Next, Let’s Stop Firing People

Yes, that’s a deliberately provocative headline. Of course, there are times when there isn’t a great fit between a particular work role and a certain worker, and something has to be done about it. And there are times when an organization simply can’t afford to pay all of its workers.

But in a world of human-centric work, we need to rethink what happens when an organization considers separating large numbers of people from their paychecks. And that rethinking needs to be done long before someone starts jotting red X’s next to a long list of worker names.

In the early days of the modern pandemic, 22 million workers were laid off in a matter of weeks. (Or was it 40 million ?) Sure, there was a lot of uncertainty. But that’s a huge part of the American workforce. How hard did the decision-makers who lead those organizations work to try to keep workers on the payroll? What were all the alternatives considered to keep them employed?

It’s no wonder that the Great Resignation rapidly followed the rehiring boom. Companies had already proven they had little loyalty to workers. Why wouldn’t a worker reciprocate?

This month, the U.S. returned to record low unemployment . Yet a relentless march of headlines is obsessed with predicting a coming recession and the resulting layoffs. The inevitable consequence is to amplify the general angst of a population reeling from two and a half years of a pandemic and biblical inflation.?

And the headlines are wrong.

• “A wave of layoffs is sweeping the U.S. ” No, it isn’t. The U.S. workforce is over 160 million people . Take a look at the list on layoffs.fyi . Try to find any company that’s laid off more than a few hundred people.
• A recent Tesla layoff dominated the news cycle for days. “Tesla's Latest Round of Layoffs Is Its Largest in Years. ” Total affected: 229. The company employs nearly 100,000 workers, and publicizes 4,600 open jobs.
• “Walmart Lays Off Corporate Employees After Slashing Forecast. ” That’s 200 people — for a company that employs 1.6 million.?

It’s no surprise that a high percentage of the separation activity is in the tech sphere , which benefited more than most industries during the pandemic. As their earnings growth starts to slow, many companies decide to do some house cleaning. Helping them is a cottage industry of layoff specialists, whose business is booming

But those workers with the red X’s on their foreheads aren't dusty boxes sitting on shelves. They’re people.

“Layoff” conjures a picture of a faceless mass of workers. But each is an individual. Some will have a new job tomorrow. Others — especially older workers, Black workers, differently abled, women — will feel the greatest impact, and have the hardest time finding new work, inevitably ghosted by hiring algorithms.

Fans of unfettered capitalism will say that this is simply the relentless hand of Schumpeter . But during the pandemic, many companies reported record profits, then conducted layoffs . Berkshire Hathaway recorded $56 billion in profit, and a subsidiary laid off 13,000. Walmart laid off 1,200 corporate workers — then gave $10 billion back to its shareholders.

This is what shareholder primacy gets us.?

Some companies use the excuse that the decision is “performance-related,” and maintain they’re only cleaning out “the bottom 15% ” (a mindset that treats people as discardable.)?But that "lack of performance" is first and foremost a failure by the organization. Did a supervisor have regular discussions with the worker leading up to the low performance rating? Was the worker given constructive feedback and continuous training to help them to be more effective in their work? Was the worker given the chance to move to another work role? Was anyone tracking on that worker’s life situation during the pandemic? Was the person supervising the worker doing good work themselves?

The U.S. “employment at will” mantra means that we don’t have an employment system: We only have an unemployment system, where worker support kicks in only after something bad happens — like a mass layoff. By contrast, Germany and the Nordic countries have strong worker protections in place, as do many government organizations. Sure, that can make it very difficult to deal with a worker who is simply coasting, or who is even sabotaging their work. And there’s no question that some people need a wakeup call. I’ve informally coached countless people since being trained as a career counselor at the age of 19. Some people aren’t happy in their work, and they should have changed a long time before.

But that situation itself is also a failure by the organization, which should be ensuring workers and work roles are well matched, continually training people so they have needed skill sets, and providing variety and engaging work.

In previous times, the potential for a global recession would make you would think that a significant wave of layoffs is just around the corner. But these are not ordinary times. Economists are speculating that a recession might actually not mean massive layoffs.?

But many organization decision-makers have shown they can be ready to conduct layoffs with just a hint of a coming downturn. Even with so much demand for workers today, mass layoffs in the U.S. will come again someday.?

But they shouldn’t.

So what should you do Next?

• Ignore the headlines. Some faceless editor or algorithm just wants your clicks. And ignore layoff news from startups that are still on venture-capital life support. Their VC overlords can dictate layoffs if they think the next round of funding is at risk, forcing startups to hoard current cash by reducing headcount.
• If you are an employer, do everything in your power to retain your workers . Retrain them, now — not two years from now, when you finally decide they don’t have the skills you need.?
• If you are a team guide (aka manager), commit to a level of constructive communication that always lets workers know where they stand, and provide them with the support they need to help them to continually improve their effectiveness in their work.
• If you absolutely must lay someone off, make sure it hurts. Do it with courage and compassion. (Lazy decision-makers will do it through Slack or email . Where’s the courage and compassion in that?) Provide generous severance, and job-search support for as long as it’s needed.
• If you have influence over legislation, look at what Germany has done with the Hartz Reforms , and see how they can be applied to create a more compassionate employment system for the U.S.

?-gB Gary A. Bolles

UPDATES

• (19 Aug 22) Pwc survey suggests half of U.S. companies are gearing up for layoffs.

?I’m the author of The Next Rules of Work: The mindset, skillset, and toolset to lead your organization through uncertainty . I’m also the adjunct Chair for the Future of Work for Singularity Group . I have over 1.1 million learners for my courses on LinkedIn Learning . I'm a partner in the consulting firm Charrette LLC . I’m the co-founder of eParachute.com . I'm an original founder of SoCap , and the former editorial director of 6 tech magazines. Learn more at gbolles.com