There’s quite a hubbub going on regarding the job cuts at Intuit. If you missed the controversy, the company is laying off 1,800 people, and saying that many of those are being let go for underperformance.
“We’ve significantly raised the bar on our expectations of employee performance, resulting in 1,050 employees leaving the company who are not meeting expectations,” the company said.
This mention of employee underperformance is getting lots of pushback among commentators, influencers, and HR professionals on LinkedIn and Twitter. Long-time analyst Lance Haun, for example, summed up what many have said when he wrote:
“If you have poor performers, especially more than a thousand of them, what were you doing before this action to improve them? If their performance was being managed, why not let those processes play out? We know the real reason: Layoffs like this are 100 percent a positioning exercise for publicly held tech companies, designed to appease shareholders and pressure workers to produce more with less. Intuit is profitable and healthy. They could've likely reskilled many of the people they laid off but, in an irritating trend, would much rather get the press that they are ‘cutting the fat’ but also ‘hiring for innovation.”
Dollar Signs and Vital Signs
We’re not here to pile on to Intuit. Profitable and healthy companies do seem to be cutting employees by the thousands, and time will tell which companies’ layoffs were a good long-run idea, and which weren’t.
What we did take note of, however, was the direct cost of this plan to lay off people and reallocate work. That cost is estimated by Intuit to be about a quarter of a billion dollars in severance, health care, mental-health, and more. Some might say the PR is hurting the company’s brand, costing it even more than that projected cost, but the $250-60 million is a more direct dollar figure.
This is just one more reminder how costly it is when people leave, whether by their choice, yours, or a combination.
We work with one customer in a high-volume warehouse. It has about 12,000 agents and spends about $800,000 a year on hiring. The customer estimates that turnover costs the company about $40 million annually.
These kinds of dollar figures are like vital signs of your hiring process. And they’re “flashing red” or providing a warning that something is amiss in the way you are screening, assessing, and retaining employees. They’re a sign you may not have a fully developed data-driven hiring process, aimed at time to hire and quality of hire. The latter metric should include a turnover component. If someone’s a superstar employee but leaves in two months, it’s not quality. If you’re profitable but cutting by the thousands, we’re thinking there could be a talent-acquisition or hiring problem here, not just an HR problem. You may not be hiring the people you want to be hiring, people you want to be part of the future of the company.
If you’re seeing high turnover or costly employment decisions, let’s talk about how to make it better.
