In brief:
- The first three rungs, in order: freeze hiring, reduce contractors and vendors, then furlough or cut hours.
- Before closing a role the business still needs, offer it to people in shrinking teams. Nobody joins the payroll, and nobody has to leave it.
- Contractor cuts are the easiest to hide, because contractors are not on the company’s payroll. RETAIN sets minimum terms for them: a real reason, reasonable notice, and no timing chosen to dodge a report or a notice threshold.
- Reduced hours and furloughs have not vanished, but they buy time and do not guarantee jobs. Layoffs are not ruled out.
In the LinkedIn post that goes with this article, I described a scene that many managers know. A role remains unfilled. A contractor’s renewal stalls. Someone says “budget” and the room goes quiet. Nobody announces a freeze or calls it the first rung of anything.
The ladder is a disclosed, ordered sequence of cost levers. A company works through them one rung at a time, from the least harmful to the most. Layoffs come last. The order is published in advance, so anyone can check that it was followed.
The last article covered the ground the ladder stands on: a hiring gate that sets a very high bar for approving new headcount, in good times as well as bad. The reason is simple. Every role added in a boom is a role that may have to be cut in a bust. With that covered, I will now proceed to explain the first three rungs of the ladder.
Rung 1: Freeze hiring
It should all start with closing open roles and skipping backfills. That way nobody loses a job and the company buys time. To be fair, that’s what a lot of tech companies start with nowadays.
I propose a significant improvement to this process: the roles the business still needs should go first to people in other teams, especially teams that are at the risk of shrinking. The company approaches them directly instead of waiting for applications. That way nobody gets added to the payroll, and nobody needs to leave it.
Parts of this exist already. Gartner advised HR leaders in Apr’20 to promote internal vacancies during freezes. Salesforce, for example, gave staff in eliminated roles 60 days to find another post. IKEA, by contrast, retrained about 8,500 call centre workers as design advisers or to handle more complex customer queries after its chatbot took over part of their work. I am a strong advocate of offering the roles first rather than telling the people to go job hunting throughout the company. I will discuss this topic in a lot more detail in one of the next posts in the RETAIN series.
In Apr’26, Meta closed about 6,000 open roles, disclosing it in the same memo that announced the cut of about 10% of its staff. They applied the mildest and the harshest means at the same time. Google’s two-week pause in Jul’22, described in the last article, shows a more considerate pattern: a freeze used as a pause to review the needs, with no layoffs attached.
A freeze without a foundation only pushes the problem downstream. If the old habits return when the freeze is lifted, the next round of cuts is already on its way.
Rung 2: Reduce contractors and vendors
From the company’s perspective this rung is cheaper and easier to reverse than a layoff. A contract can lapse or go unrenewed and the company can sign a new one when demand returns. Bear in mind it is still a job that someone will most likely lose.
We see a long record of that at Google. Way back in Nov’08, the company told the Wall Street Journal that it planned to significantly reduce its roughly 10,000 contract workers and had no plans to cut its permanent workforce of roughly 20,000. In Jan’09, Google confirmed it had let go about 100 recruiters and ended almost all of its recruitment vendor contracts.
By Mar’19, an internal count seen by the New York Times listed 121,000 temps and contractors against 102,000 full-timers. OnContracting, a site for tech contract work, told the New York Times that tech firms save about $100,000 a year on average per American (i.e. high cost) job by using contractors. Google denied that contractors are a cost-saving measure.
In Jul’22, the hiring pause came with a rule: no contract extensions for now, and no renewals for expiring contracts. Then, in Jan’23, Google cut 12,000 full-time jobs – its largest layoff ever.
Full disclosure: I have not found any evidence that Google used contractors as a layoff buffer. No source I have access to says so. This is a documented sequence, not a causal claim.
The hard part in all of this is that there is always a real person that gets impacted. Google’s full-time US employees laid off in Jan’23 were paid through at least 60 days of notice and received severance of 16 weeks’ pay plus two weeks for each additional year of service. Compare that with the contractor cuts below.
In Aug’25 Wired reported that more than 200 contractors who rated and edited AI responses for Google’s products were cut. The workers said they’d had no warning. One said the reason he was given was “ramp-down on the project.” Some workers alleged retaliation after trying to form a union, and two filed complaints with the US National Labor Relations Board. Google said the workers were employed by GlobalLogic or its subcontractors, not by Alphabet, and that those employers were responsible for the working conditions. Google also said it audited its suppliers against its Supplier Code of Conduct. GlobalLogic declined to comment.
In Apr’24, Google said it would drop its 2019 rule that US suppliers pay at least $15 an hour and provide benefits. The company claimed the change was driven by the need to clarify that it was not the employer of suppliers’ staff. It followed a Jan’24 US labour board ruling that Google and its contractor Cognizant jointly employed a group of YouTube Music workers. Google appealed. In Apr’25, a federal appeals court set the ruling aside as moot, because the Google-Cognizant contract had expired in Feb’24. The board has made the same finding in a second case, involving Accenture contractors, most recently in Apr’26. Google has appealed.
