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Compassion in the Time of Layoffs

Paul is on his way to work. He’s not worried about the usual stressors: the traffic, the meetings they have, the daily to-do list that creeps and grows continually. Or, not only. But he is worried. 

An email notification pops up on his phone and when he glances down and sees his boss’s name, his adrenaline spikes. He notices the subject line references he’s just being copied on a thread with someone else, and he tells himself he’s overreacting. But later that day, an all-hands meeting is announced, and the anxiety spikes again. 

If you’re not “Paul”, you probably know him. 

In the midst of the “Great Layoff,” there is a pervasive sense of anxiety and foreboding in the tech industry. Hundreds of thousands have lost their jobs and countless more are left behind, asking, “Am I next... And when?” What is the impact on organizational health, and how can companies navigate chaotic times with greater clarity — and compassion?

Mass Layoffs Shake Up the Tech Industry 

After a decade riding a bull market, sky-high inflation, rising interest rates, and pandemic overhiring, fears of an impending economic downturn are rattling the tech sector. Within a span of a few months, hundreds of thousands of people have had the rug pulled out from under them. This phenomenon has been called the Great Layoff and it is making an impact that will last much longer than the 24-hour news cycle. 

On the Chopping Block 

A look at the Great Layoff by the numbers:

  • According to Layoffs.FYI, 160,000 industry employees lost their jobs in 2022, the majority of which occurred in November and December. In the first six weeks of 2023 alone, over 100,000 people were laid off
  • Alphabet cut 12k jobs; Microsoft “reduced” its workforce by 10k; Amazon axed another 18k. Tesla, Twitter, and Meta laid off 6k, 2k, and 11k workers respectively. 
  • 20% of all cuts are in sales, marketing, and customer-facing positions, with HR and recruiting being the most affected.
  • Preliminary research indicates that women and minority communities may be more heavily targeted. While women account for less than a third of tech employees (and less than a quarter of those in technical positions), they make up at least 45% of current layoffs. Twitter, specifically, is being accused of letting 57% of its female workforce.

The good news, or at least the vaguely-silver lining in the cloudy sky, is that small and mid-size companies seem to be holding steady and/or adding jobs — and they are in a better position to compete for top talent who were lost to layoffs.

How Do Mass Layoffs Impact Workplace Culture?

Well… negatively, as you can imagine. Seventy-eight percent of the workforce reports feeling scared and worried about their job security. Listen to what these tech workers have to say:

  • “Every day feels like a waiting game. I live in fear of the morning when I check my email and discover I’ve been locked out.” Janice, VP of Client Experience
  • “My imposter syndrome has gone into overdrive. I’m working later and later to prove my value and show I’m worthy of keeping on board.” Noah, content manager
  • “It was a normal morning and the CEO sent an email saying that, because of the economic downturn, we’d have to let go of 25% of our workforce. He didn’t say much in the email but said that everybody would go to the all-hands at 11 am for questions. It was paranoia in the moments after. Whoever had read the email would stay because the people let go had meetings in the morning and were immediately removed.” Startup employee

The Great Layoff has led to the Great Apprehension or, as Harvard Business Review puts it, “Layoff Anxiety.” Those left behind live in a constant state of dread. How long can they do this before they walk away? (Or jump from what they perceive to be a sinking ship?)

The Real Cost of Layoffs

The lasting impact of layoffs is massive:

  • Morale suffers hugely, leaving even those remaining in a state of anxiety and malaise.
  • Knowledge is lost as star contributors abandon ship.
  • Reputation takes a hit with current and potential employees, vendors, and customers, especially in the fast-moving communication style of social media.
  • Innovation dips as people scramble to cover the work gaps left by layoffs.
  • Layoffs are on the list of grieving life experiences.

Here’s the truth we always come back to: People matter. How you treat your people will determine your success — or lack thereof.  Most organizations who engage in mass layoffs don’t actually experience improved profitability; no matter how you measure it. More commonly, performance goes down and market share doesn’t increase. Companies have to pay severance, tapping those already-drained financials, while morale tanks leading to lower quality of work and problems with retention. Bottom line? If you don’t pay attention to the people factor, you might briefly balance a book, but you won’t see results. 

Ethical, Compassionate Layoffs

It seems like an oxymoron, we know. But there is a way to handle layoffs that doesn’t break your company — or the individuals who are let go. 

Is There a Better Way?

Is a layoff really necessary or if there is an alternative that is more productive and sustainable? That’s the number one question we ask: is it really your best option? Have you considered salary cuts for executives, short-term leaves for employees rather than layoffs, shifting from base salary to commission for some positions, reducing location costs by going remote, or in-company reassignments? There are options! 

Remember, layoffs create a 20% drop in productivity for remaining employees, so the ripple effects can extend far and wide. 

AT&T faced this reality a decade ago when they realized that 100,000 of its 240,000 member workforce had positions that would be obsolete in the next ten years. They could have laid these people off.

Instead, they wanted to keep their knowledge, experience, and talent in-house. They began retraining them for the roles that the company would need. Within a year and a half, product development cycle time dropped by 40%, time to revenue sped up by 32%, and overall revenue has grown by 27%. 

Practicing Empathy

Being empathetic means asking two key questions: First, is it necessary? Then, is it kind?

If there is no way around a layoff, it is important to create a plan and strategy that aligns with your overall business philosophy, as well as a method that minimizes harm. It should encompass a plan for continually changing workforce needs, accountability for managing and supervising this plan, and metrics that will help us measure the efficacy of these actions.

If you have worked to create a culture of communication and vulnerability, it will serve you well now. The worst thing you can do in the face of layoffs is… nothing — to stop communicating with your people, to allow rumors and worries to shape the narrative. Reductions are hard, but it is not an excuse for radio silence or to avoid difficult conversations. 

Be there for your employees. They need time to process their new reality — and say goodbye to team members and friends. They also need real help: severance packages, extended health benefits, transition counseling, job training/retraining, and introductions, recommendations, and references to other local employers. Most importantly, a laid off employee should not be persona non grata. Follow up with them, direct them to available resources, and keep them actively in mind for rehire.

Step Up for the Ones Who’ve Stayed

Escaping a layoff can be nearly as worrying and anxiety-producing as losing one’s job. That fear… It does not dissipate readily, and team members who stay may feel “survivor’s guilt.” This can erode morale, productivity, and culture — and you may lose them anyway. 

Keep the conversations going, communicate transparently and frequently, ensure they have access to resources, and check in. Don’t treat it like business as usual, because it is not. It is unusual. It is uncomfortable, but with effort, it need not be uncompassionate or unmanageable for “survivors,” laid off employees, or the company itself.

The Great Layoff, the Great Apprehension. While it hurts, it can also be our chance to be great: Great leaders. Great companies. Great people. There is opportunity to shape our culture and create a safe space for vulnerability, communication, and… hope.

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