Layoffs and Hiring Freezes are actually the consequences of Over-hiring and Overstaffing and signal poor business health!
Nicolas BEHBAHANI
Global People Analytics & HR Data Leader - People & Culture | Strategical People Analytics Design
?? Hiring more people will make the company grow is a flawed assumption!
?? With more and more layoffs making headlines, job security remains a priority for employees.
?? This overstaffing led to increased costs and also resulted in higher defect rates and material waste, as more people on the line did not necessarily equate to more efficiency or better quality.
?? Hiring freezes are a less common topic than layoffs, but they were higher in 2023, up 81% year-over-year and signal a poor business health to employees.
?? Ongoing Layoffs are still a growing concern for employees and have targeted layers of middle management as companies attempt to reduce bureaucracy and increase efficiency, putting more strain on middle managers, according to the latest research published by Glassdoor using January data ?? from The Glassdoor Employee Confidence Index.
?What is Over-hiring and when does it happen?
The Josh Bersin Company defined Over-hiring as a process where overstaffed companies will underperform lean companies, requiring a change in mindset.
Josh Bersin considers that today smaller companies with higher revenues per employee will outperform, out maneuver, and outgrow their large-staff competitors. Slowed by too many layers and challenges in hiring, companies that haven’t learn how to focus their teams (and headcount) will fall behind.
?? When organizations rush to hire they force the recruiters to bring in “bodies” and not focus on fit. The result is what Josh call it the “diminishing productivity of each hire.” Each additional person organizations hire slows down the others already in place...
??When a company hires quickly the shear volume of onboarding and new people forces managers to slow down, staff to slow down, and many existing processes to slow down. And that means each additional “new hire” reduces productivity overall.
?Layoff is top of mind for Employees
Researchers noticed that the share of reviews talking about layoffs continues to rise, increasing further in January and up 27% year-over-year. Even though measured layoffs remain at historically low levels, discussions of layoffs in Glassdoor reviews are higher now than they were in 2019, before the pandemic.
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Also researchers noticed that employee confidence fell the most for mid-level employees in January 2024, declining to 48.9%, just a hair above entry-level employees at 48.8%.
?Hiring Freezes signal poor business health to employees
Researchers found that only 23% of Glassdoor reviews that mention hiring freezes report a positive business outlook, confirming that employees view slower hiring as a strong negative signal about their employers’ health.
Hiring freezes are a less common topic than layoffs, but they were higher in 2023!
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These two interesting studies demonstrate the origin of two important but natural processes: right-sizing and Freeze hiring, the role of HR is critical in supporting employees but also the business. Since these processes directly impact employee engagement, it is crucial that leaders take into account and fully understand these processes.
Thank you ?? Glassdoor and The Josh Bersin Company researchers team for these insightful findings: Josh Bersin Daniel Zhao
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Finance and Technology Executive | MBA | Project Management | Business Analysis | Client Relationship Management | Investment Management | Hedge Funds | Multiple Asset Classes
1 年I completely disagree with your premise that layoffs are a result of overhiring. Layoffs have now unfortunately become an accepted, normalized aspect of working in corporate America. They are usually done to achieve short-term profitability in order to meet Wall Street's expectations, at least for public companies. If, as you say, there is an overhiring component, how about those responsible for the overhiring lose their jobs instead of imposing their incompetence on those who were overhired and then subsequently laid off?
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1 年Nicolas BEHBAHANI. I totally agree here, decision making should be well thought process not out of surge or some external pressurizing matters.
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1 年Nicolas BEHBAHANI Great topic! I listened to Josh Bersin's podcast highlighting his research on this earlier in the week. I know at my former employer (manufacturing) shop floor headcount was determined by senior managers' gut feel rather than a more data driven approach. I was sometimes labeled as a resister when I pushed back and asked why. New production line launches rarely looked at the amount of labor required to run the line (number of production operators, quality or technicians), as a result sometimes we were overstaffed on the manual labor and understaffed on technical labor or we were not looking at forecasts to determine if we had enough employees skilled to run the lines with increased demand. From the HR perspective, it was hard to stay ahead of the curve, when Thursday manager meetings inevitably included a request shop floor hires by Monday which was not originally budgeted. As a result we were forced to over hire temp labor or we hired too many production for the wrong shift, and all that labor needed weeks of training to be effective. I spoke with a lean manufacturing consultant mid 2023, who has coached many small/medium manufacturers and his opinion was manufacturers were rarely right-sized.
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1 年Uuumm lots in this one. I’d guess one issue is HR being order takers On “lean team” a team is only lean if it is both effective and efficient other wise it’s just a group of burned out individuals scrambling to respond A sign of ineffective leadership. Thoughts? Jim