Weak Leadership

When an organization is designed to deliver value efficiently, positive cash flow is the result. - Dawn Holly Johnson?

Layoffs and downsizing have become portrayed as necessary evils to safeguard financial performance during tough times. I call bullsh*t.

Layoffs are merely the result of poor management, misaligned focus, and uncontrolled organizational growth.

The CEO & CFO Focus: Financial Performance??

The primary focus of most business owners and CEOs is equity. Unfortunately, this thinking drives them to collaborate with the CFO to prioritize immediate financial gains over long-term organizational health.

This narrow focus leads to common but misguided strategies in times of trouble:??

1. Cutting Budgets: CFOs meticulously trim expenses, often ignoring the operational impacts.??

2. Downsizing: Workforce reductions are seen as the quickest route to lower operating costs.??

3. Pursuing Mergers or Acquisitions: CEOs look to acquire companies with strong cash flow, often overlooking integration challenges, cultural clashes, and long term inefficiencies.??

4. Setting Arbitrary Goals: Leaders are assigned aggressive targets without sufficient consideration of organizational capacity or capability - little own employee morale.??

Unchecked Organic growth is Created by Hierarchical Organizational Design

Traditional organizational structures allow uncontrolled organic growth due to the prioritization of segregating people by departments. As each department reaches capacity, they add more bodies, absorbing profits and degrading enterprise-wide collaboration.

Unfortunately, no one is evaluating how convoluted the end-to-end value delivery process has become.

It's like this:

As a tree grows in the wild, branches and roots can grow haphazardly causing structural weakness and making disease more likely amidst the maze of growth.??

Conversely, a master gardener will prune unnecessary early-stage branches (eliminate non-value added growth) to keep the tree strong and healthy as it grows.

Similarly, Leaders must actively shape their organizations to ensure sustainable growth.??

Departments (analogous to branches) often grow to meet short-term needs rather than aligning with a long-term vision. Department leaders focus on keeping their "branches" (budgets) alive—even encouraging growth—regardless of the benefit to the organization as a whole.??

When an organization has overgrown, it starves profit. CFOs then instruct leaders to cut budgets by a fixed percentage across the board. But does trimming every branch of a thoroughly overgrown and misshapen tree by the same percentage create a healthier tree? — create a healthier organization???

The Flawed Logic of Across-the-Board Cuts??

In an organically grown organization, indiscriminate cuts rarely address the root causes of inefficiency. Instead, they create new problems:??

- Weakened Strong Areas: Healthy, productive areas are stunted, reducing their ability to support the organization.??

- Neglected Core Problems: Dysfunctional or unnecessary areas persist, continuing to drain resources.??

- Employee Burnout & Declined Morale: Remaining employees are overburdened, leading to errors which will decline sales. Most employees today do not feel secure in their job.

To create a truly healthy organization, leaders must identify areas of unchecked growth that do not serve the customer or organization. Like cutting a diseased or poorly positioned branch, eliminating entire areas may be necessary to allow valuable branches to flourish.??

• The SOONER this is done the better
• IDEALLY an organization is designed to NEVER allow overgrowth to happen IN THE FIRST PLACE.

Breaking the Cycle??

A shift in leadership priorities is essential to break this cycle:??

1. Aim for long-term vision.
2. Know the value proposition and redesign the organization into a value stream structure which will allow the organization to scale efficiently
3. Employ neutral process engineers to help SMEs design efficient processes and measure process performance- creating leading indicators of quality and? financial performance.?
4. Take regular pulse checks of employee engagement and customer satisfaction - which are indicators of sustainable growth.? (I highly recommend RavenCSI with Morphii for accurate data)
5. Invest in the Workforce: Employees are an organization’s greatest asset. Empowering employees to learn and grow yields better results than constant restructuring.??

A Call to Reflect??

For those in leadership positions, it’s time to envision yourself as a frontline employee. How would you feel if arbitrary decisions, detached from your daily realities, dictated your work life? What message are you sending when financial numbers take precedence over human capital???

Layoffs and downsizing are not inevitable—they are choices. And these choices often stem from a failure to effectively design and scale the organization and measure what is important. It is time to innovate beyond the outdated paradigms and foster environments where employees thrive and organizations flourish.??

By shaping organizations thoughtfully from the start, we can avoid the pitfalls of uncontrolled growth and indiscriminate cuts. In doing so, we create healthier, more resilient organizations capable of bearing fruit for years to come.??

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If this resonates with you, I’d love to hear your thoughts. Share your experiences in the comments—whether you’re a frontline worker or a CEO, your perspective matters. Let’s redefine leadership together.??

#Leadership #Management #Layoffs? #Downsizing #EmployeeEngagement #OrganizationalHealth #Future #thefutureofworkingtogether

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