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It’s probably not escaped your attention that there’s a lot of layoffs going on right now.
And in the middle of tough economic conditions, it's unsurprising that consulting firms are being swept up in the tide. The Big Four collectively planned to make nearly 2,000 cuts in 2023 alone, and McKinsey announced a move to cut 1,400 jobs, around three per cent of its headcount.
In 2024, however, McKinsey is taking a different approach to trimming the fat: Paying its workers to find a job elsewhere.
The unorthodox tactic involves keeping hundreds of engagement managers in its UK office – as well as US-based managers who are reportedly receiving similar offers – on the payroll for nine months whilst they try to secure a new gig rather than completing usual client-focused projects. At the end of the nine months, the “on search” employees will have to leave the company if they have not done so already.
McKinsey, speaking to Fortune, says the actions are part of the company’s mission to help people “learn and grow into leaders, whether they stay at McKinsey or continue their careers elsewhere." Managers will also be given career coaching, help with updating their résumés, and access to company resources such as IT systems and email accounts.
This generous but people-first approach to lay-offs is a far cry from the mass-layoff-over-video-call tactic that has seen disgruntled workers film themselves losing their jobs and sharing the footage on social media for all to see.
It’s also food for thought for employers and HR teams considering making such layoffs – is there an alternative path that focuses on reskilling and career coaching?
Could reskilling and career coaching help avoid layoffs?
Firstly, it’s worth caveating that McKinsey’s move to support managers with the transition has followed one of the largest layoffs in its history, mainly affecting support staff. And sources at the company reportedly claim that not enough workers have quit.
That said, the move is undoubtedly a positive one, and with careful planning – rather than introducing the measures as a last resort – a similar approach could help employees avoid the need for layoffs.
“Reskilling versus a regular pattern of layoffs should be an aspirational goal for any organization that has scale,” says Steve Woolwine, VP of Global Talent for Growth and Data-Tech-AI at Genpact. “It certainly mitigates the negative impact of employee morale and loyalty due to layoffs, helps retain institutional knowledge, avoids expense due to severance packages, legal & administrative costs, and recruiting costs, and fosters a culture of continuous learning which is needed to have the talent agility to remain competitive in today’s environment.”
Genpact, for example, has a culture of continuous learning created both from the top down and bottom up, pushing employees to improve their skills. Genome, its AI-assisted scalable learning platform, offers over 90 skills and the collective intelligence of over 600 subject matter experts in Genpact, giving employees access to reskilling.
“We launched Gen AI as a skill last year for all employees globally and within 3-4 months, we had over 40K people learning. As of today, we have over 80K learning the skill and over 60K have built beginner capability.”
According to company data, its workforce completed over ten million hours of training in 2023, with those who take part in consistent training three times more engaged than those who don’t.
Genpact isn’t alone in this approach. JP Morgan’s CEO, Jamie Dimon, appears to agree, after stating in a recent letter to shareholders that the company plans to use reskilling to avoid making those who lose their roles to AI automation redundant. “We will aggressively retrain and redeploy our talent to make sure we are taking care of our employees if they are affected by this trend,” he wrote.
Pre-emptively reskilling employees, including giving them the time and freedom – whilst being paid – could not only help avoid the need for layoffs, but also workers deemed as ‘surplus to requirements’ change their career path and fill business-critical roles across the business.
How to achieve impactful reskilling results
However, employers have to be careful with the execution of reskilling. Woolwine argues there are several factors for reskilling to succeed.
“Reskilling must anchor to what roles are needed for the future and breaking roles down to skills needed,” he begins. “It’s less about programs and more about culture, building the talent intelligence muscle and enablement through technology. Encouraging and enabling a culture of curiosity and continuous learning will make reskilling an embedded behavior that is needed to have the talent agility needed in today’s world.”
To do so, Woolwine argues HR must invest in technology and processes to enable reskilling and understand the skills and experiences of their workforce at depth to enable effective and timely workforce planning and talent interventions. However, they must do so with a people-first approach. “All of this must be designed from an employee-centric lens accompanied with precise guidance,” he adds. “This enables a push-pull model to deploy reskilled and upskilled talent.”
In practice, this means employers must ensure that jobs also change to reflect the new skills being picked up. “If employees are encouraged or expected to reskill or upskill, but their job does not change, this can result in frustrated employees especially if they see the organization continues to hire externally,” suggests Woolwine. “This means you may be training your competitors’ workforce as the likelihood of employees leaving for better opportunities will increase.”
Chris Lind, Chief Learning Officer at ChenMed, agrees it's frustrating when employees are forced through a one-size-fits-all pathway, when skills are not directly connected to jobs in the organization or are too vague to be directly applied, and when there are not legitimate opportunities for people who demonstrate the right skills.
“First, focus more on the skill outcomes and less on the activity to get there. When you focus on the outcomes, you make it clear what people need to accomplish but then empower them to navigate a path that works best for them,” he proposes. “People need to see how the progress they make is helping them as a professional. A surefire way to increase your attrition is to build people with marketable skills that they can only apply if they get a job somewhere else.”
Lind suggests that poor team alignment can also cause employee frustration. “Too often, efforts to accomplish this are attempted without the right players on the team,” he asserts. “As a result, the paths created either don’t align with the opportunities the business legitimately has to offer, or the systems and processes aren’t in place to make it all happen.”
To combat this, Lind suggests bringing together the right cross-functional team and getting alignment across the senior leadership team to help mitigate those risks.
Other barriers to employee reskilling include a lack of manager involvement, long cycle times, and low employee buy-in if they cannot apply learning to their current role.
But reskilling is “not a silver bullet solution”
Whilst avoiding layoffs by delivering reskilling is an aspiring state for companies to aspire to, it won’t be the right approach for all. Lengthy reskilling can be more costly than layoffs and may not align with when new skills are needed. “It may be easier and more cost-effective to buy the skill from the market,” explains Woolwine. “This means reskilling can be used as an alternative to layoffs but will not work in every situation.”
Lind also takes a measured approach, arguing that while reskilling can be a highly effective alternative to layoffs, it’s not a silver bullet solution. “People often underestimate the time and intentionality that goes into reskilling,” he explains. “Getting it right requires more than a subscription to a content library and a massive surge in completions. You need to be intentional about understanding what skills you need to sustain your organization in the future, assessing where people are today, and creating sustainable pathways to close the gap.”
Reskilling in the style of McKinsey or Genpact will no doubt time, resources, and caution to execute successfully - but it can be achievable and at the very least drive greater engagement with your existing workforce.
