As companies hint at upcoming job cuts without disclosing details, employees are left wondering who will be in the running and when.
Nike CEO Elliott Hill said on October 1 that changes to the operating model will result in “reduced roles” and that decisions on affected roles will be made “beyond 2027.” After the Paramount and Warner Bros. Discovery merger, Skydance CEO David Ellison and co-CEO Inon Kreiz wrote that these deals “bring changes, including difficult decisions that impact our employees.” Kroger CEO Greg Foran told staff on Oct. 12 that the company plans to cut 3,000 jobs over the next three years, saying “technology is reshaping what’s possible.”
Rumors of layoffs occurring, sometimes months or years in the future, without a timeline or more specific information, can reduce productivity and fuel employee anxiety. It also has the potential to attract investors and give employees a head start.
Dennis Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon University, said announcing layoffs without specifying who will be affected or when will be a departure from the norm. Companies often issue a warning to affected employees on what will be their last day of work. But that approach is “very dysfunctional” and “really destructive to both reputation and employee well-being,” she added.
Rousseau added that greater heads-up causes “much more anxiety than suddenly dropping a hammer,” but “gives employees more options.”
Why companies give early warning to employees about layoffs
Announcements of layoffs with long runways could be a play to appeal to investors.
“It’s a way to tell investors, ‘We understand that we have to change, and we’re going to work on this as quickly as possible,'” said Peter Cappelli, a management professor and director of the Human Resources Center at the Wharton School at the University of Pennsylvania.
There can be different motivations within a company.
You may want to save money on severance by letting some employees leave the company themselves, rather than threatening them and waiting for them to be fired. But it often doesn’t work. “There’s no need to scare people who don’t perform well, because it’s difficult for them to find work elsewhere,” Cappelli says. Employers therefore risk losing star employees who are more likely to find other work.
To combat this, Rousseau says employers may offer retention bonuses and other incentives to high-performing employees and other employees who play a key role in the restructuring.
Overall, the impact on workers could be severe. “It’s a huge distraction for workers,” Rousseau said. “It stresses people out, and they probably won’t give their best contribution because of it.”
Cappelli said some companies “may be trying to intimidate employees into working harder” to keep jobs. “There are business leaders who think that’s the way to motivate people.” But that’s not an effective tactic, the professors say.
What this means for workers
Some workers, especially low-performing ones, may choose to “hunker down and hide,” Cappelli said. In an effort to avoid being fired, some people may try to “work loud” in order to seek out publicity in the workplace. But that doesn’t necessarily help keep workers employed, and it can actually increase burnout, especially if workers stay on it for months or years before companies reveal the details of the layoffs, Cappelli and Rousseau say.
For employees who hear of layoff plans, professors say it’s not a bad idea to look for opportunities elsewhere, even though current hiring delays in the U.S. may be discouraging.
There may be some solace in the fact that employer plans are also likely to change in the long term, they added. There may not be layoffs as companies currently plan, Cappelli said. “They have no idea what’s going to happen in three years.”
“There’s a lot of uncertainty,” Rousseau added. “We don’t know how the environment will react, we don’t know what the price of diesel will be, we don’t know what the supply chain will do.”
