When is a Company Layoff too Big?

2 min readNov 9, 2022

When is a company layoff too big?

Tech companies, in particular, are facing strong headwinds, and many are downsizing to reduce costs. While lowering payroll costs may be a responsible move when sales and profits are declining, when is a cut too large?

If you can’t deliver a product or service that meets customer expectations, you’ve probably cut back too much. It becomes a spiral: layoff staff, remaining employees can’t meet customer needs, revenue declines more… and the business downsizes even further.

Join Conference Room: More content on accounting, personal finance, and humor/ short story topics. Video, blog posts.

Think about products and services that you use. I’ll name several that I use all the time.

LifeTime Fitness has a large facility near my house, and I go 5–6 days a week. The staff is great, class instructors are wonderful- it’s a very well managed business.

But it’s not cheap.

My wife and I are willing to pay for a great experience, but if the quality started to slip, we have plenty of other options. Heck, someone built a nice-looking yoga studio a half mile from my house.

How about streaming services?

We use a bunch of them: NetFlix, Amazon, Paramount+, Apple, Hulu. The business that offers the best content wins. Once I pick a platform to watch content, I expect the streaming service to work without buffering.

Now think about customer perceptions.

I view LifeTime Fitness as much better than competing gyms in my area- the workout experience would really have to decline before I’d leave.

However, streaming services are a commodity to me.

Who is delivering the content to me doesn’t matter, assuming all of the services offer a smooth viewing experience without buffering.

Once a business loses a customer, it’s very difficult (and expensive) to regain their trust. I had trouble with Hulu streaming within the last year, and wrote off watching Hulu. Finally, they had content I really wanted to watch- and I found that the streaming quality was much better.

Without that must-watch new content, I would have never used the service again.

Beware of the company that cuts too much, and loses more customers (and more revenue) in the process.

When is a Company Layoff too Big?

Written by Accounting Accidentally