How ‘Reassigning’ Has Become the New Layoff

The sales manager saw the handwriting on the wall. The company hadn’t updated his team’s primary software product for years. Sales were declining, and he was certain that he and his colleagues would be laid off.

But when the company announced that they were discontinuing the software, he was shocked that they were not firing him or his peers, but instead transferring them to different roles in marketing. On the company’s earnings call, the firm’s CEO called the move a “reassigning of resources.”

The rate of layoffs and firings has been remarkably consistent since 2021, at between 0.9% and 1.2% a month, according to the Bureau of Labor Statistics. But over the past year, as the economy has slowed, a growing number of firms are eliminating people’s jobs but keeping them on staff, at least temporarily, rather than handing out pink slips en masse. Multiple big firms across industries have recently “reassigned” employees as part of corporate restructurings. Mentions of reassignment, or similar terms, during company earnings calls more than tripled over the last year, according to data from AlphaSense, a financial-research platform.

Experts say favoring reassignment over firing could turn out to be a savvy way to retain valuable talent in a still-competitive job market. But firms have to be wary when executing such a plan; the wrong move could alienate employees rather than reassuring them. Worse, experts say, reassigning without an overall strategy could lead to questions about favoritism and discrimination. “I’d advocate moving people around rather than a ten percent cut, but a lot of times it can be done sloppily,” says Alma Derricks,  a senior client partner in Korn Ferry’s Culture, Change and Communications practices. 

Experts cite a variety of reasons as to why companies are choosing this course instead of reducing head count. To be sure, some of it is almost certainly a way for firms to encourage people to voluntarily quit without having to pay them a severance package.

But more often there are forward-looking reasons. For one, companies spent the last two years on a hiring binge, and some leaders are worried that top talent will be sacrificed in mass layoffs. Reassigning workers to new roles can be a way to fill jobs vital to future projects while also trimming costs associated with old ones. That’s why, even as sales and profit growth have slowed in many industries, training and development budgets have held up relatively well so far this year.

At the same time, laying off people too quickly in today’s business world could have damaging repercussions among various stakeholders, including workers and customers. “Some of this could be a fear of not wanting to be seen as heartless,” says Maria Amato, global leader of Korn Ferry’s employee experience and EVP solutions.

Experts say firms undertaking reassignments should ensure that they aren’t asking salespeople to become chemical engineers or some other similarly unrealistic transformation. “You have to make these transitions with at least some realistic hope of retaining someone,” says Michelle Seidel, a senior client partner in Korn Ferry's Global Technology practice. It’s essential to have training for reassigned workers, technology to help them be successful, and an awareness that reskilling can take some time, depending on the transition.

It’s also critical, experts say, to use a systematic approach, not just to pluck individual workers. For instance, reassigning the salespeople, who are mostly male, to a highly desirable spot while sending the marketers, who are mostly female, to do low-profile roles could cause problems. “When there’s informality, people not part of the mainstream always get hurt. It’s worrying,” says Andrés Tapia, Korn Ferry's global diversity, equity, and inclusion strategist.

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