'Thinning out’ management often makes sense, says expert, providing takeaways for HR
Amazon shocked the business world last week by announcing it would be cutting roughly 14,000 corporate jobs worldwide.
According to some experts, Amazon’s move, and those by other corporate giants such as Target, UPS and Walmart, who have all announced corporate thinning as a strategy for growth, is a signal of serious shifts in how organizations are structured.
In a message to employees last week, Beth Galetti, Amazon’s senior vice president of people experience and technology, said the layoffs are part of ongoing efforts to “get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs.”
Jason Foster, professor of human resources and labour relations at Athabasca University, notes that while large-scale layoffs are nothing new, the decision to focus layoffs on higher-level “white-collar” corporate roles marks a notable departure from past practices.
“It's a significant shift … especially recently, most layoffs have taken place along front-line staff, and lower levels in the organization tend to take the brunt of massive layoffs,” he says.
“Most of their effort is always on figuring out how to thin out the front-level workers, and so the fact that there is some renewed attention to going higher up the ladder and higher up the food chain within organizations, I think, is interesting.”
Laying off senior leadership
Foster says that corporate-level layoffs can involve a loss of institutional knowledge and organizational culture.
“There's no question that senior leadership, it's their job to try and craft vision, craft culture, leadership – in terms of building a culture within an organization, they're not indispensable,” he says.
Successful organizations innovate at all levels of the hierarchy, he says, but layoffs of management and above can mitigate the “creep” of over-staffing at management levels.
“There's some validity to it, because there is always a natural bloat in the middle that happens over time,” Foster says.
“There's a bit of a creep. So, coming in and recognizing that that creep has happened and thinning it back out, I think is partly natural.”
Mapping out the contributions of employees is essential before making layoff decisions, he says – losing individuals who have developed unique processes or relationships can create unexpected gaps, and careful documentation and knowledge transfer processes can help mitigate these risks.
Human impact of corporate layoffs
While the business rationale for layoffs is often clear, Erin DeVito, general manager of North America at Impact International, stresses that the human impact of layoffs should remain a central concern for HR leaders, regardless of who is being affected.
As she explains it, the approach to layoffs at upper levels is no different than when they’re occurring at the front lines.
“A lot of people will work outside of their roles, or they're building capability that benefits the business,” DeVito says, noting that the true value of employees often extends beyond their formal job descriptions, which HR should be aware of.
“They're solving problems that the business doesn't even know are happening, because they're potentially being proactive or using different skills that they're given, human skills, that make the company work outside of what you would classify a role.”
Making staffing decisions: process and pitfalls
Determining which roles are truly indispensable to an organization is a complex process, Foster explains, requiring a deep understanding of the organization’s mission and strategy; therefore, a systemic approach is best, and should be done well before any layoff decisions are made.
“You have to start from the principle of ‘What is our mission as an organization?’” Foster says.
“Then, ‘What positions are essential to making sure that we don't damage that, or that more importantly, that we improve that?’ And actually thinking through ‘Is this a function that is indispensable to our core mission?’ And then make your evaluation from there.”
DeVito highlights the importance of maintaining a baseline of trust and transparency with employees – both those who are being laid off and those remaining, as the loss of any employee group at any level can have far-reaching effects on morale and performance.
She also emphasizes that employee roles cannot be evaluated in isolation – every role potentially being cut should be weighed against the efficiency being lost or gained.
“When they're working the day to day in their role, they're building relationships. They have connections. They're learning different parts of the system that make a company. And those are hard to know, hard to hard to understand the impact of,” DeVito says.
“When you're just looking at subtracting people, you actually have to really pay attention to the system that the people are working in. And when you remove certain people or certain roles, what potentially are you going to be losing out on long term? Because there's also talent pipelines to think about … so it's really understanding and matching the strategy and the goals of the business, and what are you creating the efficiencies for?”
Communication and humanity in layoffs
The way layoffs are communicated can have a lasting impact on organizational culture and trust. Foster is critical of public, impersonal announcements.
“I'm never a fan of these kinds of ‘layoff by press release’. It feels inhumane, it feels cold, and, quite frankly, it feels like it's aimed at shareholders,” Foster says.
“It is a reality of the workplace that sometimes this has to happen. There's multiple ways to go at this. You can do it quietly. You can do it more personally … issuing a press release and bragging about it to the business media feels like that's more aimed at your stockholders.”
DeVito stresses the importance of treating employees with dignity and empathy during layoffs, including at the corporate level.
“How we treat people is noticed, and that is what builds or takes away trust and morale in the company … you really have to be mindful and caring with the talent and the team and the community that you are preserving or keeping.”
