Despite news reports of massive layoffs in some industries earlier this year, the overall rate of staffing cuts has been relatively consistent since 2021, between 0.9 percent and 1.2 percent a month, according to the U.S. Bureau of Labor Statistics. However, conversations on earnings calls about reassigning employees tripled between August 2022 and August 2023, according to data from the financial research platform AlphaSense that was reported in The Wall Street Journal. This phenomenon has become the latest HR buzzword—"quiet cutting"—although it's existed for a while.
"Quiet cutting is not a new strategy. It's a new term, but it has a dubious history as a strategy to push out workers without firing them," said Jessica Nevitt, a lecturer at Indiana University's Kelley School of Business.
Many organizations are realizing they must make cuts to maintain stability amid uncertain financial times—but they don't want to be caught short-staffed. They may also want to avoid being on the hook for higher unemployment insurance rates if they fire someone. So instead of firing or laying off employees, they assign them roles other than what they were hired for.
"Many reassigned workers will interpret this action as phase one in the effort to force them to quit," Nevitt said. "It's a hazardous strategy because the organization risks alienating talent or losing it anyway."
Quiet Cutting Cuts into Morale
Dissatisfied employees are much more likely to seek other employment opportunities, leading to a higher turnover rate, according to Jennifer Dulski, CEO and founder of team development software company Rising Team. Citing SHRM data, she added that low-resilience employees are three times more likely to think about quitting every week than employees who feel safer in their roles.
"Even though the job market may be more challenging right now in certain industries, employees who live in fear of future changes outside their control are much more likely to leave," Dulski said.
Many employees find themselves reassigned to roles with less prestigious titles that often come with a pay cut. When a reassignment feels like a demotion, it naturally causes people to question their skills and contributions and how the company views their work. It makes other employees nervous, too.
"This creates an environment where even employees who haven't been reassigned or who are not at risk of reassignment will be impacted and may decide to weigh other employment options 'just in case' they will be impacted in the future," Nevitt said. "Organizations should not be surprised if they lose workers or experience negative cultural consequences as a result of quiet cutting."
Provide Clear Communication and Support
Leaders may feel they need to keep reassignment announcements secret. However, Nevitt cautions that this strategy often backfires, as employees find out anyway and begin dreading that it will happen to them.
"Leadership in organizations often assume that workers don't know what's going on," she added. "Workers absolutely know when difficult times are ahead, and there is always a measure of fear about what may happen."
However, while reassigning people can lead to negative feelings, there may be valid reasons for doing so. When done strategically, thoughtfully and for the right reasons, restructuring can be advantageous, especially to keep high performers, according to Jenny von Podewils, co-founder and co-CEO of Leapsome, a people enablement platform.
In these scenarios, von Podewils suggests using these strategies:
- Overcommunicating. If people don't have access to information, then rumors and fears fill that vacuum, and it can be hard to regain trust after the fact if you provide the information too late.
- Being upfront with the people you are reassigning about why you are doing so and why you think it will be successful—for them and the business.
- Highlighting reassigned workers' individual strengths and how you believe they can be applied to the new role.
- Offering support and training opportunities so employees can succeed in their new roles.
It's also important to define performance metrics for employees' new roles and support employees in meeting them. Using feedback loops and asking employees for input will promote fairness, discourage favoritism and promote continual improvement. Ultimately, keeping employees informed while they go through reassignments will show them that you value their well-being throughout their career journey.
Make the Hard Decisions
No one likes making layoffs. However, von Podewils acknowledged that in some instances, reassignments place people in roles that employers hope will make employees voluntarily resign.
"To that I say, reassign people you want to keep and explain precisely why you are reassigning them," she said. "Give the employees the support they need to be successful. Terminate people you wish to terminate. Don't play games to avoid unemployment and severance [pay]."
Katie Navarra is a freelance writer in New York state.