Layoff - Defining Layoff And Its Significance | HRMantra Hrm Software

Layoff - Defining Layoff And Its Significance | HRMantra Hrm Software

7-8 minutes 

Definition of Layoff

Layoff is a situation when an organization or a company dismisses some employees for reasons other than their performance on purpose, either temporarily or permanently. No doubt, beside this, sometimes employers definitely lay off employees to save money during some economic crises or seasonal closures.

Now, the business landscape has lately become uncertain in which employers have no other option than to lay off employees, albeit their favorite ones. The important question here is why they are taking this measure and how does it actually send shivers down their companies.

Here we are going to learn everything from layoff meaning to its consequences, along with some of the recent mass layoffs examples.

Let''s learn:

• Understanding Layoff Definition
• Examples of Mass Layoffs in 2023
• 5 Reasons Why Companies Lay Off Employees
• FAQs

Understanding Layoff Definition

A layoff, also referred to as downsizing, smart sizing, and right sizing, is the immediate solution a company would opt for whenever the need for cost-cutting to survive arises. Layoff is a strategic measure to be adopted by companies in view of the optimization of the processes or urgent problems one can associate with doing a business.

Since the term basically has quite a la mode usage these days, it is on the tip of everybody''s lips, and when an economic downturn sets in, every employer finds it fruitful to jump at it.

Layoffs do not spare a single employee—it is basically an employee who is being affected despite being in the middle of a group of employees. Otherwise stated, it is not every working person who is not facing the hard reality of today.

CIEL HR reports that about 70 startups collectively laid off over 17,000 employees in the first six months of 2023.

Examples of Mass Layoffs in 2023:

Literally, there are many, but here are the top three companies that have headlined their mass layoff in 2023:

• Google: The earlier memo was released this year that Alphabet, the parent organization of Google, was to let go of around 12,000 employees. Moreover, after the shocking announcement that was penned by Sundar Pichai, chief executive of Google, employees in London offices organized a walkout in April.
• Microsoft: It was on January 18, 2023, that the CEO of Microsoft, Satya Nadella, conveyed through a memo to all employees that some major structural changes had taken place and they would have to trim as many as 10,000 jobs by the end of March 2023.
• LinkedIn: Unfortunately, LinkedIn announced a decision to lay off 668 employees from its core engineering, talent, and finance departments on October 16. This was the second wave of layoffs the company made this year; it had earlier pinned it on the slowdown of the revenue growth.

The cutback will affect over 3 percent of the company''s workforce, which numbers 20,000 employees—a massive clip of jobs in the tech industry.

Curious to know the exact reasons for these ongoing mass layoffs? Well, even we are! We will find them in the following section.

5 Reasons Why Companies Lay Off Employees

Here are five more reasons, apart from cost deduction and economic downturn, why employers think of laying off their employees:

• Redundancy in Staff: Workforce needs change in no time. In such a scenario, organizations often find surplus employees in certain roles or departments. This, in turn, results in redundancy. To steer productivity and competitiveness, employers today are making the tough decision to terminate either temporarily or permanently the services of employees whose positions seem redundant.
• Outsourcing Manpower: Outsourcing is considered a smart way to tap into specialized skills at a bare minimum operational cost. Due to this very reason, most of the employers are taking a step ahead to lay off their in-house employees whose duties can easily be outsourced to some external companies or experts at half the price.
• Dependence on Technologies: Technology has proven to be the cornerstone and just there to stay but keeps improving. With every improvement, that means organizations have no choice but to welcome new technology to stay at the top. This will finally create an instance in which workers who have failed to keep up with the technology will not be taken seriously anymore. In this regard, they will be fired in order to make way for a more up-to-date workforce that is digitally able and competent in handling the new digital arena with much comfort.
• Job Position Changes: Every organization, no matter how huge in size, will change whenever its need to adapt to a new order of things in the market which eventually changes the job structure or involves driving in the introduction of a job. Through repositioning their manpower requirement according to the time, employers lay off people that are not relevant to the updated job.
• Seasonality: Certain industries depend upon the varying market conditions mostly based on seasons; a prime example would be the three mainstays industries in the retail sector, agriculture, and tourism. As a remedy to that, such companies thereby practice what is termed seasonal layoffs. That simply means employing some extra workers during peak periods and then terminating them during off-peak seasons.

There you go! Then what is layoff actually?

It is just a strategic step taken by employers to cut costs and sail through difficult times.

Layoffs have become a common option that most organizations consider for saving costs. We believe this should be the last resort because laying off employees might also hold in itself several long-standing consequences for the employees and the organization. Keeping this point in mind, you might want to seek alternatives such as salary deferment, furloughs, or even reduced work hours for employees.

When all else fails, you can consider laying off the least-performing employees. Gain real-time insights and compare employee performance with the highest degree of fairness. Rely on HRMantra today!

Remember, others can easily do it; it requires a real leader to navigate tough situations with empathy toward employees through smart hiring and other solutions.

FAQs

Why are layoffs happening?

Layoffs in India and many other countries are taking place because of various issues such as economic crises, organizational restructuring, or financial problems. Companies are addressing these issues by reducing headcounts.

What is layoff in HRM?

A layoff in HRM is a process of termination for an employee on either a temporary or permanent basis to address an ongoing business issue. The layoff is not similar to resignation or firing and can occur at any time depending on many circumstances.

What is the impact of layoffs on the economy?

Laying off employees will normally affect an economy both directly and indirectly. Directly, it adds to the unemployment rates and reduced consumer spending results in an economic cycle of slump. Indirectly, large-scale layoffs reduce the confidence of consumers. This can not only impact various industries directly but can also create a ripple effect on the economy, thus showing its impact on the business environment, financial markets, and government policies.

Popular Terms