Layoff realities: Why top performance doesn't guarantee job security

Perhaps one of the most difficult lessons to learn in any place of employment is the truth that doing well at your job does not necessarily mean that you will not be laid off. Employees inherently seek to have their performance and job security correlate directly due to the natural logic in such an equation. When one performs effectively and receives good evaluations, it is expected that they would not be at risk. However, layoffs are sometimes dictated by organizational considerations outside of simple performance. The Society for Human Resource Management (SHRM) asserts that layoffs are more often associated with restructuring, budgeting, mergers, automation, or realignment than with individual competence.

This phenomenon becomes particularly noticeable during organizational changes. Firms might be optimizing for cost savings, role reduction, geographic relocation, or something totally different. In these instances, even excellent employees might become vulnerable because the size of the team has been cut or leaders simply don’t think other roles within the organization are more important going forward. It’s also worth pointing out that, according to Harvard Business Review studies, layoffs are usually the result of structural decisions made by the company to change its course of action, rather than the mere assessment of employee quality. This does not mean that performance doesn’t play an important role. Excellent performance will impact reputation, trust, support, and opportunity. The problem is that employees mistake value for structural safety, which, while similar, are two separate issues. The emotional aspect of the situation is the fact that layoffs are highly personal experiences. Employees assume that organizational results should always correlate with effort and contribution.

Layoff decisions often involve structure, visibility, and future priorities

Companies seldom admit to layoff decisions being political or structural in nature, although such issues may play roles in decision-making. According to the labor market analysis conducted by the United States Bureau of Labor Statistics, job security is more likely to be affected by the overall economic environment, business model changes, and organizational focus rather than the individual employee review process. This implies that an exemplary performer may be at a higher risk than a merely satisfactory one, provided he or she works within a contracting department.

There are two extremes by which employees misunderstand the situation. Some believe that a good review makes them invincible, while others get very pessimistic after such an incident and think that work performance does not matter at all. Both perspectives are incorrect. McKinsey & Company research has always stressed that even in situations where companies are going through restructuring, they cannot do without staff members who have adaptable skills. Visibility is also more important than employees think. Good work that remains contained in one particular team may not make much difference in the discussion about staffing if the upper-level management is unaware of their contributions to the company. This happens in big corporations where decisions are made fast without much information being sent up through multiple levels of management. However, this does not mean that employees need to be continuously promoting themselves.

Employees benefit from separating value from certainty

Layoffs become particularly bewildering as they upset the moral order employees tend to associate with work. Workers expect the organization to operate on the basis of a meritocratic order where hard work always guarantees security and stability. However, companies are compelled to react not only to immediate budgetary constraints but also to structural challenges, shareholder demands, and organizational objectives. According to research by Deloitte regarding workforce transformation, modern companies value flexibility and multidisciplinarity during times of rapid change. Those employees who can relate to larger business interests are likely to be more resilient than their colleagues.

The pragmatic solution to the problem lies neither in panic nor in fatalism. The workers are better off doing what they know best and, at the same time, realizing their position in terms of organizational requirements, recognizing the value of their skills to the organization’s leaders, and asking themselves whether they have skills that can be transferred from one team or industry to another. The most adaptable workers tend to be those who are not just linked to a particular project or leader but also to skill sets that the organization is going to keep needing even when the organizational structure changes.