When Meta, formerly Facebook, lay off 11,000 workers In November, it was in the shadow of Elon Musk’s brutality and chaos shooting spree in twitter. By comparison, the way Meta CEO Mark Zuckerberg handled the layoffs — saying he had a responsibility to grow the company very quickly, showing other cuts the company made first, and offering generous compensation — seemed humane.
But this week, Zuckerberg announce It plans to lay off another 10,000 workers and will do so piecemeal over the next few months. Hiring people will be affected immediately, tech workers will find out in April, while business workers will learn their fate in late May. Plus, Zuckerberg has been hinting at these layoffs for weeks, adding to the unease at the company.
It’s a bad way to lay off workers, which experts say should be minimal, compassionate, and clear. Doing so little by little will leave workers on edge and alienate the people Meta wants to keep, and there’s also a good chance it could hurt the company from future growth.
“We just extended the window for people worried about layoffs to the end of May now. How is that supposed to be efficient?” one Meta employee, who asked not to be identified so as not to jeopardize their work, told Vox.
In his post, Zuckerberg said, “I understand that sharing restructuring plans and layoffs months in advance creates a difficult period. But last fall, we heard feedback that you wanted more transparency soon on any restructuring plans, so that’s what I’m trying to present here.” .
All of this is happening because tech workers have seen a reversal in their employment prospects. Tech companies that conducted unprecedented hiring earlier in the pandemic are now — some for the first time ever — cutting staff as advertising dollars plummet amid a potential recession and as users do things besides hang out online. It meant a weight in perceived power among tech workers who were used to perks and big salaries, but now worried about ever getting a job.
Layoffs are generally a bad way to run a business. In addition to making people more likely to leave a company voluntarily, layoffs damage the morale of those left behind and reduce their productivity. This effect is even worse if these layoffs happen slowly and without explanation from management, as with the recent Meta round. If companies need to lay off workers, they should let everyone know in advance and offer retention bonuses for those who stay until the layoff date, according to Robin Erickson, vice president of human capital at The Conference Board, who studies how companies act in a crisis.
In addition, search Offers Layoffs don’t actually save companies a lot of money. The payroll savings are through severance expenses, not to mention the lost productivity and knowledge that workers take with them.
“What happens in the short term is the company’s bean counters say, ‘Well, if you get rid of that many people, you’ll save a lot,’” Erickson said. “In the long term, layoffs hurt companies. a period.”
So why do Meta and other tech companies keep laying off employees?
One reason is that companies like Meta are chasing Short-term stock gains. Investors were calls for Meta is tightening its belt, and in this case the layoff announcement is paying off. The company’s stock jumped 7 percent after the latest news of the layoff, closing at its price The highest point in more than eight months.
said Peter Cappelli, professor of management and director of the Human Resources Center at Wharton at the University of Pennsylvania, school. “They also can’t see the flaws in cutting people off, at least right away — what happens to the work those people have done, what the knock-on effects are on teams, other people’s turnover, etc.”
in Zuckerberg advertisement About the latest layoffs, gone are the apologies for causing the mess in the first place. Instead, there are details of his Wall Street-friendly “efficiency year” plan, which involves cutting many middle-management jobs and working with fewer people overall. He used the word “skinny” or “smaller” eight times.
To be fair, Meta multiplied Its employee base since 2020 is such that some of its employees have found the company overly bureaucratic. Like other tech giants, Meta Finding ways to get back to his scaly roots When I first considered letting some of the staff go. But the lengthy layoff cycle that has now been made could end up being an overcorrection that hurts the company in the long run.
Another reason to lay off so many tech workers? Seemingly everyone Doing it – Amazon, Alphabet, Microsoft, Salesforce. Jeffrey Pfeffer, Professor, Stanford Business School named The series of technical layoffs is mostly a “social infection”.
“If you look up the reasons why companies are laying off workers, the reason is that everyone is doing it,” Pfeffer told Stanford News in December. Layoffs It is the result of imitative behavior It is not particularly evidence-based.”
There’s also a more benign reason for layoffs: accounting magic.
Wharton Capelli Argues Accounting rules force companies to treat employees as current expenses that can be reduced rather than assets that have value. This leads to companies using layoffs as a way to make their balance sheets look better, even if it doesn’t help the company in the long run. He points out that many companies often end up trading in full-time salaried employees for relatively expensive contract workers, just because it makes their numbers look better on Wall Street.
“Some important financial accounting measures are reported on a per-employee basis, and once that denominator is cut off, measures like revenue per employee improve,” he explained. These measures, of course, don’t capture things like the loss of institutional memory and the drop in morale and productivity caused by layoffs.
None of this sounds like particularly sweeping thinking that would really lead to Zuckerberg’s stated desire in his laid-off position to “build a better tech company.” It looks instead like a short-term solution that won’t necessarily solve the company’s core problems.
With continued economic uncertainty in Silicon Valley, there’s a good chance that layoffs will continue throughout the tech industry. It’s an obvious way to try to save money and show investors that they’re course-correcting, but also risk ruining these companies in the future.
Shirin Ghafari contributed to this story.
Update, 1 p.m. ET: This story has been updated to include additional commentary from Mark Zuckerberg’s layoff announcement.