Remember the sweeping layoffs the tech sector saw earlier this year? Some 937 tech companies laid off roughly 232,600 employees, with heavyweights such as Meta Platforms Inc (NASDAQ:META) and Microsoft Corp (NASDAQ:MSFT) cutting upwards of 5% of staff.

It seems that trend may be replaced with a different one as companies try to retain top talent.

What Happened: U.S. companies are increasingly opting for “reassignment” of employees to different roles within the company, rather than laying them off.

The new approach was especially notable among tech giants and retail companies such as Adidas AG – ADR (OTC:ADDYY), Salesforce Inc (NYSE:CRM), IBM (NYSE:IBM), and Adobe Inc (NASDAQ:ADBE).

Layoffs were down 8% in July compared to the same period last year, according to The Wall Street Journal. The same data highlighted a surge in “reassignments,” which more than tripled year-over-year in August.

Reassignment allows companies to keep their workforce while repositioning employees to roles deemed more essential.

For employees, the change wasn’t entirely without drawbacks as they often had to decide between accepting a new role that they didn’t choose or seek employment elsewhere, a stressful dilemma especially in an uncertain labor market.

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The trend indicated companies were moving towards a middle-ground strategy. Having invested in top talent during the post-COVID-19 pandemic hiring spree, companies such as Adidas and IBM were opting for reassignment to align their workforce with changing corporate objectives while avoiding the costs and disruption associated with layoffs, the Journal noted.

Salesforce and Adobe followed suit, incorporating reassignments into their corporate restructuring plans. The Journal cited data from the financial research platform AlphaSense, that showed mentions of “reassignment” in earnings calls have tripled between August 2022 and August 2023.

While reassignment avoids severance costs and retains institutional knowledge, it can also be a waiting game for employees. Those unhappy with their new roles might quit, saving the company from costly severance packages.

The trend sparked mixed feelings among workers.

Matt Conrad, a 34-year-old senior sales enablement specialist at IBM, went through two reassignments before landing a role that matched his skills. “Not quitting was a matter of principle,” he said to the Journal.

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