Google maintains that it is not the employer of these workers. The labour board has found otherwise more than once. The key thing here is that a ladder should not be used to offload the pain on people the company has no direct employment relationship with.
RETAIN proposes minimum terms for this rung: a real reason, reasonable notice, no timing chosen to dodge a report or a notice threshold, and agency terms honoured through the notice period. When a contractor is paid through an agency, the agency contract is where that notice has to live.
Rung 3: Furloughs and reduced hours
Back in the early days of the Silicon Valley, in 1970, Hewlett-Packard met a recession with a 10% cut in pay and a 10% cut in work, the “nine-day fortnight,” instead of laying off 10% of its people. Bill Hewlett did not think layoffs would be “a very fair way” to handle it.
In more recent times, in 2009, Lincoln Electric cut its Cleveland workweek to 32 hours instead of laying people off. It has avoided economic layoffs for decades, for staff with three or more years of service. The same year, Scania released 2,000 temporary workers, then moved its 12,000 Swedish staff to a four-day week with a 10% pay cut and promised no layoffs for six months.
In mid-2020, about three quarters of the S&P 500 companies that had cut staff used temporary furloughs rather than permanent layoffs. The practice has not vanished. In late 2025, Nokian Tyres announced temporary layoffs of about 650 staff at its home plant in Finland. Finland’s technology industries counted 22,900 employees on temporary layoffs at the end of 2024 and 10,300 at the end of 2025. Stellantis extended reduced hours at its Mirafiori plant in Italy through Jan’26. Meanwhile, the big tech cuts covered in this series (Meta in Nov’22 and Apr’26, and Google in Jan’23) were layoffs.
Reduced hours buy time, but don’t guarantee jobs. In Canada’s Work-Sharing program, employees keep their jobs on a schedule cut by 10% to 60%, and Employment Insurance covers part of the lost pay. A federal evaluation of agreements from 2013 to 2019 found that about 7% of participants were laid off within three months after their reduced hours ended, and about 11% within six. Still, the same evaluation estimated that the program averted 4,877 layoffs a year. Bottom line: a company that uses this rung should say plainly what it can and cannot promise.
What a ladder does not promise
I will repeat here what I have already stressed a number of times. A ladder does not rule out layoffs. It introduces a clear series of fully disclosed steps, so that anyone can check if it has been followed. Disclosed means published before the crisis: the sequence, who decides when to move from one rung to the next, and what has to be triggers each move.
Next in this series: E, part 3: pay cuts and dignified exits.
Sources
- Meta’s Apr’26 memo (about 10% cut, about 6,000 open roles closed): Business Today, April 24, 2026; also The People’s Board, April 27, 2026
- Google’s Jul’22 hiring pause: Android Central, July 21, 2022
- Internal vacancies during freezes (Apr’20): Gartner newsroom, April 30, 2020
- Salesforce’s 60 days to find another post (Aug’20): Computing, August 2020, citing the Wall Street Journal
- IKEA’s call centre retraining: Fortune, July 30, 2026; Retail Gazette, June 2023, citing Reuters
- Pichai, Jan 20, 2023 (12,000 cuts, notice and severance): Google blog; also Ars Technica, January 20, 2023 (mirror)
- Google contractors in Nov’08: Computerworld, November 25, 2008, citing the Wall Street Journal; the recruiters, confirmed in Jan’09: VentureBeat, January 2009
- The Mar’19 count (121,000 vs 102,000): New York Times reporting, via Inlander (NYT News Service) and MIT Technology Review
- OnContracting estimate and Google’s denial: New York Times, May 28, 2019, as summarized by Truthdig
- Google AI contractors, Aug’25: Wired, September 15, 2025; HR Grapevine, September 17, 2025; AllWork.Space, September 2025; IANS, September 16, 2025. The other three cite Wired.
- Google’s Apr’24 supplier-rule rollback: Reuters, via The Globe and Mail
- Google’s joint-employer cases: Jan’24 labour board ruling, CNN, January 5, 2024; appeals court, Apr’25, Proskauer, April 28, 2025 and the court’s opinion; Accenture case, Apr’26, NLRB Edge, April 9, 2026 and SHRM, April 14, 2026; Ninth Circuit, Bloomberg Law, April 2026
- HP’s nine-day fortnight: HP Company Archives
- Lincoln Electric (2009): Lincoln Electric release, 2009 (SEC); NPR, November 5, 2009; Fortune, July 19, 2023
- Scania (2009): The Local, May 15, 2009
- S&P 500 furloughs (2020): Marketplace, July 8, 2020
- Nokian Tyres (2025): just-auto
- Finland’s technology industries, temporary layoffs: Technology Industries of Finland, Feb 2025 outlook and Feb 2026 outlook
- Stellantis, Mirafiori (2025): Reuters-based report, via iTiger
- Canada’s Work-Sharing evaluation: Employment and Social Development Canada, June 2025 (summary); full report
