Experts: 'Quiet cutting' employees makes no sense, and it's costly

Companies are increasingly using role reassignments as a strategy to sidestep expensive layoffs, according to some tech industry experts. But they see it as generally short-sighted and likely to do a company more harm than good.

As with last year's 'quiet quitting' trend, quiet cutting appears to be a concept originally coined in the media - in this case, by The New York Times. The practice involves reassigning workers to roles that don't align with their career goals to achieve workforce reduction by voluntary attrition - allowing companies to avoid paying costly severance packages or unemployment benefits.

"Companies are increasingly using role reassignments as a strategy to sidestep expensive layoffs," said Annie Rosencrans, people and culture director at HiBob, a human resource platform provider. "By redistributing roles within the workforce, organizations can manage costs while retaining valuable talent, aligning with the current trend of seeking alternatives to traditional layoffs."

Recognizing the signs of having been quietly cut is crucial for an employee to address the situation. It often involves withholding career advancement opportunities, denying compensation adjustments, assigning unpleasant tasks, creating unnecessary hurdles, and even isolating employees, according to Rosencrans.

"It can manifest as slowed growth, broken promises, a lack of feedback, and an encouragement for co-workers to distance themselves from the affected employee," Rosencrans said.

What's behind quiet cutting?

Zachary Chertok, research manager for IDC's Employee Experience practice, said a variety of issues have combined to prompt quiet cutting among organizations. For one, during the COVID-19 pandemic, many companies went on a hiring spree as remote work put digitization projects on steroids and employees left the workforce permanently or reevaluated their career directions.

The pandemic hiring boom was followed by a significant correction in the second half of 2022 and the first quarter of this year. Companies, especially tech firms, culled workforces by hundreds of thousands as the economy settled and fears of a future recession took hold.

But with unemployment levels still below 4%, employees feel empowered to demand better pay and work flexibility as organizations face talent droughts for vital skillsets.

"As organizations deal with all of this, they are seeking to rebalance power with the available workforce as they pursue strategies for operational efficiency in the wake of rising interest rates," Chertok said. "Some organizations are eliminating large swaths of high-risk or redundant roles and hiring back from eliminated trained talent once termination has taken place - Google, Meta, Microsoft, and Amazon all did this."

The optics around quiet cutting and its effects on employee morale is a big problem, however, and experts argue it's not worth the perceived cost savings. Companies reassigning workers to jobs that may not fit their hopes for a career path or align with their skills can be demoralizing to remaining workers and lead to "disengagement," according to Chertok.

He argued that the quiet cutting trend isn't necessarily intentional; it's more indicative of corporate America's need to reprioritize how talent is moved around within an organization. When done the wrong way, internal reorientation makes employees feel as though they are being downsized or pushed out, Chertok said.

"Quiet cutting is nothing more than organizational reorientation, often at the expense of the workforce," Chertok said. "Why does this happen? The practice of trying to eliminate staff without organizational risk during downsizing or reorganization is a tactic leadership teams have been using for decades anytime org change happens, regardless of the stimulus."

Brennon Huffman, senior vice president of sales at career consultancy Right Management, recently received a request for outplacement services for a client organization that was cutting more than 1,000 employees.

Huffman researched the organization and discovered it had also listed more than 2,000 job vacancies on its career page - not unusual at a time when a skills shortage is high and unemployment is near historic lows. Yet the company was looking to lay off half as many of its seasoned employees.

The numbers just didn't make sense. "So we asked the simple question: how are you going to help ensure these folks have an opportunity for these open jobs before you exit them from your organization? They bring a lot of domain expertise with them," Huffman said. "They said, 'We don't have the infrastructure to do that.'"

Is quiet cutting more hype than real?

Karel van Der Mandele, senior vice president of Right Management's North American operations, said the concept of quiet cutting is most likely not real. "There is no widespread evidence of that happening in organizations," he said.

"The idea of companies cynically transferring employees into new roles because they want to save on severance and outplacement costs is nonsensical," van Der Mandele continued. "The long-range costs of such a cynical practice are tremendous. You're basically ruining your employer brand."

In fact, earlier this year, a report from staffing firm ManpowerGroup found that nearly four in five employers are struggling to fill job roles  - a 17-year high.

Organizations reassigning staffers into dead-end roles or positions for which they're not qualified would also likely bring with it legal issues, and employees who remain in their roles are more likely to "voluntarily" exit, too. "They're not going to be fully engaged knowing that the company did that," van Der Mandele said.

Additionally, it takes companies an average of 44 days to hire for an open role after posting a job. Then there are also costs, time, and effort involved in snapping a new employee into a role and getting them comfortable with company culture.

What all that in mind, what's more likely happening is corporations are engaged in internal mobility, "which is sensible," but they're not executing it well, van Der Mandele said.

Virtually all large enterprises have multiple business units. Each grows or shrinks depending on its maturity and market conditions. If one business unit is declining and another is growing, it doesn't make sense to reduce the overall company headcount. Instead, van Der Mandele said, organizations need to create and exploit "internal talent markets."

"Literally by transferring people from the mature business into the growing business unit, there's a way for them to thrive in a market so marked by talent shortages," he said.

The benefits of creating an internal marketplace for existing talent mean employees will see an organization that cares about their career path instead of dead-ending it for financial reasons.

"When we talk about laying those foundations to create that internal market for talent, that's not something you can do overnight," van Der Mandele said. "You really have to understand where talent is and what they're capable of, which means you have a process in place to capture that. You have to have a good understanding of where you want that talent to be going forward, as well so you can create the internal market."

Changing employees' career paths often involves upskilling or reskilling, another hot trend among organizations looking to avoid the arduous task of finding and onboarding new talent. In fact, it can be six times less expensive to "reskill" an existing employee than to hire externally for many jobs, according to Josh Bersin, an industry analyst and educator for corporate HR, training, and talent management.

More HR technology vendors, such as Right Management, are offering services and software tools that can reveal the skills - sometimes even hidden ones - of an existing employee base, including soft skills that can be harder to develop than technical abilities or certification.

Skills-based hiring has been on the rise in recent years as organizations seek to attract a broader pool of candidates better suited to fill positions long term. The practice also opens opportunities to nontraditional candidates, including women and minorities, according to management consulting firm McKinsey & Co.

How companies can properly reassign / reorganize employees

For companies navigating the challenge of reassigning or reorganizing employees while steering clear of the "quiet cutting" trend, several effective strategies are available, according to HiBob's Rosencrans.

For one, transparency is key; that involves open communication about the need for changes and the organization's objectives behind them. Careful skill assessment ensures that employees' strengths align with their new roles, supported by clear criteria based on skills, experience, and potential.

"Employee input here should be valued, taking into account their preferences and aspirations, and - where possible - adequate training should be offered," Rosencrans said.

It's also important to define performance metrics and support employees in meeting them with the aim of contributing to their success in new positions.

"Ultimately, a well-structured communication plan addresses concerns, while a balanced timeline prevents productivity disruptions," she said. "Meanwhile, feedback loops foster continuous improvement, promoting fairness and discouraging favoritism in the process. All this will demonstrate not only how reassignments align with career growth but also show you're prioritizing employees' well-being throughout the journey."

If you're an employee who's been reassigned to a new position, it's "essential" to familiarize yourself with the new responsibilities and expectations, Rosencrans said. Then, engage in an "open and constructive conversation" with your manager to address questions, concerns, or adjustments needed for a successful transition.

"By all means, ask about the reasons behind your role change," she said. "Also critical is to maintain a polite and professional demeanor throughout the discussion. Stay positive and consider that this could be beneficial to you and that you could make it work to your advantage."