Transcription
Most people think that layoffs happen because of the company struggling, and oftentimes that's true. But honestly, it's probably the least interesting reason, and it might not even be the most common one. The more uncomfortable truth is that layoffs are a deliberate business strategy planned well in advance, executed with a level of precision that most employees never see coming. And unfortunately, I've been on the inside of some of these processes, and I've watched some of these layoff lists getting built. So, I want to walk you through what exactly happens behind closed doors because understanding the mechanics is the only way to protect yourself from them.
Hey everybody and welcome back to my channel. If you're new here, my name is Brian. I'm the founder of A Life After Layoff, a career strategist, and a corporate recruiter. And after an untimely layoff myself a few years back, I decided to reclaim control of my career. And I made it my mission to demystify how job search and careers work for major corporations. So, if you're trying to navigate this crazy world of work or your next job search, make sure you follow along.
Now, before we talk about how the list gets built, let's talk about why the list gets built. Because the reasons matter more than most people realize. And actually, I covered this in a recent video about why companies post jobs while they're laying people off at the exact same time. I'll leave a link at the end of this video so you can check it out. But essentially, the biggest reason is cost. Yes, that's probably the most obvious one because payroll is one of the biggest line items on most companies budgets, salaries, benefits, the cost of doing business usually starts with people. So when shareholders and the board of directors start to get a little antsy and senior leadership is starting to feel squeezed, headcount is usually the fastest reaction because they can impact the bottom line almost immediately.
Then we have business streamlining where the company is pivoting to something new, a new direction, new priorities, a new product focus and the people that they hired for the old version of the company don't always fit the new one. So this isn't necessarily about performance. Sometimes it's just about a fit to a strategy that shifted after you were hired.
And then we have new leadership teams and in particular senior leadership. And this is kind of related to the last one, but this is a warning sign. When a new CEO, a new division head, or a new senior leader comes in, they almost always want to build their own team with their own strategy. So, they want people who are loyal to them and fit their vision for the mission, not the person that they just replaced. So, if your company brings in new senior leadership above you, and I'm usually talking two and three layers up, this is a genuine red flag that's worth paying attention to because usually layoffs follow soon thereafter.
And then there's shareholder perception. And this is one that we spoke about on that video that I referenced. This one is particularly cold, but unfortunately it's a real thing. Sometimes companies lay people off, not because they have to, but because it signals to investors that management is being disciplined, being decisive, and actively cutting costs. And I challenge you, the next time there's a major layoff announced, check the stock price because the stock price almost always bumps up because the earnings calls start to sound better. But unfortunately, real people have to lose their jobs so that the number goes up for the quarter. And that's really a messed up one.
And then we have one that's becoming more and more popular these days, which is the funding of new initiatives. And this is really relevant right now because we're seeing a lot of companies announcing major headcount reductions specifically to fund AI investments. So they're replacing human capacity with technology and then using the savings to pay for more of it.
So, let's talk about how the layoff list actually gets built. Because most people imagine layoff decisions as a dramatic boardroom moment where executives debate individual names. It's actually not how it works. Not even close. The edict comes from senior leadership and then there's a data pool. So, it starts with a spreadsheet and a very detailed one at that. So, HR will run a report on every person in every affected area. name, title, department, salary, tenure, bonus structure, benefits, cost, performance rating, history, a list of current projects that they may be assigned to. Everything that can be quantified gets quantified in a master spreadsheet. And then this document is what drives what happens next. So, here's what's unsettling about it. At this stage, nobody is thinking about you specifically as a person. They're looking at a row on a spreadsheet and your entire professional history is reduced to a couple of lines of data.
Then those targets get firmed up and it's usually a percentage of the total workforce. Sometimes it might be a dollar amount. We need to cut 15% of our headcount or we need to remove $4 million worth of salary and benefits cost from this division. So the math is essentially what is driving the decision before any names get circled.
