Are the Best Employees More Likely to Be Laid Off? A Surprising Strategy for Staying at a Company Long-Term

The other day, I came across an intriguing idea.

When a company runs into financial trouble, the least capable employees are not necessarily the first to be laid off. In fact, highly capable, well-paid employees may be the first ones targeted.

That seems backward. Surely a struggling company should be doing everything it can to retain its best people.

But when management must make substantial payroll cuts in a short period, it may be looking not at each employee’s abilities but at the number on their paycheck.

Being Excellent Can Be the Very Reason You Are Cut

The reason is simple.

Letting one highly paid employee go can sometimes save as much money as dismissing several lower-paid employees. It also reduces the number of departure negotiations the company must conduct.

Management also has a convenient rationale.

“Someone as talented as that will quickly succeed at another company.”

How considerate. Curiously, that consideration never seems to work in the direction of keeping the person employed.

When the company is doing well, management says, “Exceptional people are our greatest asset.” Once performance deteriorates, it starts saying, “Exceptional people will be fine somewhere else.”

Excellence can be used both as a reason to protect someone’s job and as a reason to eliminate it.

It is a remarkably convenient standard of evaluation.

The Mechanical Layoff Process I Heard About in Business School

During an MBA class, I once heard an interesting story from an instructor who had worked for a foreign-owned company.

He had once been responsible for reducing the company’s workforce.

First, the company listed every employee and approached them one by one from the top of the list to discuss voluntary departure. Each person who accepted brought the company one step closer to its reduction target. If someone refused, it moved on to the next person. If it reached the end of the list without meeting the target, the negotiations continued.

He said there was no time to evaluate every employee’s ability or contribution in detail.

The company did not need to identify its most capable people. It needed to reduce payroll by a specified amount before a deadline.

Even a veteran employee who had supported the company until the day before becomes nothing more than a row in a spreadsheet when management is cornered.

If You Are Asked to Leave, Start by Buying Time

So what should you do if you become a target?

I would not agree to resign on the spot.

In Japan, being encouraged to resign and being dismissed unilaterally are two different things. An employee is not obligated to accept a request to resign, and there are legal restrictions on dismissal.

I would examine every negotiable condition, including additional severance pay, the departure date, the treatment of unused paid leave, and outplacement support.

Then I would use the time I had secured to look for my next job or project.

The company wants to finish reducing its workforce quickly. The employee wants to move on under the most favorable terms possible.

What matters here is not appealing to the company with claims of loyalty, but calmly protecting your own interests.

In reality, however, I am a freelancer, so none of this would help me. One notice that my contract is ending, and that is the end of it.

Do “Reasonably Good Employees” Survive the Longest?

There is another interesting theory.

The employees least likely to be laid off are neither exceptional high performers nor incapable low performers, but the middle performers in between.

It cannot be called a statistically established law, but the logic is intriguing.

They do their jobs reasonably well. They get along adequately with the people around them. Their salaries are not exceptionally high.

The company has no particular reason to go out of its way to dismiss them.

By contrast, outstanding employees tend to become more expensive as they receive promotions and raises. Depending on the company’s financial condition, that can turn into a vulnerability.

If remaining at the same company for a long time is your highest priority, there may be a rational case for avoiding unnecessary attention and maintaining a moderate level of recognition.

Could Avoiding Promotion Be the Best Career Strategy?

We have been taught that success means producing results at work, earning promotions, and increasing our salaries.

But succeeding as an employee and remaining at the same company for a long time are not necessarily the same thing.

Should you build strong market value so that you can change jobs at any time? Or should you prioritize working comfortably at your current company for as long as possible?

Either can be a survival strategy.

If you choose the latter, do not let your salary rise too high, do not take on too much responsibility, and perform your work reasonably well.

Become the kind of employee whose absence would be a minor inconvenience but whose dismissal would not save the company much money.

Such a person may prove surprisingly difficult to eliminate.

Companies say they want excellent employees. But when a company is struggling, what it may really want is inexpensive employees.