The Wall Street Journal is reporting that the new headache for employers is that employees are staying. Just last year, organisations were struggling to keep staff in what was termed The Great Resignation, or as I called it, The Great Realisation.

These days, too few people are voluntarily leaving their jobs. Attrition is very low.

Chip Cutter, writing for the WSJ, says:

“Turnover has declined so steeply at some large employers that companies now find themselves over budget on certain teams, requiring leaders to weigh whether to postpone projects or to cut additional staff as the end of year approaches. Other bosses worry about how to keep star employees engaged when there are far fewer vacant positions internally, making it harder to move people into new roles.”

I discovered the WSJ report via a Forbes article from Roberta Matuson, “Burning The Dead Wood.”

Matuson suggests that if you are worried about this latest trend, “Get out your matches. It’s time to burn the dead wood!”

While I agree that you need to manage employees who are not performing, there is more to this story than just that.

Social contagion

What caused these companies to have so many employees they did not need? It is due to social contagion. Behaviour spreads through a network as companies almost mindlessly copy what others are doing.

In 2020, during the pandemic, many companies snapped up workers to build a deep bench and hoard talent from competitors. This was particularly prevalent in the tech and finance industries.

In 2020, Meta increased its headcount by 30% - 13,000 workers. The following year, it added another 13,000 employees to its payroll. CNBC called this “the two biggest years of expansion in Facebook’s short history.

According to CNBC, Microsoft had 221,000 full-time employees at the end of June 2022. That was a 40,000 jump from the same time in 2021, a 22% increase in staff. The year before, Microsoft added 18,000 employees, an 11% increase.

Amazon grew voraciously in 2021, adding 310,000 jobs. That followed an even bigger expansion in 2020 when it grew over 38% and added half a million employees.

All these companies and more hoarded employees to avoid their competitors getting hold of them. It has also been referred to as copycat behaviour. Companies imitate each other.

The following image is from CNN and shows the major tech companies' headcount growth during the pandemic.

The same trend in headcount increase is seen in the finance industry. This is from BNN Bloomberg on August 12, 2020.

The big banks hired 19,000 workers in the first half of 2020.

I also believe the hiring and hoarding was theatre. What would customers, consumers, and shareholders think if Microsoft hired thousands of employees and Google did not? Microsoft was doing much better than Google. So, companies copied and hired massively rather than appear at odds with their competitors. This has also been labelled a “vanity metric.”

The fallout

Rather than burning the dead wood, widespread layoffs are rife. According to Lyoffs.fyi, 1112 tech companies have laid off 249,354 employees in 2023 (as of November 15, 2023). That is 50% higher than last year and growing.

Big tech has made mass workforce reductions, including Google, Amazon, Microsoft, Yahoo, Meta and Zoom, with more to come.

In January 2023, Google announced it was cutting 12,000 jobs, affecting roughly 6% of the workforce.

Meta CEO Mark Zuckerberg declared 2023 the “year of efficiency” and proceeded with a plan of an additional 10,000 job cuts in March. It had cut 11,000 workers in the preceding November.

In March, Amazon CEO Andy Jassy announced the plan to eliminate 9000 jobs, adding to the 18,000 it announced in January.

The exception is Apple. It did not appreciably increase its hiring rate during the pandemic and has not announced any layoffs.

In Australia, the four big banks have made over 2000 workers redundant in 2023.

In the USA, the five largest banks have cut a combined 20,000 positions so far this year.

Since January, Bank of America’s workforce has shrunk by about 6,000 full-time employees to roughly 213,000 people.

Hired to do nothing

An indicator that the hiring was not considered but an imitation of what other companies were doing comes from workers, who amid the layoffs, are venting that they had jobs with little to do.

The WSJ reports former tech workers posting videos saying they collected paychecks from large tech companies without doing much.

Analysts, executives and industry professionals are not surprised.

“Tech companies that boomed during the pandemic were flush with cash, they say, and snapped up workers to build a deep bench and hoard talent from competitors, even if those workers weren’t being fully utilised.”

The New York Post reported:

“Former employees of tech giants including Meta and Salesforce say they were hired to sit around and essentially do nothing as companies embark on a course-correction and lay off extraneous workers during the current economic downturn.”

A past employee of Meta said:

“It kind of seemed that Meta was hiring people so that other companies couldn’t have us.

They were just kind of like hoarding us like Pokémon cards. It was a very strange time to work there.”

The impact

Research by Stanford Graduate School of Business Professor Jeffrey Pfeffer and others has shown that the stress layoffs create takes a devastating toll on behavioural and physical health and increases mortality and morbidity substantially. Layoffs literally kill people, he said.

Despite the massive job cuts, Pfeffer says they do not improve company performance. He points out that academic studies have shown that, time and time again, workplace reductions don’t do much for paring costs. Severance packages cost money, layoffs increase unemployment insurance rates, and cuts reduce workplace morale and productivity as remaining employees are left wondering, “Could I be fired too?”

Before companies take Matuson’s advice and start “Burning The Dead Wood,” they should take a close look in the mirror and think long and hard about their behaviour.

1. They hired and hoarded employees so that the competition could not have them. They did not have a job for them. They sat around doing nothing.

2. They copied the behaviour of their competitors. “Everyone else is doing it. Why aren’t we?”

3. Then, they started the rounds of layoffs.

4. They copied the behaviour of their competitors. “Everyone else is doing it. Why aren’t we?”

All this with no thought to the impact on the people. Where is the humanity? They played people like pawns in a game of chess.

Humanity in the workplace

Humanity in the workplace means people are treated as people – not numbers. This is the workplace where:

Leaders are empathetic.

Leaders ask questions.

Leaders trust.

Leaders provide autonomy.

Leaders empower.

There is psychological safety.

We have high-quality leaders.

Conclusion

Do I agree that if leaders are not managing employee performance, they should not be leaders? Yes.

Do I agree that leaders who are unwilling to manage should not be permitted to stay in the organisation? Yes.

Do I agree that leaders must share their expectations with their employees and hold them accountable? Yes

Should the companies mentioned in this article be looking for dead wood? No. Not right now.

There is something much more fundamentally wrong with the behaviour of these organisations that needs fixing first.

Employers have headaches from hoarding people