It’s a familiar narrative: every election year, businesses brace for economic and political uncertainty, with layoffs often seen as an inevitable consequence. However, while elections may cause turbulence in political offices (such as one party wanting to fire the other) layoffs in the business world are driven by something else; strategy, or the lack of it. 

The reality is that business leaders deal with uncertainty every day, not just during election cycles. The fourth quarter is infamous for layoffs, but not because of who’s running for office. It coincides with the end of the fiscal year, the season of performance accountability, when executives who’ve been making non-strategic choices wake up to poor results and scramble to salvage their financials. The culprit isn’t the election, it’s a failure in data-driven decision-making and poor planning throughout the year. 

Take CVS, which is preparing to eliminate thousands of jobs in an effort to reduce costs and streamline operations, affecting a significant portion of its workforce. Similarly, Verizon recently announced plans to cut 5,000 positions by March, reflecting a broader push to enhance operational efficiency. While competitive markets remain volatile, these cuts highlight the importance of strategic planning over reactionary measures. Elections are predictable events, happening every four years without fail. What’s unpredictable, however, is the marketplace, which is why leaders must prioritize year-round, data-driven decision-making to maintain resilience and growth. 

THE COVID-19 EFFECT 

Admittedly, the past few years have been uniquely challenging. The pandemic brought a business environment unlike any other.  Initially, it triggered fear, but then demand surged, margins grew, and companies ramped up spending. Businesses got government aid, and homebound consumers with extra time and money shopped like never before. Prices went up, inventories swelled, and it seemed like demand would just go on booming. 

Now, the party’s over. 

As people continue to return to in-person work, the focus has shifted back to productivity in shrinking markets. The post-pandemic reality is forcing companies to return to basics, with the Pareto Principle (80% of revenue come from 20% of resources) reasserting its dominance. Leaders are now shedding unproductive segments and doubling down on what works. 

While layoffs can be painful, they’re not infrequently a strategic necessity. The lowest-performing quartile in a business often drains resources, and downsizing can free up capital and personnel for top-performing areas. But leaders must trade their chainsaws for scalpels, turning layoffs into opportunities for strategic growth. The goal isn’t just survival, it’s laying the foundation for future profitability. 

No question about it. The post-pandemic era has forced companies back to fundamentals. The 80/20 rule, which dictates that roughly 80% of profits come from roughly 20% of resources, is making a comeback. This is a development not to be mourned but applauded, loudly. And while we’re at it, let’s not put all the blame (or bestow all the credit) on the post-Covid hangover. Automation has been a driver of layoffs since the industrial revolution. Today’s dominant mode of automation, AI, threatens (or promises) even more profound workforce disruption. 

AI OPENING DOORS 

We see AI proliferating where automation has always proliferated, replacing human labor with machines in jobs and processes that are dangerous, dirty, or repetitive. More interesting but less predictable is its impact on what William F. Heitman (The Knowledge Work Factory) calls “knowledge workers.” For instance, from customer support (CS) to software coding, AI is making deep inroads. Online, human CS agents are being replaced by AI-driven chatbots. As for software coding, Nvidia CEO Jensen Huang told his audience at the World Government Summit in Dubai: “Over the last 10-15 years, almost everybody who sits on a stage like this would tell that it is vital that your children learn computer science, everybody should learn how to program, In fact, it is almost exactly the opposite.” 

Critically, there is uncertainty in this megatrend. AI customer support cannot adequately resolve complex customer issues. The most successful CS operations deploy hybrid solutions, in which AI fields incoming calls but exercises its artificial intelligence to hand over complex calls to a human agent. As for AI software coding, experts believe that generative AI will “take over the jobs of low skilled coders, but experts will likely become even more important, providing architectural vision and direction.” 

The only certainty is that the future keeps coming. At present, however, an Upwork survey found that 77% of workers who use generative AI complain that “it has added to their workload and is hampering their productivity.” 

PLANNING IS THE ANSWER 

The key takeaway? Stop blaming uncertainties wrought by elections, pandemics, and AI. Layoffs can, and should, be part of a proactive strategy to streamline operations, refocus resources, and position your company for sustainable growth. As the pandemic taught us, reactive decisions won’t protect you from uncertainty, but a strategy grounded in data-driven insights will. Leaders must embrace year-round planning, making tough decisions early and often, not just when fiscal deadlines loom. 

To thrive in a volatile market, businesses need to prioritize long-term resilience over short-term reactions. The time for strategic, proactive leadership is now—don’t wait for external forces to dictate your next move. 

As seen on Human Capital Innovations.

Bill Canady

Bill Canady has over 30 years of experience as a global business executive in a variety of industries and markets focused on industrial and consumer products and services.

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