Layoff seems like an impending threat hanging like a guillotine often making the employees working in any industry question “Whose head is it gonna be next?”. It is no surprise that in today’s globalized environment, and dynamic economy, it often seems like organizations are dealing with the devil aka recession on a daily basis. However is it really the reality or if that is so, is laying off the only option?
With this thought in mind, we interviewed Lily Zheng, who is a DEI (Diversity, Equity, and Inclusion) consultant. Aside from this, they are an active advocate, keynote speaker, and panelist for LGBTQ+ community. Lily has completed their master’s and bachelor's at Stanford University and is the author of several great books that deal with DEI issues.
Recently, Lily stirred the conversation around layoffs in one of their Linkedin posts. The post included statistics about last year and 2023 layoffs. Last year, a staggering amount of 1044 companies dismissed approximately 1 Lakh 59,846 employees. Also in just two months of 2023, around 340 companies let go of around 1 lakh 1807 employees. These figures made us inquisitive about Lily’s perspective on the matter, and therefore we decided to invite Lily to have a one-on-one conversation with us.
So, here it is…
My journey as a consultant and practitioner started as someone with many marginalized identities. Coming out as a queer person and a trans person was a formative experience for me. It really started me on my own personal path wanting to create a world where all people could survive and thrive. However, as a practitioner that step in my journey wasn't all that was needed.
I think about what I went through as an organizer and an activist starting from college. My experiences were interesting. I participated in quite a few movements in direct action and many protests and rallies. In fact, many times we would go through an enormous amount of effort and not see the outcomes materialized in terms of Greater Equity policy change, organizational change, and so on.
I stumbled over the question, “What am I missing?”, “what don't I know about how to create change” These questions took me to get my Master's in sociology. It took me into the diversity equity and inclusion industry. I became Someone who organizational leaders and Executives can reach to make actual real change to actually implement the policies, processes, culture, etc. that they needed to achieve diversity equity, and inclusion.
I think it's really a tragedy. We need to keep in mind that when layoffs happen, it's not just a matter of ex-company cut Y number of workers. People aren't numbers. Each person laid off, especially during mass layoffs is a story of an avoidable tragedy.
The impact that especially mass layoffs have on people cannot be understated. There are some really sobering data that explains mass layoffs increase the death rate by like 15 to 20%. I believe it essentially lowers the life expectancy of someone who's laid off by almost two years. Suicide risk increases by up to three times, depression risk doubles, and substance abuse risk increases by four times.
Layoffs in general without even getting into why they happen have an enormous impact on people. I say this both as someone familiar with the research and with loved ones who have personally been laid off. I'm sure many people listening to this have experienced it as well. Layoffs hurt, they really really hurt!
Almost all layoffs have a disparate impact on women people of color, disabled folks, LGBTQ+ folks, and so on and so forth. This is for a range of reasons. The primary one is that layoffs usually rely on heuristics. A set of informal rules that determine who's laid off most often.
Companies aren't just throwing a dart at their workforce and randomly laying people off. Usually, there's some method to it. One of the most common heuristics is what's called last in first out. The most recent hires are the ones that are laid off but there's something interesting that's also been happening.
Recently in diversity equity and inclusion, which is that since 2020 companies have been hiring women, people of color, disabled folks, LGTBQ+ folks, and so on in much greater numbers than before. So when you look at last in first out as a heuristic that's actually one of the most efficient ways to dramatically undo the last three years of progress.
Specifically, work back the clock for these marginalized groups and in general it's not just last in first out. Most heuristics that companies use essentially go by the logic of we're going to cut what's least important and so that might be the most junior employees, the least tenured employees, contractors specific roles like DEI roles, learning and development roles, people Ops, and HR roles and so on.
They're not thinking about the needs of their Workforce and frankly, the needs of their business going down the line they're just looking to quickly cut costs.
Yeah, it's a great question. The first thing I will say is that if you personally have been affected by a layoff or if a loved one has been affected by a layoff know that you are not alone. This experience is bewildering it's intensely frustrating and stressful. These are common emotions so please be kind to yourself. Please check in with your community. Get the support you need and know that this is not your fault.
The advice that I'll give especially if you're looking to find new positions is that your network is your strength. Your best friends are actually likely to be sources of new job opportunities for you. They're likely to know new opportunities for you to apply. Research shows that it's the friends, the connections that tend to know the opportunities, that tend to be folks who can help you get jobs.
