Most companies have used layoffs to ax underperforming employees, survey finds

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A new law will benefit employees and employers when it comes to pay equity A new law will benefit employees and employers when it comes to pay equity 01:49 The use of layoffs as a tool for cutting costs is common among companies both large and small. But a new survey suggests that some employers have masked the true reason for why layoffs at their company took place. The survey from Resume Builder, which polled 600 business leaders involved in layoff decisions at their companies, found that half said 75% or more of dismissals that took place at their company in the past year were not for budgetary reasons. What's more, the survey found that 8 out of 10 respondents said their company has opted to layoff an employee they wanted to fire. Top reasons cited by business leaders for choosing to camouflage performance-based dismissals as budgetary layoffs are maintaining company morale (62%), avoiding wrongful termination claims (59%), avoiding having to pay severance (54%), and avoiding hurting an employee's feelings (38%). The layoff disguise is just one of a few tactics companies are increasingly using to rid themselves of unwanted employees, Resume Builder said. "A disturbing trend is emerging where organizations reduce their workforce under false pretenses," said Stacie Haller, Resume Builder's chief career adviser, in the report. "Many companies implement strict return-to-office (RTO) policies to indirectly encourage employees to leave voluntarily, thus avoiding the need for layoffs or terminations." Although about a third of participants said that performance always plays a factor in layoff decisions, Hall says the lack of transparency and obfuscation of true motives demonstrated by such tactics harmful. "Such practices contribute to the growing erosion of trust between employers and employees," she said. Another tactic used by a growing number of large companies to avoid having to address performance issues directly is so-called "quiet cutting," which is when managers reassign workers to roles with titles that are less prestigious, come with lower pay and are more demanding — prompting those employees to seek employment elsewhere. Adidas, Adobe, IBM and Salesforce have all used this technique in recent years. Some of the nation's largest employers, including Ben & Jerry's, Carvana and Peloton, have announced major layoffs in recent years. Despite today's job market being relatively sturdy, 2024 has seen its fair share of layoffs. All told, about 60% of U.S. companies have laid off employees in the past year, the Resume Builder survey said. Earlier this month, Yankee Candle laid off 100 employees in Massachusetts and electric-vehicle maker, Tesla, announced in April it would lay off 2,700 workers at its plant in Texas. Google, Microsoft, PayPal and Salesforce have been among the biggest tech companies to slash thousands of jobs this year.