Labor Hoarding: What Is It & How Does It Impact Your Team Culture?

Let’s face it – it can be difficult enough for your company to retain top talent in the best of times. And right now, in our uncertain economic climate, the last thing you want to do to save money is to lay off the very employees who are the backbone of your company. Cue the rise of the labor hoarding phenomenon.

Instead of laying off top talent, companies are keeping them on board to weather out the economic storms together. Are you scratching your head and wondering why they’d do that? Or, even, how can they afford to?

Keep reading to discover how labor hoarding can keep morale high, strengthen your team culture, and ultimately save your company money in the long run.

What Is Labor Hoarding?

The word hoarding may trigger any number of negative images in your mind. But when it comes to the labor force, it’s a good thing for your team and the company as a whole. Labor hoarding is when a company retains its employees, rather than laying them off in unpredictable economic times.

With rising inflation and more, many companies want to scale back and save money. And that can often mean letting go of the best in their ranks. Let’s cover the reasons why you want to avoid this and opt for labor hoarding instead.

Why Companies Choose Labor Hoarding

If the pandemic taught us nothing else, it’s that laying off your employees is a costly move. There are countless benefits to avoiding layoffs – not only for your company’s bottom line, but also for your employees, the team culture, and even the economy at large. Benefits of labor hoarding include the following:

  • Allows you to make an investment in your employees’ morale.
  • Gives your employees economic security.
  • Improves your team culture by strengthening trust in your company.
  • Scouting and hiring new talent to replace those you laid off is more expensive than practicing labor hoarding in the first place.
  • Saves money in training and onboarding new employees.
  • Prevents your competitors from scooping up your employees.
  • Allows the company to invest in your current team’s professional development/upskilling.

How Does Labor Hoarding Impact Your Team Culture?

Think of your team culture as the ethos of your brand. Positive team culture is built on a foundation of trust, diversity, inclusivity, and positive morale, to name just a few of its many pillars. Of course, all of the above can make or break your team’s motivation, productivity, creativity, and more.

How labor hoarding can impact your team culture depends on whether your company is practicing labor hoarding or if your company needs to hire new employees. Let’s examine both scenarios.

When Your Company is Labor Hoarding

Turns out the execs in the C-Suite have decided it’s best to retain your employees after all! Cue the celebrations! This means you don’t have to worry about the release and subsequent replacement of team members rattling the trust, morale, or team dynamic.

In short, nobody feels they might be next to get the boot. You’ve shown the team they are valuable and irreplaceable even in uncertain times. And you’ve even reinforced the company’s commitment to the team’s livelihood outside of work. 

Even if you’re labor hoarding, you still might need to make adjustments to some of your team’s duties and responsibilities as a short-term solution to any ongoing financial issues. We like to think of this as an opportunity to upskill your team.

Here’s what we mean – let’s say the new hire from three months ago is no longer needed for a client that had to end their contract with your company. You know you want to keep this talented employee on board, but you don’t have any other clients they could focus on at the moment. No problem! 

Here’s how you can retain this employee and show them you’re invested in them as part of the team:

  • Offer them paid professional development opportunities where they can upskill their problem-solving skills and ultimately bring more creative, innovative solutions to the table.
  • Schedule team-wide events so they can develop soft skills, such as emotional intelligence and more.
  • Allow the employee to practice and hone their leadership skills with a reverse mentorship opportunity.
  • Let them shadow another employee or team to broaden their knowledge base.

When Your Company Needs to Hire

You’ve just laid off three of your most talented employees. And it looks like you’ve got five more to break the news to. They’re upset, and you’re on edge.

Not to mention, the word’s out across the team that your company had to lay off some talented key players. Of course, sometimes layoffs are inevitable. But, as a result, you may have noticed a negative vibe in the office air.

Do some employees seem shaken, perhaps feeling they might be next up on the chopping block? Have others approached you about the burden/extra workload they’re shouldering with their teammates gone?

If there’s no way around the layoffs, you’ll need to move into team culture survival mode, ASAP. Here are your goals:

  • Reestablish trust by reinforcing the company’s commitment to the remaining team.
  • Communicate to your team with full transparency – especially regarding layoffs.
  • Keep an open door and encourage questions, feedback, and concerns.
  • Level-up when it comes to employee recognition, praise, and awards.

3 Best Practices for Maintaining Your Team Culture When Layoffs are Inevitable

1. Organize Remote Teamwide Events to Boost Morale

When the axe falls, it can affect every remaining employee’s morale–especially your remote employees who may not feel as in the know as their in-office colleagues. And if their morale is low, that can negatively impact their motivation and productivity. Instead, organize a team event to lift their spirits in a fun way.

Organizing a Scavenger Hunt is a great way to involve your team in a fun and friendly competition where they can work together towards a common goal.

2. Focus on the Big Picture

No matter how well you explain why the company had to lay off some members of the team, the remaining employees won’t likely feel better about the situation. As a result, you’ll want to redirect their attention to the bigger picture. That means their professional development, future as a team, and potential to make a real difference together, outside of the office.

One way to do this is to focus on team building events where they can give back to the community in their own backyard. The Build-a-Birthday event is a great option for this. 

Here, they’ll work together to plan and give a birthday party to children who suffer from homelessness. This will increase their engagement and reinforce your company’s commitment to the well-being of the greater community – showing them you’re all in it together.

3. Reinforce Your Commitment to the Team’s Future Growth

You’ve made all necessary layoffs, but now you’re facing a team that feels gutted. Practice open communication and transparency by fielding the team’s questions. Just as importantly, reinforce the company’s commitment to the team’s future growth–both individually and as a collective team.

One of the best ways to do this is to offer individual and team-wide professional development activities that will revive their excitement about working together. Whether remote or in-person, organizing a team building activity is an out-of-the-box way to show them your company is looking forward to the future, no matter the current economic conditions.

Ready to Keep Your Team Culture Solid Despite the Economy?

In this post-pandemic era, the global economy seems less predictable than ever. Whether your company can commit to labor hoarding or if you must lay off some employees, it doesn’t have to disrupt your team culture.

Providing your employees with team bonding opportunities that will keep their spirits up and make them excited for the future is key to navigating our evolving economic state. We all know change is inevitable – but it’s how we face it as a team that counts!

Anna Webber

Team Contributor


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