So reach out not just to your immediate circle but to your friends, friends. Ask your friends. Do you know anyone else who might know opportunities in my field, who might know someone that I should talk to be proactive? Reach out and also you know be kind to yourself too. Don't go looking for jobs the second day you were laid off. Take some time to take the shock. Consider the direction that you want to go in and try to make the best of a rough situation.
Absolutely, this is a bit of a pet peeve question for me. I've been taking questions in particular about the ongoing recession or the upcoming recession since late 2021. I believe despite nearly every indicator in the last several years pointing to the fact that a recession isn't here yet. Also despite, the well-known inability of economists to predict recessions that they're not particularly good at, it’s not hard to look back when a recession's already here.
There's a recession now. I think when we say things like,” What's the ongoing recession?” or “What is this recession going to do?”. We are enabling the sort of logic that leaders use to make layoffs We like to make the same assumptions. We assume that business leaders must be shrewd, hyper-logical, and great decision-makers.
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We also tend to believe that layoffs are great business decisions to cut costs and preparation for recession and all that. We tell ourselves that if a layoff happens then going backward it must have been collateral. You know cost-cutting decisions are made in preparation for recession and it must have been necessary. However, here's the thing, I'm a strong subscriber to the theory that leaders are human leaders are people. Right, they're not these robotic mathematical logic machines that just make the best decisions for their organizations at all times. We know leaders are flawed and most of the leaders that I've talked to are human. They want quick clear solutions.
They rely specifically on their industry peers for guidance and for perspective on the world. They don't want to be caught by surprise and so there are a few factors that predict why they will make layoffs.
One research shows that having a peer at another company in your industry close to you make layoffs is an enormous factor that will predict whether you make layoffs. Having peers that don't make layoffs means that you will likely not want to do it either. We think that if a company participated in a layoff, it must be because they've seen something that we've missed. Therefore, we should probably do the same thing as well.
Another big factor is that especially in corporate America and increasingly around the world, I remember reading some research showing that layoffs are you know America's biggest exports. As American companies sort of globalize, we actually see an increasing prevalence of layoffs in the countries that they expand to essentially the layoff itself is an oddly familiar and readily available tool for leaders today.
It's convenient, right? They're familiar, they're comfortable and so essentially the logic that many corporate leaders follow is in good times you hire as many people as you can. However in bad times or even if you know the slightest bit nervous about bad times, lay people off right. So, this combination of companies doing it and then layoffs being seen as an easy go-to solution.
Whenever we're stressed or anxious about the economy, we do the latest round of layoffs. The thing that really frustrates me is that all this is happening in spite of a growing body of research showing that layoffs don't actually cut costs over the long term or the short term. It is because of severance pay the cost of rehiring and retraining a Workforce. They also have enormous hidden costs in terms of the drop in morale, the drop in retention, the drop in engagement, the drop in performance, and the drop in trust among Survivors wow
To my knowledge, small businesses in many sectors are actually pretty desperate for workers. Right now, they're looking to hire which is challenging especially given you know higher standards being demanded by workers.
Higher standards in terms of both pay and also you know remote work opportunities, increased flexibility, increased benefits for small businesses, and mid-sized businesses. They're not fighting the recession, they're fighting the fear of it right. For instance lots of small businesses especially those that are B2B or that you know cater to larger corporate clients, their experience is that these corporate clients are now suddenly closing their coffers and are suddenly much more stringent and stingy with how they spend their money.
It’s a big challenge right, not the recession itself. I don't think, we're in a recession quite yet but again this sort of cascading domino effect of the fear of a recession. With that being said you know, we've been talking quite a bit in this conversation about the case against layoffs. I also want to say that everything I've said so far is for you know large to medium large corporations companies that are in a very different situation than small to mid-sized businesses.
When huge companies make layoffs, it's not because they're going to cease to exist. If they don't lay people off, it's almost always because they're expecting lower profits like not even losses like lower profits. One of the reasons, why I'm so hard on them is because they have so many tools at their disposal. They have salary cuts, they can cut perks, they can cut bonuses, and they can accept lower profits. Although, I'm sure their board won't be happy with that. So, they simply choose not to use them and use layoffs instead the nuclear option. Therefore, small to medium-sized businesses, don't have all the same tools so when they make layoffs it's often for the sake of their survival.
