One of the biggest psychological impacts of getting laid off is the feeling of “I am not good enough”.
While performance is definitely a consideration for layoff decisions, it is overrated in the eyes of the affected people.
I am listing down the other parameters that go into the decision-making process. Leaders should be aware of these.
1. Pay – Layoffs usually have cost reduction targets. So highly paid people get impacted more to keep impacted head counts lower. In more ceremonial layoffs where head counts are targeted (e.g. big tech layoffs), the junior people get impacted more for business continuity reasons.
2. Team wind up – Management might decide to shut down a project, business or technology and everyone in those teams is impacted.
3. Tenure – Both very new employees and long-tenured employees run the risk of getting affected by layoffs.
4. Key Customer – If an employee has good standing with a key customer it is hard to impact that role due to the risk of customer dissatisfaction/attrition.
5. Skill set – If an employee possesses skills that are rare or are required for a potential project in the near future, that role is retained due to overheads in rehiring.
6. Role type – When there is downsizing, the value of integrator roles (e.g. Leadership, Project managers) goes down and they get impacted compared to roles with hard skills (e.g. frontline workers, developers)
7. Attrition risk – If there are indications that an employee is preparing to leave the company (e.g. planning to relocate to another city), decision-makers tend to lay that employee in place of others.
While leaders cannot reveal the exact reasons to the individuals impacted, awareness of various parameters can make the communication more empathetic and at the same time less pretensive.
What other parameters you have seen being used in layoff decisions? Please share it in the comments.
