When Elon Musk’s Department of Government Efficiency (DOGE) introduced sweeping layoffs to federal agencies in the name of “efficiency,” it grabbed headlines. But are these drastic workforce reductions truly making the government leaner and more effective? Or are they inadvertently stripping it of key talent and institutional knowledge vital for long-term operational efficiency and innovation?
Layoffs surged by 245% in February, with 62,000 government employees cut under this initiative. Plans for deeper reductions are reportedly underway, targeting agencies like the IRS and Department of Education, with staffing cuts reaching up to 50%. Yet, the math doesn’t align with the broader fiscal goals. Economists at Deutsche Bank estimate a 10% reduction in the federal workforce would save just $25 billion annually, a mere fraction of total federal spending.
For leaders outside of Washington, this serves as a cautionary tale. We may not be governing federal agencies, but we all face decisions around workforce optimization. According to Korn Ferry, there’s a growing trend of companies focusing on “employee underperformance” as a key factor in layoff decisions, a shift from the past when external factors were often blamed. So the question isn’t whether we should realign our teams for efficiency, it’s how we do it without compromising operational efficiency, strategic foresight, morale and credibility.
What Happens When Workforce Pruning Goes Wrong?
Indiscriminate cuts paint every employee, team and department with the same brush. The result? Critical roles are eliminated, institutional knowledge is lost and remaining employees become disengaged, overworked and less productive. Instead of creating a stronger organization, we risk eroding the foundation it’s built on.
Federal layoffs under the DOGE initiative exemplify this. Slashing staff without precision undermines initiatives that demand specialized expertise, like modernization efforts at the IRS or long-term strategic projects within the Department of Education. The sweeping nature of these cuts overlooks the nuances and complexities of how employees contribute to organizational goals.
So, what lessons can we take from this as leaders? How do we prune wisely, ensuring our decisions strengthen, not hollow out, our workforce?
Rethinking Workforce Optimization
First, we need to abandon the chainsaw. Strategic workforce management isn’t about slashing headcount for the sake of flashy cost-cutting. It should be about aligning people with future priorities and ensuring every role creates tangible value. In fact, research shows that companies putting talent at the heart of their business strategy achieve higher total shareholder returns than their competitors.
How do we achieve this? By adopting precision in how we assess and realign talent. Internal talent mapping and workforce analytics allow many modern organizations to identify not just redundancies, but where employees’ skills bring the most value. We should never guess when it comes to our people.
Equally important, we must innovate in how we utilize talent. Internal talent marketplaces, for example, allow us to redeploy employees to areas where their skills are most needed. By transitioning employees into new roles or project-based work within the organization, we create agility without sacrificing expertise or morale.
The Role of Strategic Attrition
Why rush to the chopping block when natural attrition can solve part of the problem for us? Every organization anticipates retirements and resignations. Leaders who think long-term use this knowledge to plan ahead. Replacing an employee can cost between 16% to 213% of their annual salary, depending on their role and experience level. By strategically freezing non-essential backfills, organizations can achieve substantial cost savings while reducing workforce size without triggering the cultural fallout that layoffs so often bring.
But this approach takes patience. Are we willing to resist the pressure for immediate results in order to maintain operational effectiveness, innovation and stability? What will ultimately help us build resilient strategies that sustain an organization in the long term?
Linking Workforce Changes to Strategic Outcomes
One of the greatest failures of the DOGE initiative is its lack of clear, measurable alignment between workforce reductions and strategic objectives. Laying off up to 50% of certain agency workforces limits their ability to modernize, innovate and operate effectively.
Leaders must approach workforce pruning with more precision. Are we tying layoffs or role eliminations directly to measurable milestones, like the adoption of automated systems or the achievement of productivity benchmarks? By linking reductions to specific operational or innovation goals, we ensure workforce changes don’t compromise long-term aspirations.
The Human Imperative
And then there’s the human side. Any decision impacting people’s livelihoods has ripple effects on morale and trust. Research shows that approximately 71% of employees who remain after a layoff report decreased motivation, and 65% feel overworked due to a reduced workforce. When we prune our workforce without clear rationale, we signal to remaining employees that their roles are just as vulnerable, compounding these feelings of burnout and disengagement.
Instead, we must engage our teams in the process. Transparency isn’t a leader’s job, it’s their responsibility. Unlike DOGE cuts that lack collaborative and transparent approaches, true leadership ensures employees understand why changes are being made. In fact, studies shows that organizations that prioritize and demonstrate “process fairness” see fewer wrongful termination cases and experience shorter declines in employee engagement. When the process is seen as strategic, not arbitrary, teams are more likely to stay engaged and committed to the organization’s vision.
Bold Leadership, Strategic Change
The federal layoffs orchestrated by DOGE underscore the dangers of reactive cost-cutting. Workforce pruning should never be reactionary or indiscriminate. It should be strategic, precise and deeply aligned with the organization’s long-term objectives. It requires bold decision-making but also empathy and foresight.