HR technical departments are out of their league. After years of throwing money at anyone with a computer science degree or IT experience, companies need to get rid of employees instead.
Amazon and Meta, which owns Facebook, lead the pack in scale of job cuts, with more than 10,000 each planned, while Twitter is grabbing the headlines for brutality and incompetence. New owner Elon Musk fired some 3,700 employees via email and immediately tried to rehire some, saying they were fired by mistake.
The shooting goes beyond the big names: Nearly 800 tech companies have announced layoffs since January, shedding 120,000 jobs, including 25,000 this month alone, according to layoffs.fyi, a tracking website.
Except for a few veterans who survived the dotcom crisis, tech workers have never seen anything like it. How cuts are handled could shape the culture of the industry for years to come.
Normally, innovation and rapid growth require technology employees to keep the faith. They often work long hours and solve seemingly impossible problems in anticipation of financial rewards that can take years to arrive. Unexpected job losses, especially if handled cruelly, undermine any sense of shared sacrifice not only among the deceased but also among those left behind.
Tech companies facing their first big takedowns should keep this in mind and learn lessons from other industries. The banking sector is known to attract many employees who are primarily concerned with immediate personal gain. That’s why the reforms enacted after the 2008 financial crisis aimed to force staff to worry about the consequences several years into the future.
This short-term view was a natural consequence of decades of cyclical hiring and firing that sapped any sense of institutional loyalty. Banks have spent decades recruiting staff in good times only to swing the ax indiscriminately in bad times. And many of them have done so in particularly nasty ways. In 2012, Swiss bank UBS made it clear how little individual feelings mattered. Around 100 London-based fixed-income traders learned they had lost their jobs when they arrived at the entrance turnstiles to find their access passes deactivated.
The post-Covid version, as practiced by Twitter and others, is to deactivate Slack and someone’s email accounts before informing them that they will be fired. Heartlessness sends the message that workers are expendable, so why would they put in an effort that won’t directly benefit them?
At the same time, companies that show basic decency can benefit. As pandemic-related travel bans hit the U.S. airline industry, Delta handled its financial crisis primarily with voluntary buyouts and unpaid leave, while American and United announced mass layoffs. When air travel returned last summer, Delta had fewer issues with canceled flights, in part because the Atlanta-based carrier was able to replenish staff more quickly.
Although the other carriers reversed most of their job cuts after receiving government aid, their former employees took advantage of the warm job market and chose to go elsewhere. (Loyalty only goes so far: The Delta pilots union recently voted to go on strike to protest long delays in contract negotiations.)
While avoiding mass layoffs is ideal, many tech executives think that’s not possible. However, some ways of doing things are clearly better. Patrick Collison, chief executive of payments company Stripe, recently received praise for his admission of wrongdoing and generous severance packages, while Brian Chesky provided support for reallocating departing workers as part of job cuts. Airbnb jobs 2020.
Management experts say it’s best to have a big round of cuts, with adequate reallocation benefits, and be clear with employees about why the losses are needed and when they’ll stop. Being human and accessible helps. But do not exaggerate. Braden Wallake, chief executive of marketing agency HyperSocial, has become a figure of amusement online after posting a selfie of himself crying over layoffs.
Most importantly, says Bob Sutton, an organizational psychologist at Stanford University, don’t pretend you’re just getting rid of the underperformers: “Everyone knows that’s bullshit, and in the future you might see them again. You may even want to hire them again.
Tech executives may also want to learn lessons from professional services firms, which have decades of experience relieving people, due to their “on or off” employment structures. For many law firms and consulting firms, alumni networks are a source of referrals. Sometimes being kind pays off.
Follow Brooke Masters with myFT and go Chirping