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Layoffs driven by skills mismatch, performance issues – not over-hiring: LHH report

by HR News Canada
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Recent layoffs across various industries are increasingly being attributed to skills mismatches and performance issues rather than over-hiring, according to a new report by talent solutions provider LHH.

The 2024 Outplacement and Career Mobility Trends Report, which surveyed over 3,000 HR leaders and more than 8,000 workers in nine countries, indicates that economic pressures and the rapid integration of technology are reshaping workforce strategies.

The report shows that while layoffs remain common — with 73% of HR leaders either planning or considering them this year, a slight decrease from 77% in 2023 — the reasons behind these decisions have shifted. Performance issues (30.2%) and the lack of relevant skills (29.7%) now top the list of reasons for workforce reductions, as companies grapple with the evolving demands brought about by technological advancements and economic uncertainty.

“HR leaders are increasingly recognizing the impact of technology on the skills required for organizational success,” said Russell Williams, Senior Vice President of Career Transition & Mobility, North America, at LHH. “In the face of economic challenges, employers are reassessing whether their workforces are meeting these evolving needs, while also exploring how technology can support employee growth.”

LHH’s findings suggest that organizations are also turning to redeployment strategies as an alternative to layoffs, with 82% of HR leaders considering redeploying workers to fill skills gaps. The proportion of HR leaders with active redeployment initiatives has risen by 25 percentage points since last year, now standing at 47%, reflecting a growing trend towards retaining and reskilling talent.

The report also highlights a disconnect between the support employers say they offer and the awareness among employees. While 43% of HR leaders report providing career coaching services and 45% offer outplacement services, only 10% of workers are aware of career coaching being available, and just 9% know about outplacement services.

John Morgan, President of LHH’s Career Transition & Mobility and Leadership Development businesses, highlighted the importance of evolving talent strategies to support employees throughout their careers.

“The global job market has undergone significant reshaping over the past year, largely due to the rising impact and integration of AI,” he said. “Our research tells us that leaders are recognizing the need to evolve talent strategies to support employees throughout their careers, making reskilling and redeployment essential for maintaining an agile organization.”

Burnout is another major concern highlighted by the report, with 69% of workers globally reporting that their teams are experiencing burnout. This issue has become the top concern for HR leaders, with 25% expressing worry about increased workloads leading to burnout—a significant increase from just 6% last year.

As layoffs continue, the report suggests that addressing burnout and offering opportunities for reskilling and leadership development could be key to retaining the remaining workforce. According to the findings, 28% of workers considered leaving their employer, with a quarter applying for jobs outside the organization and another quarter exploring internal opportunities.

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