Layoff Reasons

by Lynda Moultry Belcher; Updated September 26, 2017

Layoffs can be a harsh reality for many businesses, specifically those suffering from a myriad of financial problems. The employees affected by the layoffs often find themselves panicked and unsure of what to do. Moreover, their confidence in their job abilities may be compromised as they wonder why they were targeted for a layoff. However, there are many reasons why a company might have to lay off employees, and many of them have nothing to do with job performance.

Financial Issues

This is one of the more commonly cited reasons for laying off employees. When going through tough economic times, companies must cut costs wherever possible and generally, they achieve their greatest cost savings through elimination of positions. Employees are the most valuable and among the most costly assets of a business. Not only do layoffs save on salaries, they save on benefits as well, which when added back to the company's bottom line, can be a huge financial windfall.

Company Reorganization

When companies merge or restructure, they may lay off people in duplicated positions. For example, if two companies are merging, there is no need for two marketing departments, so one group of people is let go. Generally, companies take steps to try to reassign some individuals, particularly those with the greatest breadth of skills and experience; however, in some instances, a round of layoffs during to merger or restructuring is unavoidable.

Increased Efficiency

When companies try to streamline their processes to become more efficient, layoffs can occur. Generally, this is the one area where job performance could be a factor, depending on the reason cited for the need for greater efficiency. The process could be as simple as determining that there is no need for multiple positions of the same title (such as six staff receptionists) or as complex as combining two or three positions to create one more efficient one with several responsibilities from the old positions.

About the Author

Lynda Moultry Belcher is a writer, editor and public relations professional. She worked for a daily newspaper for 10 years and has been a freelance writer for more than 15 years. She has contributed to Divorce360 and Revolution Health Group, among other publications. She is also the author of "101 Plus-Size Women's Clothing Tips" and writes "Style At Any Size," a bi-weekly newspaper column.