Layoffs eject the assets of an information based economy. Bad communication makes it worse.

March 05, 2023

The assets of many modern companies are more intellectual than physical. They are the Intellectual Property that is locked in the brains of the employees. That IP has legs. Companies may target layoffs at a single group but that often spills over escalating concern and confusion. That unease causes more assets to leave the company.

Communication is key to keeping knowledge/people in place. Silent or stealth layoffs drive the rumor mill and make people wonder about the real drivers for staff reductions.

I've worked in places where everyone in the company took the same pay cut or where executive compensation was slashed in order to save jobs. Those companies seem to be rare. Layoffs remind people that company loyalty is often a one-way street. Companies pay for this with higher turnover, increased costs, and reduced efficiency. There are times when layoffs are necessary. Restructuring and layoffs may be necessary but at the end of the day, layoffs are due to some organizational failure. That failure is rarely a major surprise often years in the making. Cost cutting is the easiest lever to pull when in trouble. Cutting costs well and correctly is significantly harder.