A small business owner with three employees has to lay one or two employees off. One employee is off and is upset that they have to do that in a dramatically different situation. It is not even a comparable situation to a multi-national global company with hundreds of thousands of employees laid off.
You know a tenth of their workforce is dramatically in different situations. I just want to keep that in mind that I think small and mid-sized businesses as I mentioned earlier are struggling because of this broader note of fear and anxiety permeating larger companies.
Right now, if we look past that I think you know there continues to be a war for talent. Small businesses, in particular, are really looking to innovate and trying to find new ways to reach good employees and you know continue meeting these changing expectations of the labor force.
The easiest way to combat demographic disparities due to layoffs is to not make layoffs. To pursue any of the many alternatives, I mentioned. Alternatives such as salary cuts, cutting perks, cutting bonuses, accepting lower profits, retraining your workforce, promoting lateral moves, foregoing some promotions, etc.
There are tons and tons of things companies can do so essentially. They simply need to sit down and do that analysis. Ask yourselves are you at serious risk in the next five years or ten years? Is there some sort of existential threat to your business?, and Model your workforce to anything. Brainstorm, what are all of your options?
Sure, layoffs can be one of your options but what are the other options? What are the pros and cons of each? If I’m laying off employees, the only option available to you which again I'm still pretty skeptical of but that's the case. If you want to minimize disparate impact then the only thing you can really do is to plan ahead and conduct an assessment of who would be impacted by a planned layoff.
Before you do it essentially you ask yourself, this is going to be my layoff heuristic. I'm going to use last in first out. Let's see who this impacts and you do a demographic analysis of who that would be if there are disparities. And well, there are going to be disparities. After that, you ask yourself how would a different heuristic change. Can I use performance reviews? Can I have managers identify employees? It's not a great idea that tends to be pretty biased but essentially ask yourself what can I do to minimize these disparities and then follow through with whatever that data recommends.
Of course, you know that goes without mentioning the damage control that you have to do to make sure a layoff doesn't do. Even more harmful than all the things that we talked about so giving employees in advance notice that they're going to be let go giving them time to wrap up their current projects, to say goodbye, to take work samples with them, to sort of protect their dignity offer generous severance.
Offer you know resources for employees who are going to be laid off to find their next positions. Support the survivors and you know work together to create a new path for all that follows next. However, don't make layoffs right that continues to be my top recommendation.
It's for anyone. Whether you are in the C-suite, whether you're a DEI practitioner, an employee volunteer, or an employee resource group who wants to do the work, who doesn't just want to talk about it or isn't just interested in it intellectually but really wants to do it.
To be frank, it wasn't written as a direct guide to handling layoffs but the principles in the book are essentially what I've been saying over and over in this conversation. Using data-centering outcomes, prioritizing the experiences of marginalized communities, getting to the root cause of problems rather than Band-Aid solutions, and learning from the past.
I've been essentially drawing on all of these principles and I've tried to answer your questions here because I think if we don't do these things, we risk making the same mistakes, as the people before us. We risk you know pursuing solutions that don't work that might even make the problems worse so I believe that the book is useful for many but especially leaders who might be mulling over whether they should make layoffs, please don't make layoffs.
I'll use a metaphor. Laying off employees is like the equivalent of punching a hole in your wall. It's messy, it's painful, it's ugly, and it's hard to fix. You can say that you saw a spider on the wall or that you never liked the color of the wall or that all your friends are punching holes in their wall but at the end of the day you have to reckon with the fact that there were many alternatives. Do anything else, however, you chose to do that to the bottom line.
Layoffs do enormous harm not just to marginalized communities but to organizational Health as a whole. Layoffs don’t work. Again, they are not the nuclear option and especially in 2023. With so much knowledge of alternatives and so many case studies of companies that have pursued other options other than layoffs.
It's a tragedy to see companies persist with the equivalent of the good old-fashioned like shooting yourself in the foot that mass layoffs have become. Therefore, please consider otherwise. Ask yourself if is this going to fix your problems or if you are doing this just because you think it's your only choice. If so please recognize that you have other options. You have other far less painful options that are frankly going to do a better job of solving the root problem. You're concerned about mass layoffs.
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