The layoffs will continue until (investor) morale improves

10 months ago 230

Since the start of 2023, more than 150,000 people have been laid off at tech companies, large and small. That’s a staggering number of people who have been put out of work.

When you think about how Meta, Amazon and Salesforce have handled these layoffs, the situation becomes even more grim.

Salesforce announced in January that it was laying off 10% of its approximately 80,000 employee workforce. Since then, it has been letting people go in dribs and drabs. Amazon also announced in January that it was laying off 18,000 employees, then announced another 9,000 this week. Meta laid off 11,000 in November and let another 10,000 people go in a second round this week. In addition, the company shut down another 5,000 open recs.

This, some would say, cruel, rolling approach to layoffs leaves employees anxious and uncertain about their own positions, while grieving about the loss of valued colleagues who have been let go.

Investors, on the other hand, seem to like layoffs as a way to move companies toward greater operating efficiency. CEOs typically are less concerned about the well being of their employees as they are in keeping investors happy.

An argument could be made, of course, that these companies overhired during the recent tech boom, and now it’s time to right size to better fit a changing market. That argument would carry more weight if the companies in question weren’t profitable. However, large American tech companies are very often both profitable and incredibly wealthy, even if their market cap has fallen from record highs.

While there is some truth to the idea that companies grew too quickly in recent years and need to reset, layoffs feel like the worst kind of short-term thinking: sacrificing employees to please investors. Are companies at least getting what they want from investors out of this devil’s bargain?

Investor response

If companies are looking to impress investors with their cost-cutting measures, we can rate how effective their layoffs are by how investors have reacted to them.

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