Why do we have layoffs? One counter-intuitive answer is “because retention programs work.” Layoffs happen because the efforts to keep the workforce trimmed didn’t work. Attrition wasn’t high enough. The right people did not leave of their own accord.
Hiring and Keeping the Best People is a standard goal in most organizations. Identifying key talent and promoting them is such a core part of conventional wisdom that we take it for granted. Most leaders aspire to be surrounded by trusted colleagues who are well seasoned and deeply experienced.
When this idea spreads through an organization, it is called “Retention”. In a harsher light, it is the essence of cronyism and featherbedding.
Is it really a sound business practice?
Good, strategic workforce planning is virtually nonexistent. Instead of accurately knowing and describing the specifics of our workforces, we rely on tired generalizations. We want to manage attrition down and become the “employer of choice”. In other words, our HR Departments lead us down the primrose path and make our organizations home to people who retire in place.
It should be no surprise that we have downturns. Preparing for them, hiring wisely and continually pruning the organization is the right way to approach the problem. Too few hands always leads to greater productivity.
Time and again, our organizations act surprised when the downturn . RIFs mean that we “hired too many people”. Said another way, “We didn’t let enough people go when times were good.” Retention and retention programs, therefore, are the primary cause of RIFs.
“Why do we have layoffs?” Because the retention programs work too well. The idea that great people should be retained in their jobs for a long time is the exact opposite of growth and innovation. Retention breeds seniority and bureaucracy. Innovation requires youth and inexperience.