The Year of the Stealth Payroll Cut

This is one of Korn Ferry's Under the Radar trends for 2025. You can read about all these trends here. 

Experts believe that the one of the biggest talent trends of 2025 might actually be how to go about shedding it—ideally in ways that many executives hope goes unnoticed.

There’s a growing sense in many C-suites that organizations certainly have too many people in manager roles and, perhaps, given their individual business outlooks, too many employees in general. Historically, such a mood has often portended a wave of publicly announced layoffs involving hundreds or thousands of workers. “It shocks me that CEOs are reluctant to get rid of heads right now,” says Mark Arian, CEO of Korn Ferry consulting.

But in an era where news of major layoffs can do damage to a company’s image with consumers and other stakeholders, experts suggest finding other, more creative ways to curtail payroll.  Hiring freezes are one technique, of course, but there are numerous others, including “reassigning” employees to other roles or other divisions, reducing flexible-scheduling options, limiting promotions, and cutting back on compensation increases. Experts believe that many of these measures are covert ways for leadership to shed head count by making employees quit.

This approach isn’t exactly new. HR experts say managers have often gone this route to avoid difficult conversations with employees. The tactic even gained a catchy nickname during the Great Resignation: “quiet firing.” But 2025 might be particularly ripe for it. 

Profit expectations for next year, at least from the investment community, are pretty high. Wall Street expects operating earnings to grow 15% per share for the S&P 500. Some observers believe that’s aggressive, considering most of the world’s economies aren’t growing particularly fast, there’s uncertainty over global trade policies, and many companies are having trouble growing revenues organically. Leaders will be pressured to at least come close to meeting that expectation, however, to maintain their stock prices.

Of course, payroll shedding using these techniques could backfire. The targeted employees could just stick around. Or, rather than shedding its least productive workers, the organization could lose its most talented ones.

Or the company could develop a reputation for not being honest with workers. Even if an employee is struggling, it’s not ideal for managers to just ignore the issue, says Flo Falayi, a senior client partner in Korn Ferry’s Leadership and Executive Development practice. “Being transparent and up-front gives employees a chance to improve, while also making them aware of any problems that might be getting in the way of better performance,” he says.

In the long run, it might be more effective for leaders to admit that they need to downsize their organizations—as quickly and efficiently as possible. Especially with such uncertainty around top-line growth, CEOs should be planning on significant cost cuts now. “CEOs who may be reluctant to downsize must strongly consider doing this in order to maintain margin,” Arian says.

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