The Business Acumen and Business Leadership Impacts of Cutting Jobs


The headlines in the news that seem detached have a different impact when colleagues you have known,layoff-business-acumen worked with and respected for their contributions in the workplace personally reach out to let you know their jobs have been eliminated and are asking for help networking and finding new jobs. Over the past week, I have had more people reaching out because they have been cut than I can ever remember including the early days of the pandemic.

By now, we have absorbed the data:

  • 103,000 jobs were cut in January 2023
  • Twice the amount cut in December 2022
  • 440% more than in January 2022
  • 41% of the cuts are coming from the high-tech sector
  • Retail and Financial Services were the next largest sectors impacted

Literally, at the very same time these cuts were being announced and reported, there was an unexpected job hiring report that included:

  • 517,000 new (non-farm) jobs being added to payrolls in January 2023
  • The previously expected increase in payrolls for January 2023 was supposed to be 187,000 jobs
  • Unemployment is at the lowest rate, 3.4%, since 1969 and you must factor into the appreciation of that number there were 30 million fewer people in the workforce in 1969

So, what gives? How are business leaders supposed to understand all of this and continue to make business decisions based on the market dynamics of jobs and then indirectly consumer spending and interest rates? This is truly a VUCAD (volatile, uncertain, complex, ambiguous, and digital) world that takes strong business acumen and business leadership skills to understand.

The Systemic Business Impact of Cutting Jobs

I will share that my perspective on the job cuts in the high-tech, retail, and professional services sectors is that we are in an adjustment phase meaning that the frenzied hiring of the post-pandemic economy is leveling out and in the new normal of business, these job cuts are a trimming of the fat and a realization that many organizations can do more with less because they are actually more efficient with remote and hybrid workers.

Whatever you may think of Twitter and Elon Musk, after slashing jobs and disrupting the entire organization to a point where people thought Twitter would fold, it is still operational and delivering the same value proposition it was founded on. It may not last, but I feel the people who put up the $44 billion to purchase it aren’t going to let it fail.

In many of Advantexe’s Business Acumen and Business Leadership simulations, learners build their skills through immersive experiential environments and are faced with these very same issues as they learn to become better leaders.

I am currently conducting several high-potential leaders programs and in the second year of their simulation experience, once the teams running their simulated companies have set and are now executing strategy, they are hit with a recession, higher interest rates, and a gloomy long-term outlook. They are faced with many choices but ultimately it comes down to cutting jobs, cutting operating budgets like R&D, or borrowing cash to stay the course.

If the learners cut jobs, they feel the impact both in the short and long terms in the following areas:

Customer Satisfaction goes down – There are fewer people to perform their jobs, and “institutional knowledge” walks out the door. The employees who are left become anxious, worry bout their jobs, and are less focused on the value proposition.

Employee Satisfaction goes down – As soon as the cuts are implemented, the satisfaction of the remaining employees goes down. In addition to being fearful they are next, they become less focused and the lack of focus on execution permeates the entire organization. In our high-tech industry simulations, the decrease in ESAT can be over 20% which has a severe impact on the bottom line.

Customer’s Perception of Quality goes down – One of the most important elements of learning in Advantexe’s simulations is that there is the quality of products/services being offered to customers, and there is the perception of the quality of the products and services being offered. Once the cuts start to take place, the perception of quality is immediately impacted because customers “reading the news” and hearing of the cuts begin to question if they are working with the right partner.

In summary, understanding the systemic impacts of outside factors like the economy is the hardest part of business leadership. Even for the companies that invest in training and development, there is a lot of uncertainty, but like pilots who go through flight simulators to learn what to do in times of crisis, business leaders going through business simulations will be much better prepared to understand the dynamics and make the right decisions back on the job.

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Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.