The Fewer, Better, Better-Paid Workforce

Something has changed about how companies manage their workforce.

In 2015, small layoffs affecting fewer than 50 employees accounted for 38% of all workforce reductions. By 2025, that number hit 51%. In its 2026 Worklife Trends report, Glassdoor calls this the “forever layoff.” Continuous small cuts throughout the year instead of rare, large-scale reductions.

The logic from leadership’s perspective is not that hard to understand; small cuts fly under the radar. They allow for continuous budget adjustment without the reputational hit of a major reduction in force.

The end result of this “CFO Lens” thinking isn’t as simple. Employee mentions of “layoffs” and “job insecurity” in company reviews are now higher than they were in March 2020. Workers today feel more anxious about losing their jobs than they did at the onset of a global pandemic.

The forever layoff – the fact that we’re even coining a term for it now – is just one of many indicators of modern workforce strategies being built on the wrong foundation.

Most companies manage headcount as a cost line: when margins compress, they cut and when things improve, they hire. Cut, hire, cut, hire. This cycle continues indefinitely because rarely does anyone take the time to address the underlying question: why do we need this many people to produce this much output?

I’ve written this article to recommend a different approach. One that eliminates the need for continuous cutting because it builds a workforce that produces more per person from the start. Fair warning: It requires interested parties to think differently about compensation, capability development, and what you’re paying for when you pay someone’s salary.

Jim Collins studied Nucor extensively while writing his 2001, “Good to Great”. The steel company went from the verge of bankruptcy to becoming one of the most profitable steel manufacturers in America, beating the general stock market by a factor of five.

Collins found something surprising about their workforce approach:

Nucor paid its workers more than any other steel company in the world and more than 50% of that compensation was tied directly to team productivity. The result was workers who showed up 30 minutes early because they wanted to, not because anyone told them to. In one case Collins documented, teammates chased a lazy colleague out of the plant with an angle iron. While I am certainly not condoning violence, or the threat of violence, the point is that the culture self-enforced.

One Nucor executive summarized the philosophy: “We hire five, work them like ten, and pay them like eight.“

Five people produced the output of ten while being paid far better than average but costing less in total than the ten average performers they replaced. I remember reading this many years ago and being struck by how simple, but powerful an idea that was.

If you pay people 60% above market but they produce twice the output, you come out ahead. Way ahead. You never find yourself needing to cut headcount because you never hired the excess headcount in the first place.

If your business is like most, you calculate labor cost per hour or per year. Very few expend the time and energy to calculate labor cost per unit of output.

Most companies look at what an individual’s compensation costs the company and ask, “is this too expensive?” They rarely ask, “what would it cost to get this output any other way?”

The Nucor principle works at every level. One well-developed, well-compensated person producing the output of two or sometimes even three average performers costs less than hiring the two or three.

The typical company hires for the role as defined and then try to pay the lowest possible rate the market will bear, considering this good business sense. They provide whatever training is required to perform the basic functions or to meet minimum compliance requirements. What they end up with is exactly what they set themselves up to find: employees who do exactly what the job description says, nothing more. Those same employees are, more often than not, keeping one eye always on the horizon for something better.

When the workload increases, the company hires more people. When margins compress and the strategy becomes “do more with less”, they cut people. And the cycle repeats.

Nucor’s approach demands something different; employees who can operate beyond their job description and who understand not just their function but how their function connects to the business. Employees who can make decisions that account for cost, quality, and customer impact without escalating every judgment call to management.

Simply put, market-rate employees with standard training will give you market-rate output. Period. And that’s fine, because what matters is what comes after the hire: whether you develop people into high-output contributors or leave them to figure it out on their own.

Most companies choose “figure it out on their own” because development costs money and takes time. It’s harder and requires effort. Those same companies then stand there, scratching their heads and wondering why productivity stagnates and headcount keeps growing.

You’ve probably witnessed this: someone damn good at their job gets promoted. They were excellent at what they did – doesn’t matter what it was, and the assumption was made that because they were so good, logically they must be management material to lead others doing the same job. Now they are responsible for all or part of the P&L, for managing budgets or at least having a hand in meeting that budget, and for making decisions that affect profitability. And yet nobody taught them how to read and understand that P&L they have implicit responsibility for – and may not have even shown it to them. Nobody taught them how to calculate ROI on an equipment purchase they need to make the decision for. Nobody taught them how to think about labor cost per unit of output rather than just “we need more people.”

