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As the sun sets on 2023, we can look back at the year in corporate layoffs that cast a shadow across industries in the hopes we can learn a few lessons. The year marked a stark contrast between the ideals of corporate loyalty and the calculated decisions that left thousands jobless.
Let’s take a look at four less-than-desirable trends that marked the year in that regard — and maybe take notes to avoid repeating the same mistakes in 2024 and beyond.
1. You’ve Got Mail
2023 seemed to be the year of the email layoff.
Four days into the new year, Salesforce CEO Marc Benioff emailed more than 7,000 employees telling them they were laid off. To make matters worse, the announcement came just a few months after Benioff had tweeted about CEOs’ responsibility to take care of their employees no matter what, going so far as to refer to his workers as “Ohana,” or “family” in Hawaiian. At the time, the company was not suffering financially.
Google execs didn’t fare much better. The company whose founding motto once included “do no evil” laid off 12,000 workers via email in exchange for a 5% stock bump — which they ultimately didn’t hold onto. At the time of the layoffs, according to Cory Doctorow, the company had enough cash in its coffers to pay its laid off workers for 27 years.
“It’s hard for me to believe after 20 years at #Google, I unexpectedly find out about my last day via an email. What a slap in the face,” tweeted former Google employee Jeremy Joslin.
2. Tech Industry Hit Hard
The tech industry saw some of the biggest layoff hits in 2023.
As the year started, we had reported that an average of 2,080 tech workers had gotten the ax every single day in January. And by the end of the year, the total number of laid-off tech workers in 2023 was a staggering 253,559 employees across more than 1,000 companies.
Some of the biggest offenders included:
- Amazon laid off 8,000 workers.
- Meta cut 10% of staff and revoked job offers.
- Microsoft laid off 10,000 workers.
- Vimeo laid off 11% of its employees.
- Parler cut 75% of its staff.
Perhaps the biggest slap in the face to employees — beyond losing their incomes — was that many of these layoffs were preventable, according to many experts.
Some of the biggest (preventable) causes? Companies using debt to scale, making them more vulnerable to interest rate hikes. Unrealistic stock market valuations that don’t align with actual financial performance. And pandemic over-hiring, which didn’t take into account stalled growth after the fact.
Related Article: How to Hire After Layoffs
3. The Corruption of Power
Corporate decision-makers have been making bold claims these past few years regarding employee experience and human centricity. Yet, the behavior behind 2023’s layoffs showed that talk was little more than hot air.
Reworked contributor Mary Slaughter argued that the actions of leaders are the “single greatest influence on organizational culture.” That includes layoffs — namely, how they’re communicated, managed and experienced — and leader self-awareness. And that self-awareness tends to be a little lacking once the idea of “power” is put on the table.
Why does power change the dynamic? For one, research shows that powerful individuals tend to believe they are “right” and, as such, have less interest in others’ perspectives and less inclination to be inclusive. And second, these powerful people pay less attention to risk. Because there’s no need to focus on the possibility of making a mistake if you know you’re right.
The result of these corrupted powerful people is the headline-making layoffs we saw this past year. Mass emails. Little to no warning prior to getting laid off. And blocking employees from systems and buildings before they’re even aware of what’s happening.
Related Article: Layoffs Are Hard, But They Don't Have to Be Cruel
4. Heading Into the Holidays
The year began with a bang of layoffs, and it seems it will end that way too.
In Mid-November, Citigroup announced plans for reorganization, which will include management changes and layoffs. The bank, which employs more than 240,000 people, claimed it will cut out five layers of its management leadership. In the top two layers alone, Citigroup cut 15% of functional roles and 60 committees. Employees still await more details about the scope of the job cuts.
Just two weeks later, Twilio followed suit, saying it plans to lay off around 300 employees — roughly 5% of its staff. According to CEO and co-founder Jeff Lawson’s letter to employees, the company’s recent investment in Twilio Segment did not lead to the growth outcomes they’d hoped for. “As a result, we’re simply spending too much,” he explained. “So we’ve made the hard decision to eliminate some of our Segment GTM [go-to-market] roles — right sizing the investment for the results we’re seeing.”
And in what will hopefully be the last news of layoffs in 2023, Spotify announced that it’s cutting 17% of its global workforce, its third round of layoffs this year alone. CEO Daniel Ek said on the company’s blog that these job cuts are part of a “strategic reorientation” where the brand will move to slash costs following increased interest rates and slowed economic growth.
Moshe Isaacian, a senior brand strategist who’s worked for major companies like Toyota, Snapchat, Nike and others, summed up the situation in a recent tweet: “We are so desensitized as a society that the fact that people got laid off 3 weeks before Christmas is not being met with more outrate,” he wrote.
The Layoff Alternative
There will always be layoffs, especially in a tech industry that’s prone to boom-bust cycles. But that doesn’t mean letting go of employees should be the first line of defense. That becomes crystal clear when companies blame the layoffs on capital only to turn around and make significant investments elsewhere, as Reworked contributor Lance Haun reported in February.
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Take Microsoft, for example, a company that is performing just fine financially after hitting a 52-week high just weeks ago. Yet, days after laying off 10,000 employees, the company turned around and invested $10 billion into OpenAI. And it also still lists nearly 800 open positions on its website — sales positions, developers and other roles that typically are not difficult to fill.
And Microsoft is not alone. Other companies announcing huge layoffs — Meta, Amazon, Google — have hundreds, even thousands, of listings for open positions.
Why, when a company seeks to hire more employees, would it choose to turn to layoffs? Plenty of viable alternatives are on the table, namely reskilling and upskilling in the name of internal mobility — alternatives that just make good fiscal sense when you consider the costs of hiring new employees vs. retaining existing ones.
As Haun succinctly put it in his article: “If you already have people in your massive organization who can do these jobs, and most of them do, wouldn't it make more sense to reallocate them appropriately?”
There’s also the much-overlooked cost of letting employees go. For instance, earlier this month, Wells Fargo announced plans to make more aggressive strides toward efficiency, which has been hindered by its low staff turnover. To make this happen, the company will allocate between $750 million and $1 billion toward employee severance, with plans to layoff workers in 2024. The company has yet to reveal how many jobs it plans to cut.
Related Article: Breaking the Middle Management Boom-Bust Cycle
Saying Goodbye to the Year of Layoffs
If one thing is clear from the extensive layoffs of 2023, it’s that a critical reflection on corporate strategies and employee wellbeing is much needed. While CEOs and other decision-makers like to talk-the-talk of “family” and “employee experience,” many fail to execute the walk.
2023 not only underscored the vulnerability of tech industry workers, it also sparked a conversation about what sustainable and ethical business practices should look like in the face of financial pressures.
And those conversations become even more crucial as artificial intelligence catapults into the scene. As much as we want to believe the technology will free up employees to do more meaningful work, what’s to stop powerful decision-makers from using AI to cut costs by firing more people? Especially when they have no qualms doing so now when the tech has yet to reach its full potential.
