Over 600 employees at Paramount Skydance chose to leave their jobs before returning to their office-based positions full-time; the large number of employee departures occurred after Paramount Skydance CEO David Ellison stated in an announcement dated September 2024 that all employees would be required to report to the office five days per week and/or receive a severance package.

Regulatory filings released on Monday, indicated that approximately 600 employees, who were classified as Vice Presidents and lower, received the buyout and Paramount paid them $185 million dollars in severance. Paramount stated the costs associated with the severance packages were a portion of a larger plan to “restructure” the company to better align with “strategic objectives,” which is related to merging with Skydance.

Costs of Ellison’s In-Person Policy

Paramount Skydance CEO, David Ellison.

In announcing a new requirement for employees to work from the office full-time Ellison stated the reason for the policy was necessary to restore both collaboration and creative development throughout the organization. Ellison stated in the company-wide memo to employees, “some of the most impactful experiences of my life occurred in a room and I was just a fly on the wall, listening and learning.” Ellison also stated that he has never seen this type of experience occur using video conferencing software, specifically referencing the use of Zoom.

The majority of employees receiving the buyouts were located in either Los Angeles or New York. The $185 million dollar severance payment represents a small fraction of the estimated $1.7 billion dollars in total restructuring costs Paramount anticipates paying during the current fiscal year. As part of a shareholder letter, Paramount explained the details of how they intend to create a more streamlined operation and reduce operational costs by eliminating $1 billion in additional costs to help stabilize their financial position after two turbulent years.

Prior to the merger, Paramount had experienced several years of uncertainty and instability, including significant changes in leadership and decreased performance across the various divisions of the entertainment industry. Ellison, the son of Oracle CEO Larry Ellison, became the new CEO of Paramount earlier this year with a mission to provide clarity to the media company and improve operational efficiency in light of growing competition from streaming giants.

A Trend of “Back-Door” Layoffs

Paramount’s mandatory Return-To-Office (RTO) policy has been compared to other companies’ actions. NBCUniversal has recently stated that they will require employees to return to the office 4 days a week beginning in 2026 or employees can choose to receive severance pay. NBCUniversal is mimicking the same strategy employed by Amazon and many other technology and media companies.

Many analysts in the industry have referred to the strict mandates for employees to return to the office as a “back-door layoff”, where companies anticipate or encourage employee resignation in lieu of involuntary layoffs. A 2024 BambooHR survey of more than 1,500 U.S. managers reported that almost one-quarter of the surveyed managers stated they hoped employees would voluntarily resign as a result of their RTO policies and nearly 20% of the surveyed HR Professionals stated the purpose behind their company’s RTO policies was to reduce the overall size of their staff.

Additional staffing cuts are anticipated at Paramount as the company strives to streamline their operations and become profitable. Earlier this month, Paramount eliminated approximately 1000 employees in an attempt to achieve this goal.

Overall, the economy appears to be transitioning into a low-hire, more-fire environment, according to economists. According to RSM chief economist Joe Brusuelas, companies are investing heavily in Artificial Intelligence (AI) and automation technologies, and subsequently choosing to prioritize operational efficiencies over increasing the number of employees. “As companies increasingly invest in productivities, we believe we will see increases in layoffs, and therefore, we believe we will see an increase in unemployment,” Brusuelas stated in a recent client update.