If you were convinced that layoffs were an IT sector phenomenon, the pharmaceutical industry would like to have a word with you. With the excuse of restructuring and cost-cutting to back it up, CVS has announced its own layoff plans for 2024. The number of jobs being cut aren’t quite as dramatic as some of the cuts announced by other tech giants, but for the employees, a job loss is an opportunity lost, regardless of how many of their colleagues exit with them.
CVS Health, the owner of CVS Pharmacy, is expected to eliminate over 2,900 employees from its workforce this week. The company has handled bigger job cuts in the past, but CVS’ 2024 layoff plans are expected to be just as critical for the business to evolve. These numbers are not intended to significantly shake up the business structure as they represent only 1% of the workforce but it will allow the organization to reorganize some of its resources over the course of the next few months.
CVS’ employee cuts are expected to target corporate roles primarily, so in-store workers who manage the day-to-day interactions with customers are unlikely to be affected by CVS’ layoffs. There is also talk of the company breaking up its retail and insurance business into separate units going forward, but the plans are still under discussion.
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CVS’ Layoffs in 2024 Will Not Affect Front-line Workers
The latest CVS job cuts will impact over 2,900 workers but the company has reassured front-line workers that its corporate teams will be at the center of the layoffs. “Impacted positions are primarily corporate roles. The reductions will not impact front-line jobs in our stores, pharmacies, and distribution centers,” a spokesperson told CNN. The layoff plans at CVS will start in 2024, but the decision is part of a multi-year strategy to deliver $2 billion USD in cost savings measures. The company is intent on reducing expenses and investing in technologies that can enhance how the organization functions.
Employees affected by the layoffs can expect to learn about the change by the end of this week, which means that the company has likely already identified the roles it intends to eliminate. Besides the mention of corporate workers, CVS has not indicated whether it will target specific departments while making the cut. As of now, it looks like company-wide cuts will take place.
The CVS employee cuts will not come without compensation for affected workers. The U.S. healthcare company has not elaborated on the exact severance packages the employees will be offered but it has provided assurance that those affected will see severance pay and some benefits like access to outplacement services.
CVS’ Employee Cuts Last Year Affected 5,000 Employees
The layoff plans in 2024 are not the first time CVS has had to cut jobs in recent years. The company eliminated around 5,000 non-customer-facing roles last year as part of its efforts to cut costs.
In 2021, the company announced its intention to close around 900 stores between 2022 and 2024. The store closure plans focused on the pharmacies that could be found within the Target shopping centers after their analysis showed a shift in population, consumer purchasing behaviors, and the healthcare demands that were anticipated. CVS’ latest cost-cutting plans also hint at similar circumstances of “continued disruption, regulatory pressures, and evolving consumer needs and expectations,” while the business struggles to remain competitive.
Along with a decline in demand, the organization has faced considerable issues in running parts of its business, including the challenge of employee protests and unionization efforts for better working conditions. The company was also accused of undisclosed use of AI “lie detectors” during its hiring process, a case that the pharmacy chain chose to settle in July.
CVS to Pursue More AI Investments In the Coming Years
CVS’s AI investments are also a key part of the strategic changes being made at the company. The organization has been looking into various avenues to incorporate AI into its business, including the replacement of call centers with AI customer support. The controversial strategy has been in discussion for some time now, and while it does not figure into CVS’ layoffs in 2024, we could see a bigger impact on the company’s workforce in upcoming years.
According to its annual report, the company is looking into different forms of automation “to reduce cost and improve the experience for all of its constituents.” As CVS’ AI investments grow, we can expect more large-scale changes to take place within the business, but these plans will unfold towards the end of 2025 or later.
The CVS employee cuts have also extended to senior leaders within the organization, although the company has not explicitly tied the two elements together. The company recently fired division head Brian Kane citing the underperformance of the Aetna insurance business that CVS acquired in 2018. This decision was expected to ruffle a few feathers but it is evident that CVS has set its sights on making all aspects of the business profitable at any cost.
After CVS completes its layoffs for 2024, the board is expected to shift its attention back to the conversation regarding the division of the business and how it can be executed in a way that is profitable to both the retail and the insurance segments.
