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The truth about layoffs and inequity, and how to overcome it.


DATE: 18 October, 2023

Key Takeaways

  • Companies must consider and prioritize diversity, equity, and inclusion (DEI) during layoffs to avoid disproportionately impacting marginalized communities.
  • Tech layoffs hit underrepresented groups especially hard, setting back efforts by the industry to build a more diverse workforce.
  • To create a more equitable workplace during layoffs, companies should seek alternative solutions, communicate openly, collect workforce demographic data to support decision-making, offer outplacement services for impacted individuals, and rebuild with inclusivity in mind.

Conversations about diversity, equity, and inclusion (DEI) are missing an important piece of the puzzle. We need to be talking about layoffs. Most of the focus on DEI centers on things like diversity recruiting, equity in pay and promotions, and fostering inclusivity and belonging. But workforce reductions should not be overlooked because they're another area where marginalised communities are disproportionately impacted. That's why companies must prioritize DEI in all areas of their operations.

When companies downsize, it's not just a matter of losing jobs. Marginalised communities feel the impact even more because they already face hurdles to finding employment, stability, and career growth. Furthermore, there seems to be a prevailing bias against hiring individuals who have experienced layoffs, where employers might disregard highly qualified candidates solely because their previous positions were eliminated during a workforce reduction.  This perpetuates a vicious cycle. 

I constantly emphasise the importance of addressing the root causes of underrepresentation at work, not just treating the symptoms. This is a point I often discuss with my clients, urging them to change their systems to create a truly inclusive workplace. While addressing the immediate problems may provide temporary relief, sustainable changes are essential for long-lasting results. Read on to learn how DEI efforts often break down during layoffs and how to make workforce reductions more equitable by taking a holistic approach to DEI.

The disproportionate effect of layoffs on marginalized communities

When organisations go through layoffs, they should use fair criteria to make decisions and be transparent with employees throughout the process. Companies often use position and tenure to determine who to keep and who to let go. While these factors may feel “fair” on their face, they can have the unintended consequence of disproportionately impacting marginalised groups in the workforce.

How is that possible? Since many companies have just recently made commitments to diversity, equity, and inclusion (DEI), groups like people with disabilities, people of colour, or LGBTQIA+ employees are likely to be the newest. When decisions are made on a last-in/first-out basis, those are often the same employees being cut.

This not only undermines any progress made in creating a more diverse workforce, but it damages trust and affects the morale and engagement of the employees who are left. The long-term effects can be serious, too. It becomes harder to attract diverse talent, the company's reputation can take a hit, and there are limited opportunities for career advancement for underrepresented groups.

Studies have also shown that companies often see positions held by women and minorities as expendable when they're making cuts. In addition, those who have made it into management positions are usually in more junior roles or work in departments like human resources, legal, or public relations. While these roles are important, they're often considered less critical support functions outside the core business. So, companies end up inadvertently undoing a lot of the progress they've made toward creating a more diverse workforce.

Tech lay-offs hit diversity especially hard

While many tech companies were quick to go remote and saw their diversity increase, many of those same companies are now laying off employees and requiring returns to the office. This has hit the technology sector especially hard since it already has a lack of representation at all levels. A lack of diversity limits thought and innovation and prevents the industry from reaching its full potential for growth and success.

Unfortunately, the industry has unequal opportunities, with systemic barriers in place. These barriers include limited educational access and networking opportunities and biased hiring and promotion practices. As a result, specific communities remain underrepresented in the industry and struggle to find career opportunities and advancement.

On top of that, the tech industry also faces challenges in creating inclusive work cultures. Discrimination, bias, and exclusionary practices can make marginalized employees feel alienated, leading to lower job satisfaction and higher turnover rates.

Proximity bias

Remote and hybrid work has largely been a positive development for marginalised communities, as working moms, people of colour employees, employees with disabilities, and other groups have embraced remote work at higher levels for various reasons. However, these flexible arrangements leave these communities more vulnerable during layoffs due to proximity bias—the tendency to favour employees who work in close physical proximity with decision-makers. In fact, a recent survey revealed that 60% of managers would opt to cut remote workers first if a recession necessitated laying off employees. 

When companies reward presence in the office and hours worked over productivity and results, it undermines the contributions of remote employees, who are more likely to be from marginalised communities. Without policies that consider DEI, biases like these can creep into layoff decisions. To address this problem, organisations should work on levelling the playing field in remote and hybrid environments and establish transparent evaluation criteria based on performance rather than physical presence.

Creating equity through the system

When it comes to diversity, equity, and inclusion (DEI) initiatives, organisations tend to focus on the front end of the employee lifecycle—the hiring process. However, DEI should extend across an employee's entire journey with the organisation. Companies planning layoffs should apply their DEI goals and principles to minimize a disproportionate impact on marginalised communities and individuals. Here's what this looks like in practice:

  • Alternative Solutions: Companies should explore alternatives to layoffs, such as reduced work hours, job sharing, or re-skilling employees. These solutions can help mitigate the impact on marginalised communities and provide new opportunities for career growth across the workplace.
  • Transparent Communication: If layoffs are necessary, companies should communicate openly and honestly with affected employees, providing clear reasons for decisions. This transparency helps foster trust and demonstrates a commitment to fairness and inclusivity.
  • Data-Driven Decision-Making: Companies should collect and analyse data on the demographic composition of their workforce to identify any existing disparities. Using this information, they can develop targeted strategies for retaining a diverse workforce during layoffs and rebuilding with inclusivity in mind.
  • Provide outplacement services: To mitigate the impact of being laid off, offering outplacement services can be highly beneficial. These services can include career coaching, resume writing assistance, job search support, and networking opportunities. By providing these resources, companies can help their employees transition smoothly to their next job, minimising the negative effects of layoffs and demonstrating a commitment to supporting their workforce even during challenging times.
  • Rebuilding with Inclusivity: After layoffs, companies should make a deliberate effort to rebuild with diversity in mind. They can create a more equitable and inclusive workforce by proactively recruiting, hiring, and promoting individuals from marginalised communities.

Ongoing holistic DEI efforts

Layoffs can devastate underrepresented groups in the workplace, perpetuating existing inequalities and hindering their access to employment opportunities and career growth. While layoff decisions are never easy, they can be made more equitable and respectful by leveraging data, being transparent, supporting impacted individuals, and rebuilding with inclusivity in mind.

It's not just the right thing to do, but it's also good for business. A diverse workforce brings a variety of perspectives and experiences to the table, which leads to innovation and creativity. Diversity and inclusivity also help attract and retain more top talent for your organisation.

If you are a company looking for help with DEI, Aquent's Diversity+ solution can help you create a more inclusive workplace. Diversity+ is a comprehensive program that leverages data, proprietary technology, and expertise in diversity recruiting to help you identify and address unconscious bias, create a more inclusive culture, and attract and retain a more diverse team.   Connect with us to learn more about how we can support your diversity recruiting needs.