More layoffs at Meta will hurt workers and morale
- Meta is cutting about 10,000 additional jobs, the company’s second round of layoffs in 4 months.
- CEOs often see layoffs as a way to solve a company’s problems, but the cuts can do lasting damage.
- Laying off more than once can seem like management incompetence, an expert told Insider.
It’s the meta update nobody wanted.
Of course, CEO Mark Zuckerberg’s decision to cut around 10,000 jobs just four months after the company conducted its first-ever round of mass layoffs is scary for Meta’s rank and file.
It’s also potentially a risky move for the company.
CEOs often see layoffs as a quick fix to a company’s problems, but downsizing can do lasting damage, including reduced productivity and employee engagement, and reduced innovation. Multiple rounds of layoffs only exacerbate those results, management experts told Insider.
It hasn’t been an easy road for meta-staff lately. Zuckerberg wrote in a Facebook post on Tuesday that the company would be cutting about 5,000 jobs in addition to cutting 10,000 employees.
The decision follows a move by the parent company of Facebook, Instagram and WhatsApp in November to lay off about 11,000 employees – a move Zuckerberg described at the time as a “last resort”. The company’s cuts follow Zuckerberg’s pledge in February that 2023 would be the company’s “year of efficiency.”
He’s not the only CTO looking to cut costs. Layoffs in the industry are rampant after a rapid hiring pace in the early years of the pandemic. And Meta isn’t the only one to slash its headcount more than once in a short span of time. Twitter’s workforce is about a quarter the size it was when Elon Musk bought the company last year and began conducting continuous layoffs.
With the recent cuts, Meta will have about 65,000 employees, down from a peak of about 86,000 last year.
Redux on Layoffs: Why Did Executives Miscalculate?
While a company’s motivation for making multiple cuts often stems from a desire to show its full tax responsibilities to investors, this strategy can backfire. Instead, the move looks more like management incompetence, said Dana Sumpter, a former human resources director who is now an associate professor at Pepperdine Graziadio Business School.
“Companies are falling trying to impress their shareholders and boards and showing how cost-conscious they are,” she said. “Even if investors respond positively to a layoff announcement — ‘Good for Meta, they’re conscientious’ — if the company has to do this multiple times, the question may arise, ‘Did they get their act together? ?'”
Salaries and employee benefits are typically one of a company’s largest expenses, accounting for up to 70% of total business costs, according to Paycor, an HR software company. And at a time when high interest rates, high inflation and uncertainty continue to weigh on the economy, it makes financial sense to downsize.
The problem is that when companies lay off employees to cut costs and create efficiencies in the short term, they tend to overlook the negative long-term consequences of the move, Sumpter said. That could be especially true today, when a number of high-profile companies have announced mass layoffs and others are jumping on the proverbial bandwagon, she added.
“These companies want to be in the headlines. They want to show that they’re fiscally prudent and frugal, and that they’re joining their competitors in making these tough decisions and cutting costs,” Sumpter said.
Cutting a second time in quick succession probably stems from the same impulse, she told Insider. But as a strategy, it likely has the opposite effect, leaving investors at a loss as to why executives miscalculated.
“You wonder how efficient they are, and do you know what they’re doing?” Said Sumpter.
A wave of layoffs dents in morale; one second can be devastating
According to Crunchbase data, it’s unusual for a company to conduct multiple rounds of layoffs. Over the past year, around 9% of the 433 tech companies it tracked have laid off employees more than once.
That could be because doing multiple rounds is widely considered bad practice, said Kerry Sulkowicz, the executive director of Boswell Group, which advises CEOs and boards on HR and culture matters. “Launches in dribbling and murky create instability,” he told Insider.
“When a CEO does this, it’s important to communicate that this is a tough decision and to do it in one fell swoop as much as possible.”
A wave of layoffs can affect employee morale; a second round can be devastating. Bereaved employees often mourn the loss of their co-workers and feel guilty that they were spared.
They’re also likely to be particularly nervous about their job security: Instead of focusing on the work at hand, they’re looking over their shoulder, which isn’t good for their productivity or mental health, Sulkowicz said.
“You keep asking yourself, ‘Is there another round coming? Am I next?'”
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