Tech HR departments are out of their depth. After years of throwing money at anyone with a computer science degree or IT experience, companies are having to get rid of employees instead.
Amazon and Meta, which owns Facebook, lead the pack for scale of job cuts, with more than 10,000 planned apiece, while Twitter is grabbing headlines for brutality and incompetence. New owner Elon Musk axed roughly 3,700 employees via email and immediately tried to rehire some of them, saying they had been let go by mistake.
The firing spree goes beyond the big names: nearly 800 tech companies have announced redundancies since January, wiping out 120,000 jobs, including 25,000 just this month, according to layoffs.fyi, a tracking website.
Barring a few veterans who survived the dotcom crisis, tech workers have never seen anything like this. The way the cuts are handled could shape the sector’s culture for years to come.
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Normally innovation and rapid growth require tech employees to keep the faith. They often work long hours and solve apparently impossible problems while waiting for financial rewards that can take years to arrive. Unexpected job losses, especially if they are handled cruelly, undermine any sense of shared sacrifice among not just the departed but those left behind.
Technology companies faced with their first big culls should bear this in mind and learn lessons from other sectors. Banking is notorious for attracting many employees who care mostly about immediate personal gain. That’s why the reforms enacted after the 2008 financial crisis aimed to force staff to care about the consequences several years in the future.
This short-termism was a natural consequence of decades of cyclical hiring and firing that sapped any sense of institutional loyalty. Banks spent decades staffing up in good times only to indiscriminately swing the axe in bad ones. And many of them did it in particularly unpleasant ways. In 2012, the Swiss bank UBS made clear how little individual feelings mattered. Some 100 fixed income traders based in London learned they had lost their jobs when they got to the entry turnstiles and found their access passes turned off.
The post-Covid version, as practised by Twitter and others, is to deactivate someone’s work Slack and email accounts before telling them they are being let go. Heartlessness sends the message that workers are expendable, so why should they put in effort that will not benefit them directly?
At the same time companies that show basic decency can reap benefits. When pandemic travel bans hit the US airline industry, Delta managed its financial crunch mainly with voluntary buyouts and unpaid leave, while American and United announced mass lay-offs. When air travel came back last summer, Delta had fewer problems with cancelled flights partly because the Atlanta-based carrier was able to staff back up more quickly.
Though the other carriers rescinded most of their job cuts after receiving government aid, their erstwhile employees took advantage of the hot job market and chose to go elsewhere. (Loyalty only goes so far: the Delta pilots’ union recently voted to strike to protest against long delays in contract negotiations).
While avoiding mass firings is ideal, many tech executives think this isn’t possible. Still, some ways of doing things are clearly better. Patrick Collison, chief executive of payments company Stripe, has recently won praise for his admission that he erred and for generous severance packages, while Brian Chesky provided outplacement support for departing workers as part of Airbnb’s 2020 job cuts.
Management experts say it is best to have one big round of cuts, with proper outplacement benefits, and be clear with employees about why the losses are needed and when they will stop. Being human and accessible helps. But don’t overdo it. Braden Wallake, chief executive of marketing agency HyperSocial, became a figure of online fun after posting a selfie of himself crying over lay-offs.
Above all, says Bob Sutton, a Stanford University organisational psychologist, don’t pretend that you are simply getting rid of poor performers. “Everybody knows it’s bullshit and in the future you may see them again. You may even want to hire them again.”
Tech executives may also want to draw lessons from professional services firms, which have decades of experience in easing people out due to their “up or out” employment structures. For many law firms and consultancies, alumni networks are a source of referrals. Sometimes being nice pays. – Copyright The Financial Times Limited 2022
