Before We Cut Jobs: Do We Actually Know What We’re Losing?

TL;DR

• Restructuring has become routine: BMW, Volkswagen, and many other companies are cutting jobs in Germany. These decisions are usually based on costs, headcount, management layers, and utilization.

• Many companies have only a partial picture of their employees’ skills: According to WTW, only around 30% of employers have processes in place to systematically identify and track skills. According to SHL, only 42% of employees say their manager fully knows their skills beyond their current role.

• Networks and experience are even harder to see: Who connects departments, who everyone calls when a tricky problem comes up, and why a process was built the way it was rarely shows up on an org chart or in a process manual.

• Layoffs can cause a second, hidden cost: When a person leaves, context, customer relationships, and the connections between many other roles can leave with them.

• Before “build, buy, or borrow” comes “know”: Before companies hire for skills externally, they should know what they already have. That leads to a simple sequence: Know, Move, Build, Buy.

• Five steps before cutting jobs: Make skills visible, identify critical knowledge holders, map networks, explore internal mobility, and start knowledge transfer early.

• The key question: Which skills, relationships, and knowledge can a company not afford to lose?

Restructuring at BMW and Volkswagen: What Companies Look At When They Cut Jobs

In early November, BMW announced that it would speed up its restructuring. Reuters reports that around 8,000 jobs are set to be cut in Germany. At the same time, Volkswagen is going through the largest restructuring in its history. In my conversations with customers, too, hardly a week goes by without restructuring, cost-cutting programs, or new organizational models coming up.

Let me say one thing up front: I don’t think layoffs are wrong in principle. When markets collapse, and cost pressures keep rising, restructuring can be an economic necessity. What I keep coming back to is a different question: What information do companies actually base their decisions on when deciding which roles and which people they will still need in the future?

When I look at the data that goes into these decisions, it is usually costs, headcount, management layers, teams, functions, and utilization. All things that fit neatly into a spreadsheet. Much harder to see are:

• skills outside of someone’s current job description

• experience

• informal roles

• internal networks and connections between departments

• knowing “how things really work around here”

An organization is made up of far more than the boxes on its org chart.

The Skills Visibility Gap: Companies Often Don’t Know What Their People Can Do

One finding from a recent WTW study honestly surprised me: Only around 30% of the employers surveyed have processes in place to systematically identify and track their employees’ skills. In other words, seven out of ten companies lack a reliable picture of the skills that exist within their workforce.

SHL reaches a similar conclusion from the employee perspective. Only 42% say their manager fully knows their skills beyond their current role. Two-thirds even believe they would have to leave their company to advance their careers, even though they would actually prefer to stay.

This means companies are sometimes searching the external market for skills they already have in-house. Under normal circumstances, that is frustrating and expensive. During restructuring, it becomes critical. If I don’t know what someone can do, I can hardly judge which skills I lose when that person leaves.

Why Job Profiles Only Show Part of the Picture

A job title describes someone’s current function. What it usually doesn’t show:

• previous work experience

• additional skills and language abilities

• industry and project knowledge

• relationships with specific markets or customers

• tasks someone has informally taken on over the years

Take a financial controller who spent several years in sales a decade ago, speaks fluent Polish, and has long been the unofficial go-to person for every Excel question in her department. In the headcount overview, she appears as “Controller, Level 3.” Everything else is invisible to the people making the decisions.

That is why workforce planning should shift its focus from “Which roles do we need?” toward “Which skills do we need?”

Informal Networks and Tacit Knowledge: What No Org Chart Shows

Even a perfect skills database wouldn’t tell me who everyone in the company calls when a complicated problem comes up. In my view, this is where things get really interesting.

Informal Networks: The Bridges Between Departments

Some of you may remember Peter from my column on organizational transformation. Peter stands for the kind of people you find in every company: They connect departments, know “the right person” for almost any topic, and have spent years building relationships with customers, locations, or other functions. They often translate between areas that formally have little to do with each other.

Many of them aren’t managers, and their job titles tend to be unremarkable. Yet they can be enormously important for how information flows through the company.

So when Peter leaves, the company loses more than a position. It may also lose the connections between ten other positions at the same time.

Tacit Knowledge Can’t Simply Be Written Down

It gets even harder with experience. A large part of what keeps a company running is tacit knowledge. It’s the kind of knowledge that answers questions like these:

• Why was process X built this way in the first place?

• Which solution have we already tried, and why didn’t it work?

• Which customer is sensitive about which topics?

• Who needs to be involved early in a decision?

• Which shortcut works, and which one causes problems later on?

This knowledge rarely lives in SharePoint, Notion, or a process manual. It builds up over years, through experience, through mistakes, and through countless conversations by the coffee machine.