And next is the assessment phase. And this is the one that you need to listen to really carefully because sometimes companies will bring in outside consultants or HR representatives or some unrelated senior leader who will then assess the scope of work across all teams. They may ask you to document what you do or set up individual meetings to have essentially an interview where you're telling them what projects you're working on, what skills you have, what your background is. They may even ask you to submit your resume and frame it as a career development conversation. But rest assured, it's not a career development conversation that's going to benefit you. When somebody from HR or an outside consultant starts asking you to explain your role, document your responsibilities, or share your resume internally, that is a very clear signal that they're sending. They're assessing whether your work is essential or whether it can be redistributed and ultimately whether you're a candidate who is potentially going to end up on a list. Now, I'm not saying be paranoid. I'm just saying be aware. Don't volunteer information that makes your role sound smaller than it really is. Don't downplay your workload and don't mistake professional curiosity for a genuine investment in your future at that company.
Next step is the performance and potential review. Your manager or your manager's manager is likely to be asked to assess their teams. So, they're going to be pulling performance appraisals. They're going to flag anybody who's been on a performance improvement plan or anybody that has any documented issues. They'll then rank your department for performance and potential. So, they'll do something that's often called a nine-box assessment. And if you haven't heard of this, basically what it is is a grid of plots where employees are on two axes. Performance on one side, potential on the other. And it puts every person in the department into one of nine categories ranging from high performer with high potential all the way down to low performer with low potential. Where you land on that grid has a direct impact on where your name gets circled. And as a leader of people I have certainly been asked to do these myself for my team. Now obviously the people who are most protected are the ones who are on the upper right corner, the high performance and high potential folks. But the people who are at most risk are going to be, you guessed it, people on the bottom left. But here's the nuance. You don't have to be a bad performer to end up on this list. And in fact, most of the layoffs that have been happening over the last few years have absolutely nothing to do with your individual performance. Sometimes it's about potential. Sometimes it's about perceived replaceability. Sometimes it's about need. And sometimes your manager just didn't advocate for you when it actually mattered.
And then the next step is that the targets get set and the names start to get circled. So then senior leadership and HR sit down together. They have this spreadsheet. They have the nine-box results. They have all the performance appraisal data. They have cost targets and they start working together to make the math make sense. So this is the meeting that most employees don't know even exists. And oftentimes your direct boss has no clue it's happening either. And by the time this happens, the outcome is already largely determined by the data that's fed into it. And if there is a chance for you to review any of the metrics or things that are being reported, you have to make sure that they're checked for accuracy because I've seen people not be particular about this and have bad data go to decision makers who know nothing about you personally.
And then the names get added to the preliminary list. And I want you to understand how clinical this process is. In most cases, the people who are making these decisions have never met you. They're looking at your row on a spreadsheet and making a call based on your salary, your rating, your tenure, and what your manager said about you in the calibration session. It's cold, it's calculated, and it's almost entirely devoid of emotion.
Then we have the risk assessment. And before the list gets finalized, HR runs a legal review. They'll meet with their attorneys and go through any potential exposure that they have. They're looking for any protected classes, age discrimination being one of them. And if a disproportionate number of people are on the list that are over the age of 40 or some other protected class, that potentially creates a legal liability. So sometimes names will come off of that list and then other names will go on to replace them specifically to balance out the demographics and reduce exposure. And the company's legal team gets involved at this stage precisely because they know what they're doing creates a lot of risk. That's why they have you sign the severance packages saying that you're not going to have any claim against the company.
And the manager could be the last to know or they could be on the list themselves. And here's something that surprises people every time I say it. Your direct manager is often not informed until very close to the end of the process and sometimes not at all until the day it happens. The decisions get made above them. The names get selected without their input. And sometimes the manager finds out that they're also on the list at the exact same time their team does. And I know this because it happened to me. My entire department was eliminated. Every single one of my direct reports, I had no idea it was coming because I found out the same way they did. That's how compartmentalized these processes are. Don't assume your manager is protecting you. They may not have the information or the authority to do anything even if they wanted to.
And then there's the meeting or the email. Logistics get scheduled, calendars get blocked, suddenly you've got some random invite to attend a meeting with human resources and your senior leader. Or in more recent cases, as we've all seen, an email just shows up one day and catches you completely off guard. But either way, by the time you're in that room or reading that message, the decision has been made for weeks, possibly even months. And everything that's happened before that moment was the process. And that moment is just the notification.
