With all the concern about tariffs, business impacts are of top concern. If companies are worried, will layoffs start?
The main reason for layoffs is almost always financial. Companies may need to reduce costs or streamline operations quickly. To this end, managers often ask whether a job can be outsourced or automated for less money than it costs to keep a full-time employee. That decision usually comes down to numbers, not qualities such as loyalty or years of service. Some things, such as strong client relationships or deep institutional knowledge, are hard to measure even though they are important to business operations.
Which individuals are at risk?
The most critical factor in many cases is whether a job brings in revenue. At the same time, human resources departments are always alert to legal risks, including claims of discrimination or unfair practices; these may override other priorities.
Given this, people with seniority are often protected from layoffs. Seniority has the virtue of being easy to measure: It is easy to know how long somebody has been with the company. These folks have had more time to develop skills and contribute to the organization. If these employees are older, they additionally may have the benefit of being protected by law.
Contractors and part-time workers are often more vulnerable, even though many companies have come to depend on them. There is less paperwork involved in laying off contractors — and less loyalty to them.
Job performance should play a major role in determining who loses a job –– in fact, some companies welcome the chance to let go of underperformers. But that only works if the company has a fair and consistent way to measure performance. It can be hard to compare employees who work on very different teams.
Managers may alternatively look at which specific skills are most relevant to the business. Depending on the industry, the most valued employees might be those with technical skills, innovative thinking and/or strong client relationships. Younger workers may have more up-to-date training in things such as programming as well as fresh ideas and energy to invigorate a team. However, employers must be careful to avoid age bias when evaluating skills.
Some companies use weighted systems to help decide whom to keep. HR data analysts may build custom models to reflect what matters most in a particular company.
Which departments are at risk?
Sometimes layoffs are organized by department instead of by individual roles. Nonessential teams or high-cost departments may be targeted first. But in today’s world, almost any function can be outsourced.
Sales and marketing jobs often survive longer because they bring in revenue. Research and development is also protected from any layoffs, since it supports long-term growth. Engineering departments can be expensive and slow to show results, so they may face more cuts.
Roles such as recruiters or data scientists may be among the first to go — especially if there are no hiring plans or customers to analyze.
How the process works
Top executives set targets for job cuts. Middle managers provide feedback based on what they see day to day. Accountants do cost-benefit analyses, and HR digs into records, performance reviews and disciplinary actions.
The main goals are to keep top talent, run a fair process and avoid legal trouble. It’s important to document each decision clearly. That includes explaining the business reasons and showing how departments will change. Charts comparing staffing before and after can help justify choices.
Even with the best systems in place, some decisions may still come down to personal relationships with supervisors. Layoffs are never perfect — and they’re rarely fair.