How successful organizations are able to hire and fire at the same time

 Over the course of 2022, US employers announced more than 360,000 job losses. Meanwhile, economists estimated that businesses across the country were five million employees short of requirements.

Hiring and firing are not mutually exclusive strategic mindsets, but rather a consequence of most strategies being implemented. A simplistic model of employment assumes businesses recruit staff when they’re doing well and let people go when they’re under pressure. However, the business reality is rarely this linear, especially for larger companies with compartmentalized businesses and functions.

Just ask Microsoft. In January, the technology giant announced it would shed 10,000 jobs, primarily in its cloud computing business. Meanwhile, CEO Satya Nadella was promising to make hires in “strategic areas” of the business such as artificial intelligence. Banks in both Europe and the US are following a similar redundancy-recruitment pattern in response to the changeable economic environment.

The danger of mixed messages

However, simultaneously managing hiring and firing processes can prove exceptionally challenging for company leaders and the HR function. It requires the C-suite to be crystal clear on business strategy – both internally and externally – and to make explicit how recruitment and workforce management practices contribute to the organizational mission.

It is also crucial to manage the noise inevitably created by such announcements. Staff across the business can be unnerved and demoralized by seeing co-workers shown the door, whether or not they’re directly affected by the departures. Getting it wrong is, therefore, a significant risk. When the C-suite fails properly to articulate the logic of apparently conflicting strategies, key stakeholders may begin to question the thinking behind them – and perhaps even whether the business has a coherent strategy at all.

Moreover, when poor communication with staff results in disillusionment, employees may turn to “quiet quitting” and begin to think about opportunities elsewhere. Talented people that the company should be desperate to retain – particularly in today’s employment market – may be lost through if management handles this poorly, and out of sync with the organization’s purpose and values.

Cutting staff in numbers may also make it harder for companies to recruit in the areas where they need staff. Businesses that are seen to make regular swathes of job cuts look less attractive to potential candidates. Today’s applicants do their due diligence: they talk to those already at the organization, either directly or through channels such as Glassdoor. Even if a business works hard on building its employer brand, this can be undermined when current employers depict a contradictory reality.

Establishing honest and open dialog with staff is, therefore, essential, as is reassuring retained employees that they have the full confidence of their managers. Speaking to individuals and teams about why their talent and experience are valued highly will inspire confidence. People want to know that they have a future at their organization – if they have doubts about that then, naturally enough, they will start to look for one elsewhere.

Recruit or reskill?

One important question is the extent to which job losses are, in fact, required. If one part of the business is hiring, could staff earmarked for redundancy be usefully redeployed there? Such an approach, recycling skills and experience where they are most needed, has a number of benefits – cutting recruitment time and costs, reinforcing employee morale (as they feel both valued and looked after), and limiting reputational risk.

CHROs will be required to drive this repositioning. In many cases, there’s natural pushback from business units that are asked to take on staff from other parts of the organization, rather than being allowed to choose from the full range of internal and external candidates. CHROs must make a strong case for reskilling and back that up with supportive programs and incentives.

Indeed, in economically challenging times, reskilling should be the norm. While there may be some roles where it simply isn’t possible to redeploy people in this way, motivated and committed staff with the aptitude to acquire new skills are the last people that businesses should want to lose. These qualities will also make them the easiest to retrain, given the opportunity.