Company guide: How to uncover DEI insights from a layoff?

Did your company unintentionally undermine its own efforts towards DEI through unbalanced layoffs? Worse yet, are you unsure whether your layoffs disproportionately affected underrepresented groups — because you don't (or can't) track employee data? The good news is, you don't actually need to have this data. What's crucial is ensuring that the criteria you use for layoff are designed fairly. How do we do that?

At the end of the day, every company operates based on some form of logic, regardless of how different their criteria may be from each other. They don't simply leave it up to chance. Even seemingly innocent systems, like last in, first out, need reflection. Start by documenting your criteria and asking tough questions.

Here are some common criteria used in layoffs, and why they could lead to an unbalanced effect on underrepresented groups:

Building a lean (and senior) organisation

Today’s business landscape is all about being lean and efficient. Companies aim to maintain or increase efficiency with fewer employees, often by retaining senior-level employees while parting ways with middle management and junior staff.

Over the years, numerous studies have shown that as seniority increases, whether in management or individual contributor roles, the representation gap widens. If your layoffs are based on seniority, there's a high likelihood that more women, as well as individuals from various ethnicities or nationalities, will be affected. While our article primarily focuses on women, it's important to recognize that diversity encompasses various dimensions and consider every aspect during your reflections.

What could have contributed to women lagging behind in seniority within your organisation?

While most companies claim to promote based on merit, reality is not that simple. It's worth considering whether women handle more “office housework” like event organisation, meeting coordination, or food ordering in your company. Or are women participating more in initiatives beyond their team's responsibilities? For instance, engaging in additional interviews to enhance diversity in hiring or leading initiatives to improve team engagement and morale.

These aspects often go unnoticed in many promotions. While female employees invest time in these activities, their male counterparts may be solely focused on team projects without juggling multiple tasks and initiatives. This discrepancy could result in gender imbalance in promotions and seniority levels, ultimately impacting layoffs as well.

Management making the decision 

Let’s face it  — we’re not yet at a point where we can leave the decision solely to AI. Human beings are always involved in deciding who will be laid off. It's important to reflect on whether bias, such as similarity or proximity bias, may have influenced their decisions.

It’s challenging to remain objective when we can relate to a person, such as seeing them at the same social club or coming from the same hometown. This can put underrepresented groups or remote workers at risk of unfair treatment. Ensure that your decision-makers receive ongoing training on unconscious bias, especially before starting working on a potential layoff.

Cost-cutting exercise

Perhaps your guiding criteria was simply a cost-cutting measure. You chose to close down the least efficient or most costly teams and initiatives, which happened to disproportionately affect underrepresented groups in your company. One aspect to consider is whether everyone had equal opportunities to join more revenue-generating teams and projects, or whether the selection process prioritised evaluating competency over personal recommendations.

Last In First Out

In more regulated layoffs, it's common to base layoff decisions on employees' tenure. If you used this method and ended up losing more employees from underrepresented groups, it might indicate that your recent efforts in DEI were actually yielding results. Even if this layoff sets you back a few steps, you now know how to diversify your workforce, and you can do it again when your business starts to regrow.

The key in these situations is asking ourselves the tough questions—ones that may lead to answers we don't necessarily like, but can offer valuable insights for building a fairer organisation moving forward. 

If there is a pattern, there’s a cause. And it deserves the question: what led us to this outcome?