Relying on Attrition (Instead of Layoffs) to Reduce Head Counts

As the global economy continues to flirt with recession, many employers have already begun letting large numbers of employees go. This trend is particularly evident in the tech industry, where companies like Google, Amazon, and Microsoft (among others) have laid off more than 70,000 workers in the past year.

And that’s just one industry.

The Trouble With Layoffs

This trend is obviously a big potential problem for employees, but it’s also not great for employers. Aside from the obvious observation that companies laying off workers may be in rough financial condition, layoffs and firings themselves aren’t great for business either.

It’s complicated and expensive to coordinate large-scale workforce reductions.

Consider Google parent Alphabet’s recent decision to lay off 12,000 workers, representing about 6% of its workforce. The company had to determine which departments would lose staff and consider and plan for the impacts of those cuts. It also had to put together severance packages and coordinate employee communication. Workforce reductions can also hurt diversity numbers and even lead to allegations of discrimination when it comes to selecting which employees will lose their jobs.

Finally, and not least of all, workforce reductions are terrible for employee engagement and morale. Not only do remaining staff often have to take on more work due to the reductions, but they may also have lost close friends and may be fearing for their own job security.

Avoiding the Need for Layoffs

But companies that plan ahead may be able to avoid the worst impacts of large-scale staff reductions by simply relying on attrition, writes Will Daniel in an article for Fortune. “Using attrition instead of layoffs and firings has become a trend in recent months,” he writes. “Video game publisher Ubisoft recently announced it would use what it called ‘usual natural attrition’ to cut its headcount as a part of its $216 million restructuring plan and Cisco CEO Chuck Robbins told Bloomberg this week his firm isn’t planning to cut jobs, instead opting for right-sizing using ‘the natural ebb and flow that you drive through attrition.’”

That may be a reasonably effective strategy considering how frequently American workers do voluntarily leave their jobs. On average, across all industries, U.S. Bureau of Labor Statistics data shows that employee turnover consistently hovers at just under 50% and was over 50% in 2021, and those who quit on their own are often those who recognize they aren’t a great fit or simply aren’t engaged in the work.

Relying on natural attrition may not be viable for all businesses, but those that plan ahead may find this approach helps them avoid the worst side effects of headline-grabbing mass layoffs.

Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.

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