Although layoffs peaked during the pandemic, the job market is still experiencing instability that is felt heavily by workers. A recent MarketWatch survey on layoff anxiety found that 70% of workers are preparing themselves for job cuts, with 32% regularly searching through job listings. Most workers are even overestimating the unemployment rate to be over 11% despite being at 4.1%, according to the survey.
Despite the unemployment rate being lower than during the pandemic, layoffs are still a common occurrence today. Data from Layoffs.fyi shows that over 500 tech companies have laid off over 140,000 employees in 2024 so far. As layoffs continue to hold a strong presence in the job market today, CHROs are forced to maneuver this turbulent landscape and find balance.
Downsizing in a Weak Job Market
The U.S. Department of Labor recently released its jobs report, which is unfortunately showing a sluggish labor market. While the economists from The Wall Street Journal and Dow Jones Newswires predicted that October would see 110,000 jobs added to the labor market, that forecast was far from reality. The U.S. Department of Labor statistics revealed that only 12,000 jobs were added in October—a sharp contrast from the original prediction.
Downsizing during a slow job market can cause laid-off employees to struggle with finding new opportunities, which can then affect the company’s reputation as well as the morale of workers still within the organization. Allowing for downsizing during such a harsh market for workers can also make it more difficult to attract future talent as they may perceive the company as unstable for long-term positions. Meanwhile, remaining employees may feel insecure about their position within the organization, which can then affect their productivity levels, and some may start looking for outside opportunities.
Layoffs are an unfortunate reality among companies, but that doesn’t mean there are no ways to do so in ways that are respectful and supportive of employees.
Here are just a few ways CHROs can enforce downsizing through a layoff while minimizing harm to both the company’s reputation and the employees’ chances for a new opportunity.
Transparent Communication
When a downsizing is near, prepare employees by letting them know beforehand. Share the reasons for the downsizing to reduce any chances of speculation and rumors. Clear and transparent communication during this time will strengthen the company’s credibility and trust with employees as they are now given the space and time to process what next steps they should take.
Upskilling and Redeployment
If possible, look for opportunities for upskilling and redeployment to avoid letting go of employees in an uncertain job market. Investing in current employees instead of laying them off allows the company to retain institutional knowledge while maintaining higher levels of trust and morale.
Objective Criteria
Analyze layoff decisions to ensure that no bias or discrimination is acting as one of the deciding factors. Keep criteria objective, such as role redundancy or company priorities, to justify downsizing without causing extra unnecessary harm to workers. When the criteria have been decided, share them with the affected individuals so they can fully understand the situation. Understand that workers may still feel slighted despite the transparency, so offer a space to answer any questions or concerns they may have.
Outplacement Support and Severance
Outplacement support is essential during a weak job market as opportunities are limited. Since former workers are going to be job hunting in a now highly competitive market, they will need extra support to succeed. HR teams can work to connect them with job placement services, resume and cover letter workshops, and networking opportunities to help them on their journey. Offering fair severance pay and extended benefits, such as health insurance, are also strong strategies for downsizing while mitigating harm.
Engagement with Remaining Employees
Employees who made it through the layoff unscathed may experience “survivor’s guilt.” Address the complexities of their feelings and allow them to express their worries and concerns. Engage in frequent check-ins to reassure them of their job’s stability, encouraging them to feel secure in their position so they can continue doing good work.
A Better Approach
Navigating layoffs in a weak job market requires CHROs to balance organizational needs with empathy and fairness. By following these thoughtful strategies, CHROs can ensure downsizing is handled with respect, helping both former employees and the organization to see success.
