What layoffs and hiring freezes mean for the talent agenda

Featured in today's briefing:

• Belt-tightening and the future of work.
• Evolving child-care approaches amid hybrid work and surging costs.
• Air travel chaos.

Happy Father’s Day and Juneteenth!

The Virus

The latest virus forecast: The US had about 102,000 new cases reported on Friday, flat with the level two weeks earlier. Vaccines for children ages six months to five years will roll out as soon as Tuesday following federal approval.

The business impact: Decades-high inflation appears to be crimping consumer spending, as US retail sales dropped in May. Auto purchases were notably weak.

Focus on Layoffs and the Future of Work Agenda

As layoffs and fears of a recession mount, organizations are wrestling with new questions around whether, how, and when to freeze hiring or make cuts. After fighting the war for talent with improved benefits and resources for employees, do those things need to be stripped away? As budgets get leaner, how should saving jobs be weighted against continuing to invest in people? How can companies navigate layoffs without undoing the progress made toward a more flexible, more humane future of work?

We reached out to Lars Schmidt, founder of the human-resources advisory firm Amplify and author of Redefining HR, to talk about best practices around layoffs and what organizations can do to preserve their agendas around the future of work. Here are excerpts from the conversation, edited for space and clarity:

With all the layoffs that have happened in recent weeks, is there any company that sticks out in your mind as a place that’s really gotten it right?

The case study in how to do a [reduction in force] was Airbnb. At the beginning of the pandemic, obviously their business was devastated, and they had a pretty sizable layoff. But the way they did it was just so thoughtful. [CEO] Brian Chesky sent an email to all employees and took ownership for everything. He said, ‘For those of you that are impacted, understandably you're going to be upset. And this is a very difficult experience to go through. But know that I made the decision.’ They also did little things like allowing all their employees who were impacted to keep their laptops. They basically redeployed their recruiting team into an outplacement agency. They created one of the first layoff lists, which has now become common practice in tech.

When you’re making those decisions, you should announce them with clarity and kindness, and do it quickly. When you leave people in limbo, obviously it’s incredibly stressful for employees—even the ones who stay—there’s a morale hit, there’s survivor’s guilt. And there is a risk. Right now, companies are making adjustments for what appears to be an economic downturn, but how deep and how long, and whether it actually becomes a full-blown recession, we just don't know. If things do start to rebound and they move back in a hiring mode, that is going to be difficult for them.

As companies try to balance preparing for a potential recession against continuing to invest in the things that make them a good place to work, what are some of the considerations in managing those two conflicting ideas? Is there any sort of decision-making framework leaders can use?

I wish there was. Companies adjust that on a case-by-case basis. There's this real whiplash around this moment that we're in, because up until four or five weeks ago, we'd been very much in a boom market for over a year. The market for recruiters had never been hotter. The market for HR leaders had never been hotter. And then it seems like in a period of five, six weeks, it's a complete flip.

If we do go into a recession, it’ll be a mistake for companies to trim back on some of those investments around redesigning the workplace and the workforce and the employee experience. I'm sure there will be some pressure to cut back.

But a wild card here is, after 2020, companies who had historically underinvested in HR were woefully exposed. They weren't able to handle the pandemic, the shift to remote, the different conversations around social justice and diversity, equity, and inclusion. And so a lot of companies that realized that they did not have an HR team equipped to handle these new volatile times invested in those functions. The job market was incredibly hot for HR leaders. There are a lot of people in the head of people roles that are now first-time heads of people. So will they be in a position to assert themselves in these scenarios, where a CFO or somebody is trying to make some cuts into their budget? Will they have the ability to push back against that, to preserve continuity in those budgets and the direction they're heading around the new world of work?

Any advice for those HR leaders who may be wondering or struggling to figure out how to preserve those agendas?

[One] of the biggest success drivers for heads of people these days—and not just new heads of people— is network equity. Your ability to have that phone-a-friend kind of peer network that you can lean on and get advice from. Because a lot of things that you deal with as a head of people or chief people officer are things you can't really talk to anybody in your organization about. You can't talk to your team, you can't talk to your c-suite. It may be about your c-suite. It may be about your board. So it can be a very lonely and isolated job. Without those networks, it's nearly impossible.

Within those networks, are there any proven strategies that might come up as ways to protect these things put in place during the pandemic—flexibility, mental health resources, caregiving resources, etc?

