Companies Shedding Workers, but Avoiding ‘Layoffs’
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Here's your money briefing for Wednesday, March 1st. I'm J.R. Whelan for The Wall Street Journal. When is a layoff not a layoff? Companies, most notably those in the tech sector, have been making staff reductions recently as a way to rein in costs. But when they make announcements regarding staff changes, many companies choose their words carefully to avoid the L word.
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.
So what tactics are companies employing to shed workers without the workers feeling, well, wronged? Chip Cutter covers workplace and management issues for the WSJ. He'll join us after the break.
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When does a company avoid calling staff cuts 'layoffs'?
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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 staffers 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, performance 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.
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