Amid ongoing economic uncertainty, layoffs spread across industries in 2023, and a new report finds that the downsizing trend is expected to continue well into 2024.
According to Randstad RiseSmart’s Global Severance report, nine in 10 employers surveyed expect to reduce their workforce size in the upcoming year, based on a survey of 400 HR and procurement professionals from around the globe, including in the U.S. While fears of a recession were often cited for this year’s reductions, those surveyed by Randstad instead pointed to another factor: talent surplus.
Lindsay Witcher, senior vice president at Randstad RiseSmart, says the biggest driver of the downsizing trend is high levels of over-hiring after the pandemic and Great Resignation subsided. Over the last 18 months, business at many organizations has stabilized, she says, and with that, companies are now looking to reduce operating expenses—often through a reduction in headcount.
Other factors include incorporating AI and automation, “strategic evolutions” and increased merger and acquisition activity.
Interestingly, the research pointed to a possible disconnect between leaders and employees when it comes to how layoffs are conducted.
For instance, 80% of HR and procurement professionals believe their company handles downsizing actions “very well,” yet Randstad RiseSmart found that just 25% of organizations in the U.S. offer severance packages to all exiting employees; only 28% of entry-level employees in the U.S. report having received this benefit after a layoff.
For employers planning layoffs in 2024, Witcher advises them to first consider redeployment or internal talent mobility; some employers, she notes, are reducing a workforce within one department yet still hiring in another.
“Getting a good cultural fit with [new] employees is not easy, so employers should invest more in the existing talent and upskill them to help them grow their careers within the business,” she says.
If layoffs are inevitable, it’s critical to ensure a fair, equitable exit—which, Witcher says, should involve transparent communication and meaningful severance packages.
“That strategy will ensure that the employee experience as they exit is as positive as it can be in a situation such as this, thereby reducing the negative impact for the organization—both in terms of remaining employees but also as a way to positively impact the employer brand,” Witcher says.
Providing meaningful career transition can also help on those fronts, she adds, noting that helping departing employees with their next career move isn’t just ethical—it’s a “strategic investment.”
When reductions are conducted well, the organization can create brand ambassadors while alleviating the impact on the remaining talent, who may have lost co-worker friends and now have increased workloads.
“Employers must prioritize the employee experience from entry to exit for long-term success,” she says.
To reduce the ongoing impact of layoffs in the long-term, Witcher notes, employers need to be strategic about creating an environment for AI and humans to thrive alongside one another while also thinking big picture in their hiring practices—particularly to avoid an oversupply of talent.
“Get ahead of a downsizing strategy,” she says, “by hiring more thoughtfully.”
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