Obviously, that’s a sarcastic comment. Having been laid off twice in my career, to say “it sucks” would be a vast understatement. Just the sheer amount of stress that it causes not to know when (or if) a next job or paycheck is coming is enough for me not to wish it on anyone. However, I was curious: how do layoffs affect the company doing them and the industry they are in?
I’ll start by looking at a list of layoffs that have occurred since the beginning of 2023 until now [1,2]:
(Please note that I’ve shortened the list to those companies I’ve heard of or am familiar with. If you wish to see the complete list, please reference the citations below)
- 3M – 8,500 total job cuts (6,000 announced in April 2023 and 2,500 in January 2023). Reasons include cost reduction, simplifying operations, streamlining the supply chain and geographic footprint, and reducing management layers.
- 3M boasts a workforce of 93,000 employees, so that’s about 9.14% of their entire workforce.[3]
- Acutus Medical – 65% of their workforce was let go in November 2023 (~146 out of 225 employees) for restructuring and a shift in focus.
- Baxter – announced layoffs in its Q4 2022 earnings report due to ongoing restructuring. Less than 5% of their 60,000 employees (up to 3,000) will be affected, with completion by Q1 2023.
- Boston Scientific – Two of the company’s sites experienced job cuts due to a more considerable consolidation and efficiency effort. Both sites were acquired through acquisitions (Preventice Solutions, Houston, TX, in 2021, and Devoro Medical, Fremont, CA, in 2021). Houston cut 120 jobs in April 2023, and Fremont closed the facility with 52 jobs eliminated.
- I couldn’t find information on their website, but several sites alluded to 36,000 total employees in 2019 (so 0.48% of their overall workforce).
- Cook Medical – 4% of the global workforce (about 500 workers) were laid off, given the reason for realigning the strategy to adapt to the changing market and operational landscape.
- Globus Medical – during the first week in January 2024, Globus announced it was cutting about 157 positions from the recently acquired Nuvasive (who had about 3,000 employees worldwide in Dec 2022) as a means of a restructuring plan.[6]
- Johnson & Johnson – At least 1,000 jobs were affected in March 2023, and an additional 67 were involved in October 2023. The reasons given were mainly part of a company-wide restructuring effort.
- In 2022, it was reported that their direct global workforce was ~153,700 employees (0.69% of their workforce) [4].
- Medtronic – To reduce costs due to rising business costs, a California facility was closed in April 2023, impacting 59 employees.
- The company states a worldwide workforce of 95,000+ employees [5].
- Nevro – In January 2024, 63 employees (or 5% of the workforce) were announced for layoff as part of a restructuring plan.
- Philips – an initial cut of 4,000 jobs (or 5% of their workforce) was announced in October 2022, with a further cut of 6,000 jobs (13% of their workforce) announced in January 2023 (with half happening in 2023 and the remainder by 2025). The layoffs are part of a broader restructuring effort aimed at improving profitability.
- Titan Medical – starting in December 2022, 40 employees were furloughed, with 48 employees being laid off in February 2023 (including previously furloughed workers), with the focus being on cost-cutting measures, with considerations of selling the company and its technology. Ninety-two jobs were cut, or 80% of their workforce. Eighteen employees remain.
- Vicarious Surgical – okay, so honestly, I’ve never heard of this company (sorry), but the name…I couldn’t resist. If you want to learn more, Google the company and I will find out information VICARIOUSly through you. (Did I even use that right? Whatever, I’m going with it)
- Zimmer Biomet – announced in its 2023 4th quarter earnings a restructuring program designed for cost optimization and efficiency. Globally, ~3% (or 540 jobs) were removed from 18,000 total workforce.
So, what are the downsides to layoffs that companies should be looking at? (we’ve already seen the “benefits” of layoffs in the reasons companies do them)
Unfair layoff decisions erode trust in leadership and the company. People fear job loss more than major threats like nuclear war (Edelman Trust Barometer, 2023). Remaining employees engage in self-protective behaviors, such as becoming skeptical of job security promises, and experience a decrease in productivity and creativity. Talented employees often seek new opportunities after witnessing layoffs [7].