This new manager proceeds to manage the way they saw their predecessors manage. They request headcount when workload increases. They focus on the technical aspects they understand and avoid the financial aspects they do not. They make decisions that look reasonable from a technical perspective but destroy value from a business perspective.

The problem isn’t character – these are clearly good people who are willing to work hard, or they probably wouldn’t have been promoted (rare exceptions aside). It’s a problem of a gap in capability, and that gap exists because somewhere along the line, someone decided that developing business acumen in the people who would have a material impact on the business was too expensive or too time-consuming. Madness, right? But it happens.

And at the same time, the company keeps hiring more people because the managers cannot figure out how to get more output from the people they have. The ‘forever layoff’ mentioned at the beginning of this article becomes inevitable because the headcount was never justified by productivity in the first place.

The alternative is to invest in closing capability gaps before they compound into headcount bloat.

This does not mean sending everyone to get an MBA. It means identifying the specific skills that would enable each person to contribute at a higher level and closing those gaps deliberately, strategically, and surgically. To develop a great employee into a well-paid, phenomenal one that stands and produces above the merely average, creating a win-win scenario for both parties.

A production supervisor who understands cost accounting makes different decisions than one who does not. A maintenance manager who can calculate ROI on equipment purchases makes better capital recommendations and stops repairing a machine that would have been cheaper to have replaced outright. A department head who can read a P&L can identify profit leaks before they require layoffs to address.

These are not abstract concepts. They are specific, teachable skills and the cost of teaching them is trivial compared to the cost of the poor decisions that result from not teaching them.

A two-day training course on financial statement analysis for managers might cost a few thousand dollars per person in direct costs plus time away from operations. If that training enables a manager to identify ONE unnecessary hire per year, ONE position they realize they do not need because they found a more efficient approach, the ROI is massive. ONE avoided $50,000 salary might pay for training the entire management team for years.

The baseline problem is that training is a black and white, clearly defined cost that shows up on this quarter’s P&L, while the avoided hire is a non-event that nobody is tracking. Sadly, this causes most companies to skip the training, approve the hire, and eventually find themselves trying to deal with headcount they cannot afford.

Traditional training models do not work well for this purpose. Pulling people out of operations for a week-long course is disruptive and expensive. The overload of information they’re asked to absorb in that week means most of it gets forgotten almost immediately. And the one-size-fits-all approach of a course at that scale means many people need to sit through content they may already know to get to the content they need.

This is why micro-learning has gained traction; short, focused modules that address specific capability gaps and can be delivered digitally so people can engage when it fits their schedule and consumed in a way that works for them, be it at a computer, or mobile device. And these are often structured so that learning can happen in 15-minute increments rather than week-long blocks.

Because I believe in this passionately, I began actively developing curriculum for a few clients to solve this exact problem; closing the gap between being excellent at the work and understanding how that work affects the business. Courses on P&L analysis, cost accounting fundamentals, ROI calculations, and understanding the operational metrics that matter.

Companies should choose a format that best serves the organization’s needs. Sometimes that looks like self-paced digital modules that people complete between shifts, and other times it is a focused half-day session taught by a third-party professional on a specific skill. Depending on the employee and the skill gaps that need to be filled, it may be a structured program that builds capability over months. The delivery mechanism matters less than the outcome: leaders who understand the business well enough to make decisions that account for both.

The production supervisor who needs to understand gross margin does not need an MBA, they need targeted training on what gross margin is, how it is calculated, and how their decisions affect it. Give them that, and they make better decisions tomorrow. If you stack enough of those modules over time, eventually you will have a technically excellent employee who also understands the business and THAT individual will produce more value than two people who each only understand half the picture.

Before Development: A production manager requests three additional operators because volume increased 15%. The request goes to the controller, who checks the budget, and to the GM, who approves it because “we need to meet demand.”; headcount increases by three.

After Development: The same production manager analyzes the situation differently. They are able to identify that volume is up 15%, but output per operator varies significantly by shift. The afternoon shift produces 20% less than the morning shift and before requesting headcount, the manager investigates why.

