Why do companies typically choose to implement layoffs affecting numerous employees rather than considering salary reductions for top executives like the CEO?
In: Economics
There is a bit of a misconception about recent layoffs. The layoffs you’ve seen in the news aren’t the same as layoffs in the past.
About three years ago, there was a massive shift in where people work. Tons of people retired early, and tons more changed careers.
Two years ago, entirely new departments and businesses were created around the shift in the economy. There was mass hirings to fill all those new roles. It was hard to find qualified workers, so companies were willing to over hire.
Last year, executives saw that many of those new hires and new departments weren’t really needed. And some of the new hires weren’t very good.
So now, some companies announce “layoffs”. They’re really not that big, only like 5% of the workforce. In terms of a large company that could just be normal attrition and cutting low performers.
So now layoffs are in the news. And that gives permission to other companies to do layoffs and blame it on the same thing. Even though the company was actually too large in the first place.
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