Layoffs aren’t a growth strategy.
I know some leaders who get a kick out of the short-term financial boost they get after a round of layoffs, but I question how helpful layoffs actually are to a company that doesn’t really need to do them. The key word there is need. (Full Disclosure: I have laid off people myself)
I think of modern companies as a portfolio of people, not a portfolio of products, services, or assets. Cutting out part of your people portfolio is similar to selling off assets to add cash reserves. It may make sense in the short term, but selling assets isn’t an intelligent strategy to make money in the long term.
Layoffs aren’t sexy and should be reserved for desperate times. It’s a desperate measure.
- Layoffs make everyone uncomfortable and cause the remaining people to start looking around
- Talented people like to work for a growing company, not a shrinking one
- Layoffs change a good company culture and breed lingering distrust
- Layoffs highlight poor decisions by top leadership (over hiring or poor vision/planning)
- The company permanently loses knowledge about it’s operations, it’s customers and itself
It might feel great to boost the stock price or add more cushion to the bottom line, but it isn’t a strategy to win. Save it for the desperate times.
Successful leaders lead their people forward, not out of the building.
Do you agree?
Have a great night,
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