The use of layoffs as a cost-cutting measure is a longstanding practice across various industries, but recent findings suggest that many companies are not being entirely forthright about the reasons behind these layoffs. A new survey conducted by Resume Builder, which surveyed 600 business leaders involved in layoff decisions, reveals that a significant portion of layoffs—75% or more in many cases—are not actually driven by budgetary issues. Instead, these layoffs are often employed as a means to address performance issues or other internal challenges.
The survey’s results highlight a pattern where companies may opt to present layoffs as a financial necessity rather than a performance-related decision. This approach is often driven by several factors. For instance, maintaining company morale is a key consideration, with 62% of respondents indicating that this was a primary reason for disguising the true motive behind layoffs. Companies might prefer to frame layoffs as part of a cost-saving measure rather than admit to performance-related terminations, which could potentially demoralize remaining employees and affect overall productivity.
Avoiding wrongful termination claims is another significant factor, with 59% of business leaders citing this as a reason for the misleading presentation of layoffs. By attributing layoffs to financial constraints, companies can sidestep potential legal disputes that might arise from dismissals perceived as unjust. Additionally, 54% of respondents noted that avoiding severance payments is a consideration. Presenting layoffs as budgetary rather than performance-based helps companies avoid the financial implications of severance packages that would otherwise be required if employees were terminated for performance issues.
Employee sensitivity also plays a role, with 38% of respondents acknowledging that protecting employees’ feelings influences the decision to mask the true reasons for layoffs. Companies might believe that employees will be less likely to feel personally targeted or demoralized if layoffs are portrayed as a necessary response to economic conditions rather than a judgment on their individual performance.
Stacie Haller, Resume Builder’s chief career adviser, expresses concern over this growing trend of companies using deceptive tactics in workforce management. She emphasizes that such practices erode trust between employers and employees. The survey reveals that about a third of participants believe performance always plays a role in layoff decisions, yet the lack of transparency can lead to a toxic work environment where employees feel insecure and undervalued.
In addition to these practices, “quiet cutting” has emerged as another tactic used by companies to manage their workforce. This involves reassigning employees to less prestigious roles that come with lower pay and increased demands, effectively pushing them to resign voluntarily. Major companies such as Adidas, Adobe, IBM, and Salesforce have been known to use this technique. By subtly shifting employees to less favorable positions, companies can avoid the direct confrontation of performance issues while still achieving their workforce reduction goals.
The broader context of layoffs in 2024 shows that even amid a relatively stable job market, significant workforce reductions continue to occur. For example, Yankee Candle recently announced the layoff of 100 employees in Massachusetts, and Tesla disclosed plans to cut 2,700 positions at its Texas plant earlier this year. The tech sector has also seen substantial layoffs, with major players like Google, Microsoft, PayPal, and Salesforce reducing their workforces by thousands.
This trend reflects a complex landscape where companies navigate economic pressures and internal challenges through various strategies. The preference for portraying layoffs as financially motivated rather than performance-based is indicative of a broader effort to manage both legal and emotional repercussions while attempting to maintain a positive organizational atmosphere. The use of these tactics not only impacts the affected employees but also shapes the broader discourse around workforce management and corporate transparency.