People Cost-Cutting: Nobody Likes It — But It’s Back on the Agenda for 2025

With labour costs squeezing 73% of organisations (BCC) and 62% of CFOs planning further cuts this year (Gartner), People cost reduction is firmly and painfully back on the table for 2025. Whether you’re preparing for it or already in the midst of it, how you navigate it matters just as much as what you do.

Here are some prompts to help you protect leadership and company confidence, culture, and engagement whilst keeping your P&L out of trouble:

-> Start with strategy and principles, not numbers.
Reductions should support (not sabotage) long-term growth. Before opening the spreadsheet, align on your guiding principles and assess your org shape and talent landscape through a dispassionate, data-led lens. Look at cost, talent capacity and capability in the context of short- and long-term goals. Bring your leadership team in early to ensure collective accountability and show up as a united front.

->Be creative, not binary.
Think beyond redundancies: voluntary exits, reduced hours, capped promotions, role redesigns. Exhaust optimisation levers before triggering disruption through headcount cuts;  and if cuts are necessary, do it decisively (not drip-feed) to minimise change fatigue.

->Be proactive, not reactive.
Don’t wait until cuts are unavoidable. Get cost-conscious early, strip non-essentials, slow hiring, use natural attrition wisely (you don’t need to backfill everyone), and revisit your workforce plan with a scalpel, not a hammer.

->Lead with humanity, integrity and clarity.
Redundancy is one of life’s most stressful events (HBR). Support your people beyond the basics: make introductions, offer interview training, enhance packages, and prepare managers to lead with care. Last impressions matter as much as first ones.

->Get your positioning right.
In growth businesses, cost cuts can feel contradictory. Be mindful of the tension between growth ambitions and people feeling asked to do more with less. Be thoughtful, honest, and consistent in your communication; don’t fall into the sugar-coating trap. This is critical to protect your leadership credibility and maintain people's confidence in your growth plans.

->Build for lasting behaviour change.
Half of execs admit cost programmes don’t stick (BCG). Unless decision-making shifts, costs will creep back. Treat this as a change programme: embed new habits, better resourcing choices, and flexible talent models (including buy-build-borrow…yes, fractional hires 😉). Involve your people: give them responsibility, and they’ll rise to the challenge, helping embed cost-smart behaviours that last.

It’s not a nice topic — but it is part of running a business well.