You have to be able to make a business case for the projects that you're recommending the organization invest in. So you can say, ‘Yeah, you can cut this, but if you cut this, here is the downstream impact on employee productivity, or employee morale, or retention. Here's the cost of having to now backfill people, because we're not going to be able to recruit at the same level without these programs. Here's the damage on the morale side for employees who have rallied around these programs.’ Having that data, that's typically the best way for leaders to be able to push back on some of those cuts, and maybe propose alternate cuts.  

Looking at layoffs, for example, it's easy to say, ‘We just need to cut X headcount to save Y dollars.’ Not easy morally or ethically, but financially that's an easy decision. A seasoned people leader may be able to push back on that and say, ‘You know what? That actually is not the answer, because there will be a short-term gain and a long-term hit.’ An answer may be more like, ‘How do we redeploy people on those teams in different areas, or cross train them to do different things so that we can retain them, rather than just automatically cut costs?’

You mentioned survivor’s guilt earlier. Can you say more about what companies can do to maintain or rebuild morale among remaining employees?

Seeing your friends get laid off when you're still there is difficult for a lot of people. Being proactively transparent and clear around the decisions can offset that. Employees want to know, ‘Here's why we made the decisions around who was impacted.’ And that you have an exit plan, whether it's severance or outplacement services. That's an important step, because employees are able to say, ‘Knowing that you're doing all you can to try to help my former colleagues land as well as they can in this difficult time, that makes me feel better about being here.’

Read a full transcript of this conversation here, including more about the value of HR networks, striking the right balance with transparency, and how to approach no-layoff commitments.

What Else You Need to Know

The power balance between workers and employers shows signs of shifting as the risks of a recession grow.

• Employers are growing bolder about office callbacks, according to Boston Properties’ chief executive. In the meantime, the national office occupancy rate hit 44% last week, the highest level since the onset of the pandemic, according to Kastle Systems.
• A shift to bigger, “safer” employers is particularly noticeable in technology amid a meltdown in Big Tech and cryptocurrency stocks. Signs of the times: Citigroup recently announced it is hiring an additional 4,000 tech workers, while Coinbase is in the middle of a hiring freeze.
• Taking a new job can be risky in a downturn, as some businesses use a last-in-first-out approach to downsizing.
• That said, the labor market remains tight for now. Some 22% of recent hires in the last six months were paid a signing bonus, according to a ZipRecruiter survey. And paid sabbaticals were the fastest-growing work perk.
• Stress among workers reached an all-time high in 2021: 58% of Americans are stressed at their job daily, according to a new Gallup report. Working women consistently report higher levels of stress than working men.
• Some 20% of workers are likely to move to a new city in the next year, and the interest in moving rises to 27% for workers under 40.
  

Parents are increasingly abandoning the standard 9-to-5 child-care arrangement due to fluid work schedules and dramatic increases in child-care costs.

• Parents are instead embracing a patchwork of customized arrangements—such as a sitter two days a week and other arrangements for the rest.
• 51% of parents say they’ll spend over 20% of their income on child care this year, according to a Care.com survey, compared with 31% of parents in 2019.
• More nannies are picking up multiple jobs, and more households are employing multiple caregivers.
• While many fathers are now able to be more involved in their children’s lives than ever before, many also don’t feel comfortable taking advantage of their parental benefits. Some 90% of fathers now take some time off after the birth of a child, but 70% take fewer than 10 days.
  

Happy Juneteenth. The newest federal holiday continues to slowly gain traction among employers.

• Some 43.5% of workers have the day off, up 11% from a year ago, according to Randstad USA, though half said they wouldn’t be paid for it and another 9% have to use their paid time off. Most workers have tomorrow off to celebrate today’s holiday.
• Less than a third of white Americans had a “lot” or “some” knowledge about the holiday, Gallup found. Randstad also found a quarter of respondents didn’t know the significance of the day, either.
• The holiday gets its name from the day in 1865 when Union troops arrived in Galveston, Texas, to announce that the Civil War was over and enslaved Black Americans were free. The power of the June 19 announcement was undermined by language that said, among other things, that the just-freed people should “remain quietly at their present homes and work for wages.”
• GM is commemorating Juneteenth as a day of service for its workers. Google is eliminating meetings and hosting a two-hour event spotlighting Black music, history, and storytelling. Lyft employees get a paid day off, and its executives are participating in a roundtable discussion about the day, voting rights, and allyship. Starbucks said scheduled hourly employees at stores, distribution centers, and plants will receive 1.5 times their regular wage on Saturday.