But how do we make sure that we're not ending up on this list? And I think that this is the part people actually need because understanding how the process works is only useful if it changes what you do before it happens. Ultimately, visibility is protection. The people who are hardest to put on this list are the ones whose absence would be immediately and obviously felt. So if your work is visible, documented, tied to outcomes that the business actually cares about, removing you actually creates a pretty big problem. But if your work is invisible, removing you doesn't mean that much to them. It feels pretty easy. So make sure that your contributions are visible to the people above your direct manager. And I'm not saying in a political way. I'm just saying in a results way. Figure out a way to get those results in front of them and know that you drove it because the person doing the calibration session about you should have heard your name before they walked into that meeting so that they can actually advocate for you. Listen, relationships above your level matter more than you think. And I know I said this earlier, but sometimes the manager is the last person to know. What that means is that your manager's ability to protect you is really limited if they're not in that room. But if somebody above them knows your value and your name, then those conversations behind closed doors change considerably. Now, this isn't about being a politician because I know people are going to react that way. It's about making sure that the people making these decisions about you have actual data points about you and not just a row on a spreadsheet. So, if that senior leader two and maybe even three layers up has no clue who you are, you're in considerable risk.
You know those annual performance appraisals that you do every year, those are not just HR paperwork to keep them busy. Those annual reviews feed directly into the calibration process. So if you've been coasting on meets expectations, you're more vulnerable than somebody with a documented track record of exceeding them. It's not because the company values you any less as a person, but it's just another data point that says that you're more replaceable.
And while this one may not be easy to figure out and be perfectly clear because your manager is probably not going to disclose this, but do your best to try to understand where you sit on the nine-box. You may not have access to your actual rating, but you can make an educated guess based on how your manager talks about you to you with you, whether you're given stretch assignments, whether you're included in high visibility projects, whether they've taken you under their wing. And if you're not getting these signals from your boss, you need to start asking the question directly, what would it take for me to be considered a high potential in this organization. That answer is going to tell you a lot about where you stand.
And then you want to document everything and keep records of your accomplishments. And more importantly, make sure that the records that they have, those KPIs, those reports that you're sending in, the reports that are generated by somebody else in your department about you and your measurements, you have to make sure that they're accurate and up-to-date. Now, these aren't just for your resume, although they do come in handy there, but they're for the moment when somebody in the calibration session needs to argue for keeping you. So, give your manager all the ammunition that they need to advocate on your behalf because they can't really fight for you if they've got nothing in their hands to fight for you with. In fact, this is one of the things that we're addressing with our software, SOAR. We're building a system that helps you track all of your accomplishments, all of your metrics so that you can pull it at moments notice for times when you actually have to justify your experience and your existence at that company. And if you'd like to learn more about SOAR, I'll leave a pinned comment below that you can check out. Keep in mind that as I record this, we are just about to launch, so we have a waiting list that you can sign up for for early access.
And finally, the most important thing that I can tell you is if you sense that something is coming, don't quit your job. And I said this in the quiet firing video and I'm going to say it again here. The only difference between you getting laid off and quitting is one comes with a severance package and the other one comes with nothing. You're still unemployed either way. If you quit your job, you're not even going to be able to collect unemployment. And you still have to explain that in interviews either way. But if the signs are there, get your resume updated. Don't wait for the other shoe to drop. And if you need help, again, check out SOAR. But you also want to start getting your networks warmed up and start exploring your options very quietly, subtly. But it's worth starting to put some feelers out there. Maybe apply to a few jobs. But again, let them make the first move. Make them put you on the list because if they do, you at least leave with something. And if they don't, you've kept your job.
So the moral of the story is is that layoffs aren't random. They're not always fair, but they are a process. And processes have at least some logic to them. And the more you understand how the list gets built, the better positioned you are to make sure your name isn't on it. And if it is, to know that you did everything you could to protect yourself.
Now, if you found this video to be useful, make sure you check out my previous video on quiet firing. I just posted it a couple days ago, and I'll leave a link in the video description below because these two things often happen together, and understanding both of them gives you a full picture on how companies manage people out before the layoff even gets announced. Anyway, hopefully you found this video to be helpful. Hopefully you're not on any layoff list. I appreciate you watching.