Why companies are replacing workers instead of adding headcount

With hiring budgets constrained, some companies are choosing to replace workers rather than add headcount. "There is just no appetite for mediocrity anymore," said Brent Orsuga, founder of the supply chain and logistics recruiting firm Pinnacle Growth Advisors.

He said over the past year many of his clients quietly replace employees instead of growing their teams; for example, a company with 10 sales reps may replace its lowest performers rather than expand the team. Orsuga called 2025 the biggest year he's seen for the trend in more than two decades and dubbed it "bullseye hiring." "It's like every seat matters, so I've got to hit a bullseye and get the right person in the right seat," he said.

Hiring has slowed in the US recently because of economic uncertainty, cost-cutting, and AI adoption; in February, the hiring rate fell to 3.1% — a modern low matched only by the pandemic and early recovery from the Great Recession. Three recruiters said when companies do hire, it can come at the expense of an existing employee.

United States

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