Swiss HR managers and the challenges of downsizing

The report shows that the reasons for job cuts are changing significantly in light of technological progress and ongoing economic challenges. Fewer and fewer HR managers are citing overstaffing as the main reason for job cuts. Instead, they point to employees' lack of performance and qualifications as well as increased economic pressure.

"Layoffs alone are not a sustainable solution to the challenges companies face today. While layoffs are sometimes necessary, it is a long-term strategy - investing in retraining, internal mobility and humane treatment - that ensures sustainable success for both companies and employees," says Svyatoslav Shalayoda, SVP Career Transition & Mobility and Leadership Development LHH Germany, Switzerland, Belgium, the Netherlands and Poland.

LHH found that HR managers are increasingly turning to professional reorientation programs to close skills gaps in the face of ongoing job cuts. They are also investing in outplacement service providers to support departing employees and help them transition to new career opportunities.

"The global labor market has experienced major upheavals in the past year. This is largely due to the increasing importance and integration of AI," explains John Morgan, President of Career Transition & Mobility and Leadership Development at LHH. "Our research shows that while the workforce is adapting to this new reality, leaders are recognizing the need to develop talent strategies to support employees throughout their careers. Retraining and reorientation are essential to maintaining an agile organization. Technology has greatly enhanced reorientations and allows us to quickly identify and develop in-demand skills for employees in transition. Once the need for this support is recognized, both employers and employees will be able to face the future with greater confidence and strength."

The most important results: Downsizing shifts focus to skills and performance - while continuing to cut costs

Layoffs are still widespread and show little sign of slowing down: in Switzerland, half of layoffs are due to strategy changes (50%), followed by poor performance (46%) and cost cutting (37%). Across all 9 countries, only 28% of redundancies are due to cost reductions due to inflation and economic difficulties. It is also noticeable that the quality of employees in Switzerland is significantly better than in the other countries, with only 17TP3T of employees being made redundant due to a lack of qualifications. The main reasons in Switzerland are clearly strategy, low work performance and costs.

"In 2024, 94% of Swiss companies surveyed are planning new support programs for employees affected by downsizing - one of the highest levels of engagement globally. This strong support underscores the challenging macroeconomic environment in Switzerland, where, in addition to a significant shortage of skilled labor, there is also a need to restructure organizations - a short-term contradiction that requires a long-term solution," explains Svyatoslav Shalayoda.

Across all nine countries, an average of 73% of HR leaders are making or considering layoffs this year, compared to 77% in 2023. The main reasons for layoffs are no longer too many hires (a so-called overstaffing), but poor performance (30.2%) and a lack of suitable skills (29.7%). With the increasing integration of AI into the world of work, the need for employees with appropriate skills is increasing in all countries.

Reorientation programs pick up speed

In Switzerland, almost all HR managers (96%) have considered postponing layoffs and filling vacancies through retraining instead - reflecting the great fear of a future staff shortage. A significant 82% of Swiss HR managers state that they have introduced a reorientation program. A further 14% are considering it but do not have the resources to implement it.

A notable shift towards reorientation programs can also be observed across all nine countries: 82% of HR leaders are considering employee reorientation as an alternative to downsizing. Similarly, the proportion of HR leaders implementing reorientation programs has increased by 25 percentage points since 2023 and now stands at 47%. This indicates a growing trend towards employee retention and retraining.

Burnout is a global problem

In light of the ongoing downsizing, HR managers are recognizing burnout as a global problem. In Switzerland, 80% of employees have experienced burnout in their team in the last 12 months due to uncertainty and workload. This prompted 26% to consider resigning and even more (30%) to apply for jobs outside the company. A further 23% were looking for new career opportunities within the company.

This figure is significantly higher than the global comparison, where 69% of employees state that their teams are burnt out. Burnout has become the biggest concern for HR leaders globally, with 25% worried that increased workload could lead to burnout - up from 6% in 2023. Employers should consider the impact of burnout in the context of layoffs, as the most common reaction of remaining employees is to question their future in the organization. This clearly demonstrates the need to provide employees with opportunities to retrain into internal roles and develop leadership skills. This enables a smooth transition and strengthens the loyalty of employees remaining with the company after the redundancy.

Increasing importance of effective employee management

98% of respondents in Switzerland believe that their retention strategy is effective. Part of this strategy is to create a culture where employees can advance their careers and where training and retraining is encouraged. Almost 9 out of 10 HR managers consider their leadership development programs - especially on the topics of effective career conversations and effective leadership - to be effective.

Source: www.adeccogroup.com / www.lhh.com