Navigating Layoffs: Criteria and Strategies Used by Companies

Layoffs can be one of the most challenging and emotionally taxing processes for both employees and employers. The decision of who gets laid off first can depend on several factors and criteria. In this article, we explore the common factors considered by companies during a layoff process, with a focus on performance, seniority, and skill set.

Performance as a Criterion

One of the primary factors in determining who is let go during a layoff is performance. Employees with lower performance ratings or those who have received negative feedback may be more likely to be laid off first. This is because companies typically aim to retain high-performing employees who drive company success. However, this approach can be controversial, possibly leading to unfair treatment of employees who may have personal or health-related issues affecting their performance.

Seniority: A Double-Edged Sword

Seniority is another critical factor in layoff decisions. Some organizations follow a seniority-based approach, where more experienced employees are retained despite their performance. While this can provide a sense of job security for long-serving employees, it can also demotivate those newer to the company. For instance, in the article mentioned, corporate managers often target 'deadwood' employees—those who are underperforming but have tenure within the organization. This practice can be seen as unfair, especially if the 'deadwood' employees are not contributing positively to the company's goals.

Position and Role: Critical to Operations

The criticality of a position can influence layoff decisions. Companies may prioritize roles that are deemed essential to the overall operations. For example, during a shift in the company's strategic focus, roles that no longer align with this strategy may be eliminated. However, this can also lead to layoffs among adaptable employees who are capable of switching roles, which might be seen as counterproductive.

Skill Set and Versatility: Essential for Sustainability

Employees with specialized skills that are less in demand are more likely to be laid off compared to those with versatile skill sets. Employees who can adapt to different roles and projects are generally considered more valuable in the long run. This criterion is closely tied to the company's future needs and strategic direction. Managers often play a key role in identifying those with specialist skills, which can sometimes lead to unfair treatment of employees perceived as rigid or inflexible.

Company Strategy and Legal Considerations

A company's strategic direction plays a significant role in layoff decisions. Companies may need to make changes to remain competitive or adapt to new market conditions. In such cases, roles that no longer fit the new strategy may be eliminated. Additionally, companies must consider legal and ethical implications, including discrimination laws, to ensure fair treatment of employees.

The 'Deadwood' and Pay Cuts

The article you mentioned also discusses the practice of laying off 'deadwood' employees—those who are underperforming and have tenure. In larger layoffs, managers may target 'deadwood' before looking at pay levels. This approach can be seen as a way to reduce costs but may also contribute to a negative work culture.

The first wave of layoffs typically targets those whose performance and job contributions are minimal, known as 'deadwood.' Later, as the number of layoffs increases, managers may target well-paid but problematic employees to meet the required quota. While this ensures the elimination of high-cost positions, it can also result in the loss of valuable team members. Ultimately, the success of a layoff strategy depends on a combination of these factors and the specific circumstances of the organization and industry.