Preparing for Layoffs (Just in Case)
Bankers worry the economy is in the calm before the storm. Inflation is at a 40-year high. Interest rates are rising. Add it all up, and some analysts believe that the Great Resignation’s job-hiring binge will transform into a corporate job-shedding, perhaps by the end of the year.
It’s why savvy leaders are already looking at how they would need to modify their workforce—even as the economy added 390,000 jobs in May—if their business softens.
One of the best things an organization can do now, while things are still going well, is to identify their best-performing employees and most essential roles. “Do the top talent review,” says Andy DeMarco, vice president of human resources for the Americas at Korn Ferry. This involves finding out which employees have the leadership traits the firm needs, which have high levels of learning agility, and which are most gifted at problem-solving.
Experts say many organizations tend to reduce their workforces arbitrarily, by cutting a certain percentage of the workforce. These firms can wind up laying off just as many top-performing employees as they do average performers or underachievers—or even more. The best executives are asking themselves if they really know who their top-performing employees are and where they are located, says Bradford Frank, a Korn Ferry senior client partner in the firm’s Technology practice. “Be strategic and ahead of the curve,” he says.
Firms also could also leave themselves short of roles that are essential to their future business. It’s why experts say reskilling should be a part of any restructuring plan. One client, having recognized that its call center business might be impacted by a softening economy, is already retraining employees to assume other roles in the future, says Kristi Drew, a Korn Ferry senior client partner and global account leader in the firm’s Financial Services practice.
It’s also true that the economy could turn out fine. The Federal Reserve could help engineer a so-called “soft landing”—an interest-rate level at which inflation falls, but the economy continues to grow. Prices for shipping rates and such critical components as semiconductors and fertilizer have all fallen over the last couple of months.
If executives believe layoffs are a future possibility, however, they should also be preparing to perform them with empathy, says Dan Kaplan, a Korn Ferry senior client partner who specializes in recruiting human resources executives. That extends to would-be employees, too. One of Kaplan’s clients that recently rescinded job offers is now helping those candidates find employment at other organizations. Experts say leaders should avoid tarnishing their brand in the eyes of both candidates and employees. “If you’re making tough calls, the best executives are doing it with an eye toward the future,” he says.