The location of a corporate headquarters is becoming increasingly irrelevant.

• Caterpillar and Boeing recently announced they are moving their global headquarters to other parts of the country and away from manufacturing operations. Caterpillar is moving to an existing office in Irving, Texas, from the Chicago suburb of Deerfield. Boeing is moving its headquarters to Arlington, Va., from Chicago (having moved from Seattle to Chicago in 2001.)
• Such moves used to attract lots of attention because the resulting infusion of thousands of people would generate significant revenue for local communities. But hardly any jobs are being affected here. For Caterpillar, the shift involves about 230 employees; Boeing’s CEO said the move affects almost no jobs at all.
• The diminished importance and scale of corporate headquarters reflects the shift to remote work. It also is the result of decentralized operating models and lean manufacturing approaches.

Surging demand and staffing cuts have left air travel in chaos. After laying off thousands of workers over the course of the pandemic, airlines are struggling to keep up with this summer’s travel boom, with more than 1,000 flights canceled on Friday alone.

• Several major airlines have responded to the personnel crunch by reducing the number of flights they operate each day, compounding the already pent-up demand for flights amid lower Covid cases and the end of the testing requirement for travelers entering the US.
• The price of a domestic flight has increased by 47% since the beginning of the year, in large part due to rising fuel costs. Avelo, a new airline, announced this week that it would be slashing prices in half for some destinations “to help provide some inflation relief.”

Return to workplace speed round:

• Only 49% of workers who’ve been ordered back to the office full-time are showing up five days a week.
• Real-estate billionaire Stephen Ross said companies could see a flood of employees returning to offices if a recession hits, as tighter times could make people worry about keeping their jobs.
• Starbucks CEO Howard Schultz said despite his best efforts, including pleading and offering to do push-ups, employees aren’t returning to the office at the level he wants.
• Testing concern NI will analyze three different office layouts built into one of its Austin buildings. One is focused on heads-down thinking, the priority of the second is focused collaboration, and the third has spaces for larger collaboration and team projects.
• Coffee and sandwich sales at Pret A Manger’s downtown New York City locations fell to their lowest level since January, likely reflecting the reluctance of bankers to head into the office amid a Covid wave and a new mask recommendation.
• Colombia approved a new law that requires companies to bear the operational costs of remote working, including internet and electricity costs for home-based employees.
  

Here are some of the best tips and insights from the past week for managing yourself and your team:

• Think of your workplace as a science lab. It’s a mindset that encourages humility about what you don’t know. What might happen, for example, if your team went cameras-off during meetings, or instituted Slack-free hours for focused working? Constantly testing new hypotheses is a way to ensure that your organization continues to evolve as employee and company needs change.
• Let your stress show through. While most of us have a tendency to try to suppress it, research shows that being open about your anxiety can increase your likeability.
• Use lighting to make your workplace more accommodating for neurodiversity. Having a dedicated area of the office with lower overhead lights can be a relief for employees with sensory sensitivities.
• Use “design fiction” as part of your future planning. Crafting richly detailed scenarios can help teams to grasp hypothetical risks and challenges they might not otherwise anticipate.
• Avoid using “we” when you mean “I.” In job interviews, candidates often default to more team-oriented language to describe individual accomplishments. But being specific about your role in a project or on a team doesn’t signal arrogance—instead, it helps interviewers understand the specific impact you made.

Coda

It’s a lucrative time to be a teenager. As teens hit the labor market amid staffing shortages this summer, some are charging rates as high as $70 per hour for tasks like babysitting or sports coaching.

• A new report from Drexel’s Center for Labor Markets and Policy predicts that around a third of teenagers will hold jobs this summer, the highest percentage in 15 years.
• Over the past year, hourly pay has increased twice as quickly for young people as it has for older workers.
  

Corporate retreats are back—and some employees are miserable. Some companies are marking the return to the office with extravagant multi-day getaways, leaving skeptical workers feeling resentful of the travel burden, the “forced fun,” and the social stress of spending uninterrupted time with colleagues. Poorly executed bonding activities don’t have to involve a night away to be (literally) painful. In Zurich, a group of employees were hospitalized with burns after walking over hot coals as part of a team-building exercise.

The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.