Quiet cutting isn’t a new strategy, but it has a trendy new name.
It’s a subtle strategy used by companies to restructure their workforce. It’s a way for employers to reduce costs and adjust their staffing needs without resorting to the more drastic measure of mass layoffs. This practice involves making incremental changes to employees’ roles, responsibilities, and compensation to encourage them to leave voluntarily, thus avoiding the need for formal layoffs.
Farhan Siraj, Co-founder and CEO of OSHA Outreach Courses, a provider of online safety training courses tailored to safety professionals, has been involved with multiple corporate restructurings and has seen the impact of quiet cutting first-hand.
His advice for employers considering this strategy is simple: Don’t do it.
“While you achieve the short-term goal of saving on workforce costs, the productivity level in the organization suffers as a result,” says Siraj. “Many of the workers you demote tend to quit in a few months.”
Although quiet cutting is a hip new term, employers have been restructuring their workforce since long before the phrase gained popularity, says Siraj.
“I have previously been involved in initiatives where we reduced employees’ salaries along with their responsibilities instead of simply laying them off,” he said. “In my experience, this sort of strategy rarely works. The freshly demoted employee loses all their motivation, and you’re practically left with team members who feel their low productivity is somewhat justified.”
Typical Quiet Cutting Strategies
Quiet cutting typically involves these strategies:
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- Role changes: Employees may find their roles subtly altered. This can include changes in job responsibilities, often without a corresponding increase in pay or, sometimes, a decrease in responsibilities, which can lead to feeling undervalued or underutilized.
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- Title adjustments: In some cases, there might be a change in job titles that doesn’t align with a change in job responsibilities or compensation, potentially leading to confusion or diminished job satisfaction.
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- Compensation changes: Companies may implement freezes or reductions in salaries, bonuses, or other forms of compensation. This can also include cutting back on benefits that were previously offered.
- Passive push towards resignation: The cumulative effect of these changes can create an environment where employees feel compelled to leave the company voluntarily. This is often the underlying goal of quiet cutting—reducing the workforce in a way that avoids the negative publicity and severance costs associated with layoffs.
What Quiet Cutting Costs Employee Morale and Company Culture
Quiet cutting can significantly impact employee morale and the overall company culture. Employees who remain may feel insecure about their job stability and undervalued, leading to decreased productivity and engagement.
“Just as we all notice at the store that suddenly package sizes are smaller but prices are higher, your staff is going to notice any quiet cuts that you make,” says Jarir Mallah, Human Resources Manager, Ling App. “This will lead to resentment and may come across as condescending. It’s best to be transparent about the cuts and word it to gain support rather than cause a quiet revolt.”
Business outcomes: While quiet cutting can achieve short-term cost savings, it can also have long-term repercussions on the company’s reputation, employee loyalty, and the ability to attract top talent.
If It’s So Bad, Why Do Employers Do It?
Bill Catlette, Partner at Contented Cow Partners, a corporate leadership and workforce advisory firm, has over sixteen years of HR leadership experience in growing, labor-intensive businesses (ADP and FedEx), plus two-plus decades of experience as an executive coach and advisor.
“I’ve seen about as many ways of exiting people from their jobs as exist,” he says.
That includes corporate restructurings, now labeled as quiet cutting.
“At its core, the practice is intended as a relatively bloodless means of separating one or more employees from the organization by changing critical elements of their job—location, pay, shift—to get them to quit on their own,” says Catlette.
But separating someone from their job through a formal layoff is unpleasant and can be expensive, Catlette points out. So, employers look for ways to restructure or cut costs without full-scale layoffs.
“The sole purpose of quiet cutting is to impose an amount of change in the nature of someone’s duties or terms of employment sufficient to cause them to quit on their own, alleviating the expense of severance or unemployment compensation and the difficult conversation,” says Catlette.
He doesn’t hold back when he says companies implementing quiet-cutting strategies are simply out of touch with today’s employees.
“We’re assuming that our employees are idiots, most aren’t, and that managers are good enough actors/actresses to pull off the caper,” he says. “Wrong again. Meanwhile, these moves are playing out in front of a wider, very interested audience—the rest of your workforce, who naturally conclude that the same could someday happen to them. Meanwhile, their work and attentiveness to customer needs isn’t happening.”
With quiet cutting, what was supposed to be incremental changes over time explodes into something much bigger than most organizations think can transpire.
“In the age of ubiquitous social media, reputational damage is a retweet away from viral transmission,” says Catlette. “That damage can, and does, manifest in degradation of the employer’s ability to attract and retain well-qualified talent, not to mention their general reputation.”
Catlette’s advice to employers is simply this: “Just don’t go there,” he says. “You’ve only got one reputation; don’t screw it up.”
Reassign Key Employees
Matt Erhard, Managing Partner, Summit Search Group, advises employers to consider quiet cutting to keep the employee’s needs and satisfaction central in the decision-making process.
“Reassigning an employee to a new role is hardly a new practice,” says Erhard. “This is something employers have done for decades to keep strong team members even as their business needs change, but there is a good and a bad way to go about it.”
The right way to approach this situation is to find a different role within the company where the employee can thrive and continue growing their career. It should use complementary skill sets to those used in their current role and carry a commensurate compensation and responsibility level—this should not be used as an excuse to give the individual a demotion or pay cut.
