Why Keeping Your Best People Is Sometimes the Only Smart Cut Left to Make

Workforce reductions may look efficient in a spreadsheet—but letting go of the wrong talent can cost far more than you save.

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In Defense of the Ones You Can’t Afford to Lose

It’s easy to treat layoffs as a finance-first decision. Revenue slips, investor pressure builds, and suddenly the C-suite is in triage mode. Headcount reduction becomes a line item—fast, clean, impersonal. But when layoffs are executed without internal intelligence, context, or care, companies can end up losing the very people they need most.

According to Gallup, the cost of replacing an employee can range from one-half to two times their annual salary, depending on role complexity and institutional knowledge.

Now multiply that by your most indispensable engineer, the trusted team lead, or the product manager who holds the roadmap in their head—and you start to see how costly miscalculations can be.

“If you think it’s expensive to retain great talent, try replacing them after the damage is done.” – Lars Schmidt, founder of Amplify Talent

The Role of Internal Advocates

In large organizations, layoff decisions are often made by leaders far removed from the day-to-day. That’s where departmental heads, directors, and managers must step in—not just to vouch for critical team members, but to present data-driven context.

This means being able to explain:

• The opportunity cost of losing a key performer

• The potential delays to mission-critical projects

• The internal morale risks of cutting trusted leaders

• The external perception damage (especially on platforms like Glassdoor)

Done right, this isn’t about protecting "favorites"—it’s about protecting the business. McKinsey notes that organizations that plan with role criticality and long-term performance in mind—not just salary brackets—outperform peers post-reduction.

Estimated Cost of Replacing a High-Impact Employee

Role	Avg Salary	Replacement Cost (1.5x)	Time to Backfill	Risk Score
Sr. Developer	$130,000	$195,000	4–6 months	High
Sales Director	$150,000	$225,000	5–7 months	Very High
Ops Manager	$95,000	$142,500	3–5 months	Medium
Support Lead	$80,000	$120,000	2–4 months	Medium

Before the Ax Falls

Instead of defaulting to headcount-based cuts, smart leaders should present alternative scenarios:

• Job-sharing or role compression plans

• Internal reassignments

• Deferred compensation offers for critical staff

• Contract renegotiations in non-core departments

Harvard Business Review makes it clear: preserving morale, cohesion, and institutional knowledge should be top strategic priorities, not afterthoughts.

Let’s also not forget that high-value employees are flight risks during volatile times. A lack of transparency or sudden organizational changes without context can lead to a brain drain—voluntary or otherwise.

Case in Point: When Bad Cuts Go Public

In 2022, Better.com laid off 900 employees on a single Zoom call, prompting mass criticism and a drop in trust from both customers and investors. While it was efficient, it also undermined employee confidence, stakeholder goodwill, and employer branding for years.

By contrast, when Airbnb announced layoffs in 2020, CEO Brian Chesky publicly acknowledged the pain, outlined decision-making criteria, and offered generous severance, job placement help, and transparent communication. The move preserved long-term credibility—and allowed Airbnb to rehire key talent as it rebounded.

Equipping C-Level Decision Makers

If you're in middle or senior management, your job isn’t to passively accept reduction lists. It’s to proactively map out the cost of each proposed cut, using KPIs, operational dependencies, and succession risk analysis.

Build a “Do Not Cut” file that includes:

• Individual performance metrics

• Strategic projects impacted by their departure

• Client or stakeholder relationships tied to them

• Estimated replacement cost and timeline

• Cultural contributions (especially in hybrid or remote teams)

Doing this doesn't just show care for your team—it shows competence and foresight to the executives who need better insight to make smarter calls.

Final Word

Layoffs will always be part of organizational life. But poorly considered ones can set your company back quarters—if not years. Protecting mission-critical people isn’t sentimentality—it’s risk management.

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