“One study found that being laid off ranked seventh among the most stressful life experiences—above divorce, a sudden serious impairment of hearing or vision, or the death of a close friend. Experts advise that it takes, on average, two years to recover from the psychological trauma of losing a job.”
Sucher, S. J. (2022, December 9)
For the company, “short-term cost savings provided by a layoff are overshadowed by bad publicity, loss of knowledge, weakened engagement, high voluntary turnover, and lower innovation—all of which hurt profits in the long run.” Studies show there is no clear link between layoffs and improved profitability, downsizing can take three or more years for companies to regain prior performance, and layoffs have hidden costs like severance, benefits, talent loss, morale decline (as I mentioned above), and reputational damage. Layoffs are not a guaranteed path to increased profit and can have significant negative consequences. [9]
With limited sources to see how layoffs affect the industry, I was given some insight from a LinkedIn author. (again, as this is a post from someone like me, please feel free to accept or reject this information with further research). Beyond individual harm, layoffs impact the broader economy through reduced consumer spending, tax revenue decline, increased demand for social services, disrupted communities, and decreased investment. [10]
Let me know if you know of any BENEFITS to layoffs from the employee perspective. Anecdotally, my previous layoffs have led to better job opportunities and allowed me to pursue a career path that aligns more with my strengths and passions. As an individual experience, I cannot use this data to make any overarching assumptions or statements.
References:
[1] Whooley, S. (2024, February 9). Layoffs in medtech: These companies recently reduced their workforce. MassDevice. https://www.massdevice.com/medtech-layoffs-companies-recently-reduced-workforce/
[2] Zipp, R. (2024, February 12). Medtech layoffs continue in 2024. MedTech Dive. https://www.medtechdive.com/news/medtech-layoffs-continue/707294/
[3] 3M Careers & Employment | Where to start | 3M US. (n.d.). MMM-ext. https://www.3m.com/3M/en_US/careers-us/#:~:text=At%203M%2C%20our%2093%2C000%20employees,people’s%20lives%20around%20the%20globe.
[4] Employee Attraction & Development – Johnson & Johnson Health for Humanity Report 2022. (n.d.). Johnson & Johnson Health for Humanity Report 2022. https://healthforhumanityreport.jnj.com/2022/our-employees/employee-attraction-development.html#:~:text=D.&text=In%202022%2C%20our%20direct%20global%20workforce%20included%20approximately%20153%2C700%20individuals.
[5] Medtronic. (n.d.). Key facts about Medtronic. https://www.medtronic.com/us-en/our-company/key-facts.html#:~:text=Key%20facts%20%7C%20Medtronic&text=With%20more%20than%2095%2C000%20people,conditions%2C%20from%20Parkinson’s%20to%20diabetes.
[6] Reuter, E. (2024, January 26). Globus lays off Nuvasive employees after merger. MedTech Dive. https://www.medtechdive.com/news/layoffs-nuvasive-globus-merger-spine/705748/
[7] Smith, A. K. (2024, February 13). 3 reasons why this season of layoffs may destroy the future of work. Forbes. https://www.forbes.com/sites/annkowalsmith/2024/02/13/3-reasons-why-this-season-of-layoffs-may-destroy-the-future-of-work/?sh=10b6f0de79d5
[8] Sucher, S. J. (2022, December 9). What companies still get wrong about layoffs. Harvard Business Review. https://hbr.org/2022/12/what-companies-still-get-wrong-about-layoffs
[9] Sucher, S. J. (2023, January 10). A better, fairer approach to layoffs. Harvard Business Review. https://hbr.org/2018/05/layoffs-that-dont-break-your-company
[10] Rajnikant. (2023, March 25). The consequences of layoffs: Understanding the impact on employees, the economy, and company morale. https://www.linkedin.com/pulse/consequences-layoffs-understanding-impact-employees-economy-#:~:text=Finally%2C%20layoffs%20can%20have%20an,impact%20the%20company’s%20bottom%20line.
Image – Kern, R. (2023, December 12). How to prevent employee turnover after layoffs | INTOO. INTOO US. https://www.intoo.com/us/blog/how-to-prevent-employee-turnover-after-layoffs/
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