Every Layoff is a Failure of Leadership

every layoff is a leadership failure

Every Layoff is a Failure of Leadership

If you’re a business leader who’s ever laid anyone off, I’m sorry to break the news to you, but you failed. If you desire to be a better leader, I recommend you accept this failure and resolve to never have to lay anyone off again, because every layoff is a failure of leadership.

Not some layoffs. Not most layoffs. Every layoff is a failure of leadership. Every single one.

This is not a complete list, of course, but failed leadership caused each of these companies to announce layoffs in January 2024: LA Times; Lowes; eBay; Cruise; Business Insider; Paramount; Condé Nast; Discord; Ford; Citigroup; Amazon; Audible; Google; Duolingo; Wayfair; Unity; Blackrock; Pixar; Disney; Levi’s; REI; Xerox; Salesforce; Newell; NBC News; Universal Music Group; Microsoft; and Rent the Runway.

And these are just the companies you’re likely familiar with, and just the ones who announced layoffs this month. (The layoff announcements between Thanksgiving and New Years were also plentiful, though those had the added cruelty of making people jobless during the holidays.)

You might be asking why layoffs are always the result of failed leadership. Aren’t there other factors – many external – at play? Yep, though great leaders who genuinely care about their employees recognize these factors early and adjust their respective businesses to avoid resorting to laying off anyone.

Whether a leader over-hired; couldn’t properly forecast demand; was ignorant of their strengths, weaknesses, opportunities, and threats; and/or simply couldn’t profitably run their business, the resulting layoffs are a clear indication of the leadership’s failure.

Okay, but what about layoffs after an acquisition?

Good question. Newly acquired companies often experience layoffs once the acquisition is complete. Some people may argue this is necessary, and I would agree in most cases. However, this is still a sign of poor leadership at either the old company or the new company, or both.

The CEO Really Doesn’t Care About You

A word of caution: there are plenty of CEOs so caught up in internal virtue signaling (my term for CEOs who continually preach about how “we’re all a family,” etc.), only to act indifferently when it comes to corporate downsizing. Your employer is not your family and the CEO (if your company has ever experienced a layoff) doesn’t really care about you.

If the CEO really cared about the employees, the layoff could’ve been avoided.

Avoiding Layoffs is Easy

What is especially troubling are the layoffs of fewer than 3-5% of the workforce at some companies. These leaders are especially uncaring, as it’s almost certain they would lose 3-5% of their workforce through attrition over the next year anyway.

Great leaders would lay off no one in these instances. Instead, they would transfer, promote, demote, and/or retrain the affected employees. By avoiding a layoff, great leaders know they’ll build more loyalty with their workforce, reduce job stress, increase employee satisfaction, and increase productivity.

Layoffs are About Bad Leadership… and Sometimes Cruelty

A friend sent me a text the week after Thanksgiving that he and others at his very large company had just been laid off. The company was downsizing; and despite his impeccable work history and his stellar leadership skills, his position was one of the those eliminated.

I offered my sincere condolences and any help I could give. Moreover, I actively shared his information with my network. The good news is he landed somewhere quickly – his value was recognized by hiring managers who took the time to interview him.

End of Story, Right?

A week after he informed me about the layoffs, I noticed a job posting from the same very large company. I followed the listing to their website and found they had roughly the same number of current open positions as they had layoffs the prior week.

This tells me two things about this very large company: They have shitty leadership, and their leaders are shitty.

Rather than do just a little work and find jobs for their loyal employees somewhere else in their company, they chose instead to hand out layoff notices the week after Thanksgiving. That’s lazy. That’s poor leadership. That’s just plain cruel.

The reason this is lazy and cruel is clear: If anyone in the chain of decision makers who approved these layoffs cared one iota about their employees, they would’ve insisted that the same HR managers recruiting for the open positions look for possible fits among those on the layoff list – BEFORE the layoff notices were handed out.

Failure to do so is lazy… and cruel. If I worked for a company that did this to others, I’d begin looking for a new job immediately. Why in the world would I want to work for such an uncaring management team? Who knows, perhaps I might be the next to go with no warning.

Okay, But Why are Layoffs a Sign of Bad Leadership?

Doesn’t the market and not the management dictate the need for most layoffs?

Not even close. Although the market is most often blamed as the catalyst for layoffs, this is usually just an excuse used by managers with poor leadership skills. To be clear: except when faced with extraordinary and unforeseeable circumstances (like the 2007 recession), great leaders never have to lay employees off.

There is nothing extraordinary or unforeseeable about the current market this very large company operates in. In fact, their market is quite stable… one might even say it’s at its peak and has been for a few years.

Great Leadership & Layoffs

Great leaders forecast and adjust to ensure growth in all except extraordinary or unforeseeable circumstances. Doing so guarantees they rarely over-hire and never have to endure layoffs.

Great leadership cares about their employees. This means they find ways to keep good people rather than making arbitrary cuts to appease other stakeholders.

Great leadership looks for creative solutions. When faced with the need to cut labor expenses, great leaders will instead institute a hiring freeze while they look for career fits among their current teams.

But isn’t using layoffs a good way to get rid of underperforming employees?

Only bad leaders do this. If you were a good leader, you wouldn’t need to hide behind a layoff to get rid of underperformers. Instead, you’d be driving better performance from all team members, and you’d be documenting the underperformance and disciplining your underperformers.

As a leader, it’s important to recognize layoffs are a sign of leadership failure, and avoiding layoffs while keeping the lights on is something great leaders do every day. Simply put: Lay people off and you’re a bad leader. Lay people off during the holidays and you’re just plain evil.

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