When Layoffs Become a Habit
Microsoft just offered a voluntary exit to about 60,000 of its employees. It's very likely the wrong ones will take it.
This week on Well•Read, Eric Kebschull and Karen Ladany, CAE look at what happens when a company keeps reaching for the same fix, and what it costs down the road.
What We're Reading
On October 26, Microsoft offered a voluntary exit to about 60,000 eligible employees, roughly 27% of its full-time workforce. Those who accept will leave at the end of the year.
It's the third time this year Microsoft has moved to shrink its workforce, after an early retirement offer in the spring and about 4,800 job cuts in July. All of it comes alongside heavy spending on AI, while the company keeps hiring elsewhere.
Our Take
A voluntary exit is a technical fix. It lowers headcount fast, but it can't choose who walks out the door.
Often it's the people with the most options: experienced employees who know how the work actually gets done. That knowledge rarely lives in a manual, and the cost of losing it shows up a year or two later.
Part of what drives this is the pressure to hit the numbers every quarter. When results are judged in 90-day windows, the quick savings always look bigger than the slow costs. As Eric puts it, a culture built around that pressure keeps choosing the same fix, even when the fix isn't working. And for a company racing to stay ahead in AI, slowing down to deal with the people side can feel like a luxury it can't afford.
Eric calls the bigger pattern path dependence. Once cuts become the go-to response, each round makes the next one feel normal. So the question is the one we always come back to: what are we actually trying to solve?
Takeaways
Identify the problem before you pick the fix. Cost, skills and structure each call for a different response, and a reduction answers only one of them. Before you decide, analyze the slow costs of rehiring, retraining and turnover next to the quick savings, and ask yourself honestly whether this is a decision or a habit.
Learn to See the Whole System
If you're the person in the room who sees unintended consequences before anyone else, you're already thinking like a Systems thinker.
Join Eric and me on Tuesday, November 10 for Systems Thinking 101, a live one-hour crash course on how to see what's really driving a problem and what to do about it. Save your seat here.
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