HR Dive lists critical knowledge loss among the key L&D trends for 2027. Retirements, layoffs, and automation mean that organizations are losing critical knowledge faster than they can pass it on. What I find particularly interesting is that documentation alone is explicitly described as insufficient. Knowledge has to be passed on through people: through exchange, mentoring, job rotation, and structures that foster collective intelligence within the organization. That matches what I have observed in organizations for more than ten years.

The Second, Hidden Cost of Layoffs

The first effect of a layoff is easy to see and easy to calculate: 100 positions are eliminated, and personnel costs go down.

The second effect is much harder to measure. What happens to the knowledge, relationships, and skills that were tied to those 100 people? Possible consequences include:

• Knowledge suddenly becomes concentrated in a small number of remaining employees, whose workload keeps growing.

• Interfaces between teams work less smoothly, and it takes longer to find the right point of contact.

• Customer-specific or historical knowledge is lost.

• Employees take over tasks without the context that comes with them.

• Certain skills later have to be bought back externally at a high price.

• Employees who could have moved into new roles leave the company.

Of course, not every layoff automatically leads to these consequences. The risk rises mainly when organizations view their workforce solely in terms of positions and costs. In the worst case, a company saves on personnel costs today and pays tomorrow to painstakingly buy back the same knowledge.

Know, Move, Build, Buy: Start With What You Already Have

When it comes to skills gaps, companies usually discuss three options: build, buy, or borrow. In other words, develop skills internally, hire externally, or bring them in temporarily.

I believe there’s a step missing before that. Before I decide how to get the skills I need, I should know which ones I already have. The SHL study describes the problem very clearly: Companies invest time and money in the external talent market, even though the skills and experience they need may already exist internally. I would therefore extend the sequence by one step:

1. Know: Which skills, experience, and networks do we already have?

2. Move: Who could take on a different role internally?

3. Build: Which missing skills can we develop ourselves?

4. Buy: What do we actually need to hire externally?

This sequence makes a big difference, especially before a restructuring. Companies that start with “know” make decisions about people on a much stronger foundation.

What Companies Should Know Before Cutting Jobs: 5 Steps

1. Make skills visible, including those outside the current role

Analyzing job profiles isn’t enough. Companies should capture their employees’ skills and experience, take previous roles and projects into account, and ask people directly what they can do and where they would like to develop. The willingness seems to be there: According to SHL, almost nine out of ten respondents would be willing to complete a formal skills assessment to show their employer what they are capable of.

2. Identify critical knowledge holders

The obvious question is: Who is our expert on topic X? For a restructuring, however, that question falls short. More useful questions are:

• Who holds knowledge that hardly anyone else has?

• Who understands the background of past decisions?

• Who maintains important customer or stakeholder relationships?

• Who do colleagues regularly turn to for informal help?

3. Map your networks

• Who connects teams or locations?

• Who regularly works across departments?

• Who acts as an informal bridge?

• Where would a single departure suddenly cause an entire network to fall apart?

4. Explore internal mobility before looking externally

When one area shrinks, another often grows. Before companies start recruiting externally for that area, it pays to look inside first: Who could move from a shrinking area into a growing one? Which adjacent skills already exist, and which gaps could be closed with a manageable amount of upskilling? And most importantly: Who actually wants to make a change?

5. Transfer knowledge before people leave

In most cases, a handover document in someone’s last week won’t be enough. Knowledge transfer should start early, for example through:

• mentoring and tandems

• job shadowing and job rotation

• expert sessions and communities of practice

• documented cases

• a deliberate handover of contacts and networks

The trend toward critical knowledge loss shows how urgent this is. Knowledge that has grown over years can’t be passed on in a few days.

Conclusion: We Should Know What We’re Losing Before We Cut Jobs

Restructuring and layoffs will remain part of business reality. And I’m not arguing that every position has to be saved.

I do think, however, that companies should understand how much organizational capital is tied to a person before they make a decision. That includes skills and experience, relationships, trust, context, and tacit knowledge just as much. As I described in the Connection Framework, knowledge sharing and trust grow out of relationships between people. Those relationships don’t appear in any cost calculation.

Every layoff starts with the question of which positions we can cut going forward. I would like companies to always ask a second question alongside it: Which skills, relationships, and knowledge can we not afford to lose?

Sources

• Reuters: BMW tune-up fixes today’s problem, not tomorrow’s

• Reuters: BMW lowers 2026 automotive EBIT margin outlook

• Reuters: Europe’s mass-market carmakers under enormous pressure, Volkswagen CEO says

• HR Dive (WTW): Capability anxiety may be pulling companies down

• HR Dive (SHL): Employees say they have to leave their companies to advance their careers

• HR Dive: 4 trends to expect in L&D in 2027