A growing number of U.S. companies are quietly replacing lower-performing employees with stronger talent rather than expanding their workforces, according to recruiters across multiple industries. The practice, which recruiter Brent Orsuga calls "bullseye hiring," spans from early-career roles to the C-suite as businesses seek to optimize performance while hiring budgets tighten.

The U.S. hiring rate fell to 3.1% in February, matching a modern low previously recorded only during the pandemic and the early recovery from the Great Recession. Hiring has slowed as companies contend with cost-cutting pressures and the adoption of artificial intelligence. Against that backdrop, some employers have turned to targeted replacement rather than headcount growth as a workforce strategy.

Orsuga, founder of Pinnacle Growth Advisors, a supply chain and logistics recruiting firm, said he has seen many of his clients quietly replace employees over the past year. Orsuga, who has spent more than two decades in recruiting, said 2025 was the biggest year he has observed for the upgrading trend. "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. "I want the best of the best."

In a typical scenario, a company with ten sales representatives looking to boost performance often finds it more affordable to replace its lowest-performing representatives with better ones, even if the new employees cost more. In some cases, however, high-performing employees are also cut because their compensation is deemed too expensive. Orsuga compared the practice to the sports world, where many teams operate under a salary cap and sometimes move on from a highly paid player.

For senior roles typically paying at least $100,000 annually, companies might use headhunters to conduct confidential searches instead of publicly posting the role to avoid alerting the employee being considered for replacement. For mid-level roles, companies use a mix of headhunters and job postings. Some companies are required to post roles externally for compliance reasons, and because many employees share similar titles, a new posting can signal growth rather than a looming replacement.

Lindsay Myketey, a recruiter at Cella by Randstad Digital, said: "As roles evolve, companies may replace workers for reasons including underperformance and skill gaps, including those related to AI." She added: "Many managers are taking on more responsibilities, and companies might replace those who can't keep up." Myketey also noted: "Many clients looking to upgrade existing employees turn to confidential searches."

"Sometimes, employees are moved into different roles rather than let go," Myketey said.

Tarun Inuganti, a recruiter focused on tech executive search at Korn Ferry, said: "We're just trying to have the best person in the role. We're just not adding headcount because there's a lot of uncertainty in the market." When Korn Ferry is engaged for executive searches, it is typically instructed to consider both internal and external candidates and complete searches in about 90 days.

The trend extends to the highest levels of corporate leadership. Roughly 11% of CEOs were replaced last year across 1,500 of the largest public companies, the highest turnover rate since 2010, when the U.S. was emerging from the Great Recession, according to an analysis by executive-recruiting firm Spencer Stuart. The Spencer Stuart report said greater market volatility, complex trade dynamics, and economic uncertainty drove the increase in CEO turnover.

Some companies maintain a continuous hiring posture, bringing on new talent not to grow headcount but to replace lower-performing workers over time. That dynamic can disproportionately affect early-career workers, who may find themselves competing with annual cohorts of new graduates. Layoffs remain low relative to historical levels. Myketey said: "Even when you have the job, you really need to make sure you're operating at a high level, like on the 'good list.'"