‘Quiet Cutting’ the Latest Labor Trend

It seems employers are back in control of the labor market. With fewer openings and more candidates applying, employers have more options. One option gaining in popularity is ‘Quiet Cutting’.

Essentially, it’s the dark side of what is typically seen as ‘restructuring’.

Employees are being informed that their current roles or positions have been eliminated, but they are not immediately terminated from employment. This practice is sometimes referred to as “quiet cutting,” “job displacement,” or “job elimination.”

In this scenario, instead of outright firing employees, companies are eliminating specific roles due to various reasons such as restructuring, changes in business needs, automation, or cost-cutting measures. The employees affected by these changes might be offered the opportunity to explore other positions within the company, essentially encouraging them to find an alternative role that matches their skills and interests. This approach can have mixed emotional impacts on employees, ranging from relief that they are still employed to uncertainty about their future within the organization.

The decision to use this approach can be influenced by factors such as company culture, legal considerations, and a desire to maintain good relationships with employees who may still have valuable skills and experience to contribute in different capacities.

It’s also mentioned that these employees are facing a less robust job market than before, which can make them more inclined to stay with the company and search for internal opportunities rather than seeking employment elsewhere.

While this practice is not uncommon, and can sometimes be the only way that a company is able to keep a good employee, it can also be a tactic that is used to cut an employee without the typical expenses of severance pay and unemployment benefits.

If an employee is reassigned to a role they do not enjoy, and if pay or other benefits are cut, chances are that employee will eventually see themselves out the door.

An article in the Wall Street Journal says:

Employees to whom it would be costly to pay severance or months of unemployment benefits might decide to leave on their own if they feel stuck in a job they don’t want, executive coaches say.

U.S.-based companies announced 42% fewer job cuts in July than they did in June, Challenger said. July job cuts were also 8% lower than the prior-year period, marking the first time this year that monthly job cuts were lower than in 2022. 

An article in Entrepreneur Magazine says:

Roberta Matuson, an executive coach and advisor to businesses including General Motors and Microsoft on human-resources issues, told the WSJ several things suggest you’re being “put out to pasture.”

If your reassignment is well below the pay or skill level you currently have, requires relocating when your boss knows that’s not feasible for you, or lands you in a division that’s rumored to be axed next, you’re likely on the receiving end of a “quiet cut,” Matuson said.

What effects will Quiet Cutting have on company culture and morale?

This shift of control back to the employer is also recognized by the employees. Understanding the job market does not have the opportunities it did last year, it might make more sense to accept the ‘reassignment’ and keep the job, rather than look elsewhere, but what does it do for company morale and culture?

If employees recognize this tactic by employers it will most definitely seep into the cultural mentality of the organization and can ultimately backfire. This negative result can take much longer to fix or ‘right’ than it might cost simply to separate from that employee, but it is something we’ll have to see how it plays out.

Ultimately employers always answer to profit and stockholders first, and it can come at the expense of good workers and company morale. With the labor market control back in the employer’s hands, the odds are that the ‘Quiet Cutting’ trend will continue to rise. How do you see this tactic playing out? Let us know what you think.