Business: Layoffs

I am conflicted about this. 

I am skeptical that when push comes to shove, institutional investors will choose to invest in “no-layoff companies” that deliver lower growth and profitability over “layoff companies” with higher growth and profitability.

I don’t like layoffs.  They are a very real and heartbreaking tragedy for the people laid off and their families.  They hurt the communities where the laid off workers live and work.  They undermine employee loyalty, which, in my view, is a grossly under-valued asset. 

Layoffs are a failure of leadership and management when they have not accurately forecasted their need for labor.  With accurate forecasts, they could allow attrition and reduced hiring to “fix” the problem before it becomes a layoff-worthy crisis and/or grow new businesses to absorb excess labor from existing businesses.    

The challenge for leadership and management is to deliver competitively superior growth and profitability while not laying off people.  That’s a hard … but hopefully not impossible … challenge. But only if we prioritize it.

Unfortunately, I expect layoffs will accelerate due to AI.  AI will automate away 20-40% of today’s work, according to credible forecasts. Globalization (chasing cheap labor) and factory automation nuked good paying, “blue collar” jobs.  AI will do the same to “white collar” jobs.  I see very little evidence that society and businesses are prepared or preparing to deal that.

https://www.library.hbs.edu/working-knowledge/profits-vs-people-investors-say-layoffs-cross-moral-line?utm_source=ActiveCampaign&utm_medium=email&utm_content=Are%20layoffs%20immoral%3F%20%7C%20The%20%22Einstein%22%20phenomenon&utm_campaign=WK%20Newsletter%205-21-2025