The analysis reveals that the afternoon shift uses different equipment settings and has less experienced operators. By standardizing settings and moving one experienced operator to afternoons to mentor the team, productivity increases 18%. Immediately, it can be determined that no additional headcount is needed, and the volume increase can be handled with existing staff.

That manager just saved the company $150,000+ annually in avoided salaries and benefits and that analysis only happened because someone taught the manager to think about labor cost per unit of output rather than just headcount. Hopefully, that manager is paid appropriately.

• “We can’t find people like that.”

You are not supposed to find them. You are supposed to develop them.

• “Training is too expensive.”

More expensive than perpetual hiring, layoffs, and mediocre productivity? Run the numbers.

• “We don’t have time.”

You will spend far more time managing the problems that result from not developing capability.

• “What if they leave after we train them?”

You can be certain that they will leave if you do not train them and they hit a development ceiling. At the minimum, trained employees produce value while they are there. Pay them appropriately and give them room to grow and you reduce the risk of losing that talent exponentially.

Each of these objections boils down to: the upfront cost is visible and certain, while the compounding benefit is delayed and requires belief. This very human tendency to chase the path of least resistance or lowest effort (at least at first glance) is exactly why most companies stay stuck in the forever layoff cycle.

Training ten managers on financial analysis: $50,000 upfront.

ONE unnecessary hire avoided per manager per year: $500,000 in annual savings.

The problem is that the avoided hire doesn’t show up on the P&L as a “negative expense” and nobody writes a report celebrating the position they did not fill. The CFO sees training cost with no corresponding line-item savings, and the training gets cut. The hires get approved, the headcount grows and eventually, margins compress. Let the layoffs begin.

The forever layoff is the inevitable result of optimizing for visible costs while ignoring invisible benefits.

Economic uncertainty is not going away. Margins are under pressure and labor costs have always risen (and will continue to rise). This isn’t new, or novel but a few times a year we sometimes pretend it is. Regardless, the traditional playbook of “hire when busy, cut when slow” is becoming less and less viable.

Companies that build high-output workforces now will weather volatility better than those stuck in the cut-hire-cut cycle because they won’t need to rely upon layoffs to do so when their productivity per person is fundamentally higher.

Do not mistake the point of this article: This is not about getting people to work harder. It is about developing them to work smarter; to see the business, not just their isolated function within it. To make decisions that account for total cost, and not just immediate needs.

If you are a business owner or GM: Calculate your labor cost per unit of output – and if you don’t know it, that is the first problem to fix. Once you have it, ask yourself which of your managers would be most likely to make different decisions if they understood financial analysis better. Start there.

If you are a manager/supervisor: Ask your leadership for training on financial literacy. Specifically: P&L analysis, cost accounting, ROI calculations. If they say no, I urge you to find it yourself because the skill gap is costing you productivity and credibility.

If you are in operations: Stop accepting “we need more people” as the default answer to increased workload and start asking why productivity varies. Investigate where output per person is high and where it is low, then figure out what the difference is. Fix it before adding headcount.

If you are in finance: Stop measuring labor cost per hour or per year and start measuring it per unit of output. Help your operations leaders see what you see because the data exists. The calculation is not complicated and the insight is powerful.

This workforce strategy requires capability development at scale. One-off training won’t have a sustained impact, and the solution isn’t isolated to merely sending people to conferences. It requires systematic, targeted skill-building that closes specific gaps for specific people.

I am building micro-learning curriculum specifically for technical professionals who need business acumen. The modules that teach financial literacy, operational metrics, cost analysis, and ROI thinking and the content that enables your supervisors, managers, and technical experts to make decisions that account for the full business picture.

If you are serious about building a fewer, better, better-paid workforce, let’s discuss what that looks like for your organization and how targeted training can eliminate unnecessary hiring in your organization.

Schedule a discovery call to explore what this workforce strategy could mean for your business.

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Thomas Geller is the Principal of TBG Advisory, specializing in operational and financial transformation for small and mid-sized companies. He’s spent 20+ years in leadership roles watching the “forever layoff” cycle destroy employee morale and company culture.

His approach: Think Strategically. Build Deliberately. Grow Sustainably.