The ugly truth behind mass layoffs

The ugly truth behind mass layoffs

An estimated 35,000 energy-related jobs have been lost in Alberta this year, about one-third as part of a group layoff. And that number is expected to keep growing. Although mass layoffs are often advertised as part of a “streamlining” or cost-savings exercise, there are many misconceptions about these types of corporate restructurings.

Mass layoffs are defined as any layoff which affects a group of 50 employees or more within a company. Once a CEO announces a mass layoff, each department head is given a quota and a select number of employees are “chosen” from within the organization and subsequently let-go. This can be a very painful experience for some, who are often left wondering why me? Why was I chosen and not the engineer in the adjacent cubicle? Why did I lose my job but Bob is still here? Employees can be left feeling like they suddenly got voted off the island without much of an explanation.

Here are some common misconceptions about mass layoffs:

1. It’s not always about saving money

Corporate restructuring is expensive. Those who are laid-off in the energy patch often get generous severance packages, pension payouts and job placement services. That costs the company big money. Productivity usually drops off a cliff during these restructuring events, the rumour mill runs wild and employees start searching the Workopolis job ads, even if they were spared the axe. It can be many, many years before a company reaps any economic benefit from a corporate restructuring event.  

2. It’s not about improving productivity

The term “top grading” gets used often when making reference to mass layoffs. This is the misconception that companies will only keep the best and brightest, and let go of all the slackers on the bottom of the productivity scale. Nothing could be further from the truth. Mass layoffs are not always very well organized. The layoffs are generally left up to senior levels of management who single-handedly pick and choose who they want to keep and who they want to let go. Sadly, life isn’t fair. As the old adage goes, sometimes who you know is more important than what you know.

3. Sometimes, it’s just about the shareholders

Ever wonder why a company would prefer to cut jobs before they cut dividend payouts to the shareholders? That’s because publicly traded companies are enslaved to their stock price. Senior management compensation is often very closely tied to the share price and the stock market is a good place to raise cash when required. When companies announce big layoffs, the stock price usually perks up. Shareholders like to hear that energy companies are getting serious about cutting costs, paying down debt and improving profitability. Whether they actually save any money or not from the corporate restructuring is very difficult to quantify. But it's the optics that count when it comes to share prices.

4. Sometimes, it’s a housekeeping exercise with no strings attached

It’s legally very difficult for a company, especially a large company, to selectively fire employees they don't like. But mass layoffs during an economic downturn provides an excellent opportunity to clean house without worrying about HR policies. It’s almost impossible to sue for wrongful dismissal during a mass layoff. Once you’ve cashed in that severance cheque, you’ve signed away your rights to any legal recourse. After all, oil prices are down and many other people were terminated at the same time as you. Right?



Alberta: 35,000
→ Cenovus Energy: 1,200
→ Suncor Energy: 1,000
→ Precision Drilling: 1,000
→ ConocoPhillips: 700
→ PHX Energy: 500
→ Nexen: 400
→ PennWest: 400

Global: 200,000
→ Schlumberger: 20,000
→ Halliburton: 14,000
→ Weatherford: 8,000
→ Royal Dutch Shell: 6,500
→ Trican Well Services: 2,000
→ Total SA: 2,000
→ Chevron: 1,500

If you’ve been involved in a group layoff, here are some tips to help you get back on your feet:


Remember, it’s not about you: Begging, pleading and plea-bargaining for your job doesn’t usually work. It’s not about how smart you are, how productive you were or how many years of experience you have (versus the other guy that still has his job). Remember, it probably has nothing to do with you or your performance.


Don’t burn your bridges: This isn’t the right time to tell your boss what you really think of him. Remain dignified, hold your head up high and politely say goodbye to as many people as you can before leaving the office for the last time. Collect email addresses and make an effort to stay in contact. Remember to always be graceful, even if it kills you.


Don’t publicly air your grievances: Tweeting “so long suckers!” as you're escorted out the door by security may make you feel better temporarily but may come back to haunt you later. Ditto for the Facebook rant on why Company X sucks the big one and you would never, ever work for them again. It’s not uncommon for companies to go on hiring sprees shortly after publicly announcing thousands of layoffs. Try to be discreet and resist the temptation to publicly air the company’s dirty laundry.


Take advantage of the employment assistance provided: Most companies will offer job placement services as part of their termination package. Connecting with job placement agencies, attending networking seminars and getting help cleaning up your resume might not be a bad idea. But for Pete’s sake, please skip the grievance counselling. Layoffs happen and they sometimes happen to good people. It’s business, not personal. Get over it. Resist the temptation to wallow in self-pity. Move on with your life and find a new job. Maybe even a better one than you had before.


Don’t take too much time off: If you’ve been working at the same company for a long time, this is a really good time to take some time off and reflect on where your career is headed. A short vacation can help provide some distance and clarity on your life. But this isn’t the right time for a year-long backpacking trip through Europe (unless you got a really good severance package). Too much distance for too long puts you at risk of losing touch with your network and any job opportunities that may come up along the way. While we’re on this topic, this isn’t the right time to enrol in a 6-year PhD program either.

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