Dumping the Crew Won’t Fix the Ship’s Course
Layoffs weren’t a solution—they became a cycle.
Over the past two years, 36% of tech companies have undergone more than one wave of layoffs or disappeared entirely after the first one. 82% of subsequent layoff waves occurred within a year. But the most shocking fact — the number of repeat layoffs has become almost equal to the number of initial layoffs over the past ~18 months.
These aren’t just numbers – they represent hundreds of thousands of people experiencing this painful reality.
These are companies that thought layoffs would save them, but instead, they only accelerated their crisis.
Do layoffs truly solve the problem, or do they just delay the inevitable?
Why Do Companies Lay Off Employees?
In tech, 40-80% of costs are tied to personnel. That makes layoffs the easiest way to cut expenses when a company is in crisis or heading toward one.
I analyzed 3,300 cases of layoffs in tech companies over the past two years (source), and here’s what I found:
36% of companies went through more than one round of layoffs or disappeared with the first,
82% of subsequent layoffs happened within a year of the previous one,
The number of repeat layoffs is now nearly equal to initial layoffs in the past 18 months.
This means that for a third of companies, layoffs didn’t work.
Most of them realized this within 12 months.
But if layoffs don’t fix the problem, what is the root cause?
Poor Context Awareness and Weak Strategy Planning
Let’s start with the key question:
How did the business end up in a situation where layoffs became the only way to survive?
At a high level, this can happen due to:
Overestimating the company’s ability to generate new revenue streams or failing to protect existing ones,
Misreading the external context—changes in market dynamics, competition, or resource availability,
An unexpected market disruption, for which the company wasn’t prepared and didn’t account in its strategy.
All these problems share a common root: poor strategic planning, weak scenario analysis, or a complete lack of it.
And when reality catches up, the company reacts with layoffs.
This is a turning point: To understand the company’s chances of survival and success, we need to analyze which of the two approaches is driving its decision-making:
Either the company rethinks its fundamental strategy,
Or it enters a downward spiral.
What Happens During Layoffs?
The Downward Spiral
🚩 Red flag: Layoffs happen first, and (maybe) an analysis of mistakes follows later.
Layoffs are often based on an oversimplified approach:
Getting rid of the least motivated and lowest-performing employees.
Eliminating “non-essential” functions that are not seen as critical.
Layoffs don’t create additional value—they only reduce the company’s capabilities.
Fewer people → fewer ideas, less work done, and a difficult period of restructuring roles.
Here are two key questions to consider before implementing this approach:
Were these employees always underperforming?
If not, what caused their motivation to drop?
Could the company have influenced this (e.g., through better strategic prioritization)?
If the performance evaluation system kept these people in the company until layoffs, does it really work? And if it doesn’t, why are we using it as the basis for terminations?
How do you determine which functions are truly “non-essential”?
Were these functions neglected from a management or organizational standpoint, making them seem less strategically important?
Could they become not only necessary but also highly effective under different circumstances?
If these questions are ignored, the company only retains the most effective part of the team… but for a strategy that already led to a crisis.
It’s like lightening a ship that’s already on course to hit an iceberg instead of changing direction.
And if you consider that the most effective team—the one that executed the failing strategy—now doubles down with renewed energy, grateful to still have their jobs, the ship will accelerate toward the iceberg even faster and with enthusiasm.
In other words:
The company is optimizing itself to execute the very strategy that led it into crisis.
And that’s why repeat waves of layoffs are inevitable.
Approach: Rethink, Then Decide and Act
The smart approach is first understanding the causes of the crisis, reassessing the strategy, and only then making decisions about layoffs.
In this scenario:
The company quickly acknowledges reality and analyzes strategic mistakes,
Strategic goals are reassessed,
A clear, transparent crisis recovery plan is communicated to the team—because if the ship is sinking, everyone goes down together,
Even if the rules of the game change for some functions, everyone will at least know these changes were made with the future in mind, not the past.
Does this guarantee success?
No. But it significantly increases the chances of avoiding another downward spiral.
How to Tell If Leadership Chose the Second Approach?
Key questions for leadership:
Why did the business end up here when we planned to be somewhere else? What have we learned?
How has our approach to setting future goals and paths changed?
How has this impacted our strategy and initiatives?
Why will it work this time, when we now have fewer resources?
If you don’t have answers to these questions, this is just the first wave of layoffs.
And as we all know, the first wave hits the job market before the second.
Conclusion
If layoffs happen before the strategy is reassessed…
If causes and mistakes aren’t analyzed…
If approaches to strategic planning don’t change…
If the new strategy is vague or poorly communicated…
Get ready for the next round.
Because the company is optimizing itself to efficiently achieve pre-crisis goals.
Dumping the crew won’t fix the ship’s course!
Bravo, Sergii 👏