Silicon Valley is about to lay off workers, and tech companies better do a better job of layoffs if they don’t want to make a bad situation worse.
Last week, Twitter laid off half of its staff. Stripe cut 14% of its workforce. Now, Meta is reportedly preparing to lay off thousands of employees — its first mass layoff in the company’s nearly 20-year history. Other tech companies could soon lay off their first jobs as they grapple with slumping ad sales and other economy-wide headwinds such as rising inflation and interest rates. How they approach these layoffs, however, will not only affect their financial performance now, but may have long-term implications for the success of these companies.
Anyway, better be Stripe, which gets credit for making compassionate layoffs, than Twitter, which apparently didn’t.
Experts say compassionate layoffs are the smallest possible layoffs only as a last resort. They are clearly communicated and respected. They also care about the feelings and workload of those who stay.
In other words, they are the exact opposite of what Elon Musk tweeted last week.
After a week of fear, uncertainty, and crazy long hours, Twitter’s layoffs began in the middle of the night. Of the roughly 3,700 laid-off employees, many were not known through Musk or even their managers. Instead, they learned they were fired when they couldn’t log into company email.
Liz Petersen, manager of the Society for Human Resource Management Knowledge Center, said that ideally, layoffs are done individually and in person. If that’s not possible, the next best option is video, then phone. Email is the “lowest level option”. Obviously, personal meetings are harder to hold when you’re laying off half the company.
“There’s a gracious and respectful way to let staff go, and I don’t think the last round is one of those things,” Brooks E. Scott , executive coach and CEO of Merging Path, told Recode. “You have some employees that have been there for years. Don’t you at least owe them a call or zoom or something?
he added,“ People remember those things about company culture. “
The way the layoffs also seemed arbitrary. In some cases, Musk got rid of entire teams he didn’t seem to like, including communications and machines. Learn Ethics Team. Other reports say he looked at how much code engineers wrote — not the quality of the code — and asked managers to write a sentence in defense of employees’ employment.
Workers have sued Twitter for not giving them enough notice, violating labor laws, even though it appears the company is paying them two months off work to avoid lawsuits. Advertisers worried about the company has crippled several important content moderation roles, and thus suspended their spending, which collectively accounts for 90% of Twitter’s revenue.
just Even those who made the cut on Twitter were left in fear and confusion. Employees reached out to colleagues on Slack to see who would respond, adding their names to Google Docs rather than communications from management. Some stayed Employees at the company told reporters they wanted to be fired.
This is a far cry from last week’s layoffs at Stripe.
There, the CEO wrote a company-wide letter explaining why they were laying off 14% of the company’s workforce and separately Affected employees have been contacted. Chief executive Patrick Collison blamed the broader economic environment for overhiring and rising operating costs too quickly, but also on himself. He expressed genuine sadness at the loss of staff and said: Indicated that they would set up an alumni email account for them so they could stay in touch with the company. Importantly, he communicated how the company would care for departing employees (the 14-week severance package would certainly help soften the blow).
Twitter’s situation may be anomalous as it includes wildcard Musk, but his decisions still have knock-on effects for his company Response.
Vice President Robin Erickson said that if layoffs were necessary, the best It’s good practice to be as compassionate as possible, says the Conference Board human capital expert, who studies how companies behave in a crisis. But it’s best not to fire anyone. Savings from layoffs are often short-sighted, she says, and rarely can help a company’s financial performance beyond a quarter or two. They can also lead to a number of negative outcomes, such as loss of institutional memory, productivity, and morale. Layoffs can also lead to burnout as remaining employees take over, which in turn Leading to more turnover.
Twitter staff are already reporting insane workloads to make up for all the layoffs and tackle new Musk projects. According to Platformer’s Casey Newton, as of Monday, many Twitter employees still didn’t know who their managers were. Managers, meanwhile, have at least 20 direct reports, while other employees say they work 20-hour days.
Importantly, layoffs—especially those that don’t do well—will Harm the company’s future hiring prospects.
“Why would anyone want to work at a place where they just treated people poorly?” Eric Sen said. “Organizations that lay off employees will have a harder time bouncing back when trying to hire them.”
Twitter Chances are you’ll run into this problem right away. The layoffs were so ill-conceived that the company has reached out to dozens of former employees in hopes of rehiring them. That could be a tough sell because those employees still have options.
According to the latest analysis from CompTIA, the unemployment rate for tech jobs is very low at 2.2% The sector continues to grow, according to the Bureau of Labor Statistics. Outside the tech sector, the hiring market also remains strong: Employers added 260,000 jobs last month, beating expectations. Experts refer to the recession as an “employment recession” because it doesn’t appear to be affecting employment yet.
While layoffs are sure to happen, they have yet to have a major impact on an otherwise healthy job market .
In many cases, employers are reluctant to fire people because it is difficult to hire them first. Companies that made mass layoffs early in the pandemic are struggling as the economy recovers. Twitter’s high-profile firings and volatile situation won’t make it an attractive place for employees to join.
Silicon Valley companies won’t always deal with a downturn, but their behavior now will affect their ability to grow when the economy improves.
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