Dive Brief:
- HR leaders in the U.S. say layoffs are coming, with 66% saying they expect reductions over the next 12 months, according to LHH’s latest U.S. Severance and Separation Benefits Benchmark Study. That percentage has nearly doubled since LHH’s last report in 2024.
- The report also highlighted changes to employee separation agreements, with 56% of organizations offering more generous severance policies, down from 76% in 2024. However, 38% of companies said they reduced their severance packages, representing a marked increase from 9% of companies who said that in 2024.
- Companies also say they’re increasing access to transitional services for departing employees, but recent reports show that the labor market continues to present challenges to workers looking for their next role. Companies are both reigning in expansion plans and becoming significantly more selective in making hiring decisions.
Dive Insight:
LHH surveyed 600 U.S. HR and business leaders, and found that 72% of business leaders and 80% of CEOs expect layoffs in the next 12 months.
However, the study also found that organizations are looking for alternatives to involuntary staff reductions. Almost everyone surveyed (99%) said their company routinely examined such options, including retirement incentives (42%), voluntary departure programs (41%), redeployment (38%) and temporary leave (38%).
“Workforce reductions are among the hardest decisions leaders make, and they’re no longer limited to periodic rounds tied to budget cycles or downturns,” LHH President John Morgan said in a statement. “As organizations invest in AI and rethink how work gets done, they’re still learning what works, what doesn’t and what that means for their people.”
In particular, nonexempt employees are increasingly gaining access to career transition services, with 79% now able to make use of those resources, up from 58% in 2024. Furthermore, 38% of the companies that offer these services to nonexempt workers also provide comprehensive programs, such as one-on-one coaching and online tools. Meanwhile, 85% of exempt employees are being given career transition services, up from 61%.
The study found that HR’s role in outplacement decisions has shrunk, with HR teams leading those decisions at only about one-third (30%) of organizations, down from 58% in 2024. On the other hand, CFOs spearhead those decisions at 18% of companies, up from 6%, and procurement is in charge at 13%, up from 2%.
“In the year ahead, pressure to deliver results will make workforce decisions harder to defer,” Morgan said. “Leaders need to make workforce planning an ongoing part of how they operate, with reskilling, redeployment and career transition built into one strategy.”
Recent reports indicate that technology jobs are most at risk when it comes to layoffs, with the sector layoffs increasing 67% year over year in July, just ahead of the finance and government sectors.
