As companies slash their staffs, HR should keep the cost of layoffs in mind

’Tis the season for layoffs.

Several employers have announced layoffs in recent weeks, citing costs, market headwinds, and slow economic growth among the reasons for the cuts.

Employers typically view layoffs as a necessary evil that will benefit the future of the organization. But they can cost an organization, too.

In the news. Handcrafted goods retailer Etsy announced on Dec. 13 that it laid off 11% of its workforce, or approximately 225 employees. In a statement sharing the news, CEO Josh Silverman called the decision “the hardest we’ve ever made,” attributing it to the “macro and competitive environment.” The layoffs followed news that Etsy expected gross merchandise sales for the fourth quarter to decline YoY.

Etsy wasn’t the only retailer reducing its workforce. On Dec. 11, toy giant Hasbro said it would dismiss 20% of its talent over the next 18 to 24 months, the Wall Street Journal reported. CEO Chris Cocks cited weak sales in the first nine months of 2023 as the reason for the reduction, which affected 1,100 employees. This was the company’s second round of layoffs this year; the first involved 800 jobs.

And in the tech industry, software maker Twilio terminated 5% of its workforce earlier this month following pressure from activist investors after the company failed to meet growth expectations. This is Twilio’s third round of layoffs in just over a year, CNBC reported.

The cost. Layoffs can have some unintended financial consequences for employers, HR Brew previously reported. From paying out severance and accrued PTO to continuing health benefits for terminated employees, layoffs can cost employers—and that’s before they have to pay up for recruiting and hiring costs, as well as high unemployment taxes.

But there are steps HR pros can take to proactively steer their organizations away from layoffs, Tara Ataya, chief people and diversity officer at Hootsuite, told HR Brew via email.

“Advocating for thoughtful hiring practices, building agility into strategies, and emphasizing transparent communication are not only ways to combat layoffs, but also ways to contribute to a resilient and adaptable workforce,” she said. “The current uncertain landscape calls for HR leaders to be proactive, strategic, and compassionate to lead organizations through times of turbulence.”