Why Many Companies Get Layoffs Wrong

From Microsoft to Google to Meta, many of the world's biggest tech companies have been announcing layoffs recently. Their explanation is usually that they overhired and need to cut costs. But Harvard Business School professor Sandra Sucher, who has been studying layoffs for years, says companies often underestimate the downsides. Layoffs don’t just come with bad publicity, she explains. They also lead to loss of institutional knowledge, weakened engagement, higher turnover, and lower innovation as remaining employees fear risk-taking. And she says it can take years for companies to catch up. Sucher is a coauthor of the HBR article "What Companies Still Get Wrong About Layoffs."

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HBR IdeaCast
Episode 896

Why Many Companies Get Layoffs Wrong

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February 07, 2023

From Microsoft to Google to Meta, many of the world’s biggest tech companies have been announcing layoffs recently. Their explanation is usually that they overhired and need to cut costs. But Harvard Business School professor Sandra Sucher, who has been studying layoffs for years, says companies often underestimate the downsides. Layoffs don’t just come with bad publicity, she explains. They also lead to loss of institutional knowledge, weakened engagement, higher turnover, and lower innovation as remaining employees fear risk-taking. And she says it can take years for companies to catch up. Sucher is a coauthor of the HBR article “What Companies Still Get Wrong About Layoffs.”

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