How Companies Are Pushing Out Workers While Avoiding 'Layoffs' | WSJ Your Money Briefing

[Music] here's your money briefing for Wednesday March 1st I'm J.R Whalen for the Wall Street Journal we often hear about layoffs as a way for companies to reduce staff and save money but many companies are finding other ways to thin their ranks and not classify them as layoffs Wall Street Journal workplace and management reporter chip cutter looked into that and he joins me now hey chip thanks very much for being with us always a pleasure thanks for having me so Chip the idea of finding ways to let workers go without actually laying them off that isn't new right it's not companies have long had ways of pushing employees out without firing them they could reorganize teams or require employees to report to a new boss or make them take on a new project all of those changes could prompt staffers to look elsewhere for work okay so what's going on now that's different well right now we're seeing a wave of high profile layoffs particularly among white collar workers but a number of companies are taking other approaches to manage their workforces and so some are adding new restrictions on remote work others are stepping up scrutiny and performance reviews and some companies are requiring staff offers to relocate across the country to keep their jobs if they're going to close certain offices now you mentioned performance reviews how do they play into this well for GE reviews can really determine whether someone wants to stay at a company or not and I think an interesting example here is that the Facebook and Instagram parent meta the company has issued thousands of subpar performance reviews in recent weeks and some people inside the company have told us that they see this as a sign that those workers may want to go elsewhere then and so a tough performance review or putting someone on a performance Improvement plan whatever that might be all of that can be sort of a signal to workers about their value within an organization and I think some employees may say rather than put up with this or after a tough review I'm just going to go elsewhere and look for another job so what rights do employees have in a situation like that well employees don't have a lot of Rights in most American workplaces this is at will employment and a company is free to change the terms or review workers however they would like what power workers have is to look for jobs elsewhere this is still a tough labor market it's a 3.4 percent unemployment rate it's still very tight historically so workers could look for jobs elsewhere of course some don't want to do that and I think the kind of layoffs that we've seen in a number of high profile companies have spooked some employees we've heard from a number of employers that attrition is down for example because people just may not feel like this is the time to look for other work so there is a shift in the balance of power that's happening across the corporate sphere now how much does this have to do with the sharp hiring increases that we saw during the pandemic well companies really ramped up hiring in the pandemic we saw a number of companies say repeatedly they just couldn't find enough people they were desperate to get new people in the door so many companies now feel reluctant to admit that they hired too quickly in the pandemic or incorrectly forecast growth and so some of them are now looking to correct and that could be behind some of these moves that some have said are sort of thinly disguised layoffs one Economist told me it's very much a layoff without calling in the layoff yeah so is there a stigma associated with layoffs why would companies try to avoid that term when it comes to Staffing changes well a layoff can hurt a company's reputation it could jar employees it could hurt a company's culture there are many reasons why a company wouldn't want to go to that drastic step of a big Workforce reduction and so I think some of these other tactics though can be a way to thin out the workforce without going to the step of a layoff and one former HR person told me that not singling people out in the layoff can also prevent a company from being sued if people you know would be unhappy in a layoff but if they sort of choose to go on their own they may not sort of feel the desire to really sort of holding the company accountable that could all just sort of change the factors here oh so the workers feel less wronged that's right employees may feel less wronged if they sort of willingly choose to go somewhere else versus being subject to a layoff that forces them out the door you know during the pandemic we talked a lot about how the balance of power had shifted from managers to workers what does that balance look like now the balance is changing once again particularly at White Collar companies CEOs and other Executives do feel like the labor market is shifting a bit and that they're able to impose some of their own preferences on the workforce so we see that in some of the return to office announcements for example companies like Disney and Amazon have recently put out edicts saying that workers will be required in the office a certain number of days a week and so these are all signs that companies now feel a little more emboldened to push for changes that they may have wanted earlier in the pandemic but felt they couldn't do because they were so nervous about losing people if bosses feel like the labor market is softening a bit now they may not just be as concerned that any of these moves might cause people to quit so where have these staff reductions been happening it seems like the reductions that get the most attention are the ones happening in the tech sector most of the reductions have come from the tech sector we've seen just so many tech companies which expanded so much in the pandemic start to sort of pull back a little bit slow hiring and have these layoffs but we are seeing layoffs trickle into other parts of the economy too we've seen manufacturing companies we've seen big consumer names retailers and others announced layoffs so it's not just limited to Tech at this point but Tech certainly has gotten the most attention all right that's Wall Street Journal reporter chip cutter chip thank you very much for being with us you're welcome thanks for having me and that's your money briefing I'm J.R Whalen for the Wall Street Journal [Music] thank you

Channel: WSJ News

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Keywords: layoffs, tech layoffs, tech sector layoffs, performance reviews, employment, company pushing you out, companies pushing out workers, resignation, resign, tech sector, stigma behind layoffs, strategic layoffs, staffing, staff reductions, pandemic hiring, employee rights, employment law, employment rights, employee rights act, amazon layoffs, meta layoffs, google layoffs, twitter layoffs, workplace, workplace culture, forced relocation, shedding workers, your money briefing, mkts

Id: 0utUU6chpss

Length: 6min 7sec (367 seconds)

Published: Wed Mar 01 2023