“Reassignment as a punitive measure can be appropriate when an employee underperforms, but it should not feel punitive if the employee has been a strong performer whose role has simply become obsolete or redundant,” says Erhard.
Shifting an employee into a lower-paying role that doesn’t bring them job satisfaction is essentially an underhanded way to get them to quit rather than simply firing them or laying them off.
“That is the wrong way to go about it and will reflect poorly on your organization if word gets out that you use this practice,” says Erhard, stating that if you truly want to keep an individual in your company, put them in a role that they’ll want to stay in. Otherwise, you should be decisive and up-front in your decision to let them go, allowing them to claim the unemployment benefits they are due and find a new position that suits their needs.
“You’ll always have more success reassigning the employee when they feel like they have some say in the decision,” says Erhard. “Offer employees a choice. Explain the situation and the fact that their role will no longer exist. Then, give them the choice of taking a different position within the company or being laid off and given a full severance package. This is the fair and ethical way to go about quiet cutting.”
Protect Critical Skills and Knowledge
The most significant risk of quiet cutting is the potential loss of critical skills and knowledge, says Fred Winchar, Founder, Certified HR Professional, MaxCash.
This risk can seriously undermine a company’s competitive edge. For example, consider a content marketing agency in 2024 that opts for quiet cutting. If they reduce their workforce, particularly in areas like research and development or content creation, they might lose touch with rapidly evolving AI trends. This gap in knowledge and skills could be detrimental. Competitors who leverage AI more effectively could easily outperform them, leading to lower profits and potentially threatening the company’s survival.
“The solution here is to safeguard the R&D department and continuously stay abreast of current trends, potential threats, and breakthroughs,” says Winchar. “Investing in areas that drive innovation and keep the company at the forefront of industry developments is crucial.”
Communicate Openly, Maintain Morale
Quiet cutting can significantly decrease morale and trust within the company, says Niclas Schlopsna, Managing Consultant and CEO of spectup.
“Employees tend to notice these changes, and the lack of communication can lead to rumors, anxiety, and a decrease in productivity,” says Schlopsna. “Instead, if reductions are necessary, it’s better to be upfront about the reasons—-whether they’re financial, strategic, or due to changes in business direction.”
Transparency and clear communication are key in any organizational change, especially those affecting staff.
Quiet Cutting Versus Mass Layoffs
The term quiet cutting seems like a reaction to the quiet quitting trend, adds Siraj.
“Employers feel the balance has shifted in their favor, and now they are coming up with unique ways to reduce their workforce expenditure,” he says. “To create a productive environment in an organization, employees should never feel that the management is hostile towards them. Unfortunately, quiet cutting sends the opposite message.”
Employers always want to avoid mass layoffs because it shows the company is struggling, says Siraj. On paper, restructuring may seem like a better, more discreet alternative.
But it’s often far from that.
Siraj says that such actions only create an atmosphere where employees constantly fear job insecurity, impacting their focus and willingness to take calculated risks.
“Over time, you will have a workforce that feels no sense of loyalty or commitment towards the organization,” he says.
Quiet Cutting Alternatives for Employers
Introduce a Voluntary Exit Plan
To avoid drastic measures like quiet cutting or mass layoffs, employers could consider a voluntary exit program or reskilling their workforce, points out Siraj. A voluntary resignation with financial incentives and other benefits can help cut costs while also respecting the employees’ autonomy.
Reskill the Workforce
Reskilling the existing workforce can be done by investing in training programs or educational opportunities that empower employees to acquire new skills. Reskilling allows workers to transition into roles your company requires but may have had trouble filling because of a skill shortage, while saving time and money on recruiting and hiring new employees.
Reduce Employee Hours
Another option to consider is reducing an employee’s hours, thus cutting their salary, but not the role.
“There are several people who would perform just fine at 30 hours per week and then could use the extra time off to do whatever they want, whether it be a side business or leisure time,” says Trevor Ewen, COO, QBench. “Identifying roles where this is viable may lead to fewer hard conversations while still gaining the cost efficiency of a 25% cut to a role.”
Shift to Remote Work
Organizations should also consider the potential for remote work in their cost-cutting plans, says David Gaglione, Founding Partner, PS212. Evaluating the feasibility of remote or hybrid work arrangements can reduce office space costs while offering employees greater flexibility. This allows the company to potentially cut costs while adding the flexibility most employees today covet.
Wrapping Up: The Last Word on Quiet Cutting
While quiet cutting might appear as an attractive, low-profile solution for cost-cutting, its long-term repercussions far outweigh its immediate benefits. Employers should be wary of employing such tactics, as they can severely damage company culture, employee morale, and ultimately, the company’s reputation. The loss of trust and the potential to demotivate remaining employees can lead to decreased productivity and innovation.
No matter how you navigate labor strategies in the year ahead, you should be open, honest, and fair to the teammates who have worked so hard to support your goals over the months and years. Quiet cutting can harm your brand and reputation because it’s a roundabout and rather painful way to push employees out the door and give them less than they deserve.
When it is all said and done, don’t participate in quiet cutting—-full stop, says Robert Kaskel, Chief People Officer, Checkr.
“Never, ever try quiet cutting,” says Kaskel. “Your business should embody solid values and ethics by striving to improve society at every step, so quiet cutting is never the ‘right’ answer.”
