First in line is not the end of the line
Newer employees no longer more liable for layoff, writes Gary Martin
WITH some economists falling over themselves to tell us we will enter into recession later this year, there is growing concern among those who have recently switched jobs that they will end up at the top of any layoff list.
Their disquiet is based on bosses’ traditional deployment of the last in-first out (LIFO) principle to decide which employees should face the harsh reality of the corporate chopping block.
LIFO involves selecting employees on the basis of the length of their tenure.
Those with the shortest length of service are the first candidates for any required layoffs, while those who have been around the longest will typically be the last to go.
Hanging on to long-term employees means organisations can retain vital corporate knowledge and memory.
LIFO is also considered a relatively straightforward and judgment-free way to assess who should be made redundant.
Despite those advantages, many employers in the modern workplace have discovered that the risks associated with LIFO can make it more of a liability than a liberator.
LIFO ignores the case of the recently appointed stellar performer who adds great value to the future of a business – only to be sacrificed to retain a longer-serving yet perhaps underperforming employee.
The reputation of a business in the employment market also has to be considered.
Hiring new staff and letting them go a few months later is never a good look – and that is before considering the impact on workplace diversity.
Companies have taken great strides to diversify their workforce, which has meant many new hires have been women, those from culturally and linguistically diverse (CALD) communities, Indigenous Australians, people with a disability and LGBTQIA+ employees.
A LIFO approach to downsizing is therefore likely to disproportionately affect people from those groups, at the same time as sabotaging the progress made towards an organisation’s diversity goals.
On top of those issues, there are potential allegations of age discrimination.
This is because younger employees tend to have shorter periods of service and would therefore be disproportionately affected by a LIFO approach to shedding staff. Some suggest FIFO – or first-in, first-out – is more appropriate because it prioritises workers with the longest service for the layoff list rather than those with the shortest tenure. But just like LIFO, FIFO will come with accusations of age discrimination.
Many employers have come to the view a LIFO strategy is an overly blunt cost-cutting tool that might hinder an organisation for the foreseeable future. More often than not, LIFO alone will lead to many important skills being lost.
The modern organisation will increasingly look to reshape a workforce beyond length of service and instead focus on measures such as experience, skills, qualifications and overall employee performance.
The bottom line is that while there are never any guarantees of job security, being new to an organisation should not make you any more vulnerable to being laid off.