Cost-cutting in tech is officially hitting the industry’s titans. After years of ruthless staffing up, both Meta and Google have told some employees to find new jobs within the company or leave, according to a report in The Wall Street Journal.
These actions at Meta, via departmental reorganizations, have affected a “significant number” of employees. Cuts aren’t unexpected, a Meta spokesperson pointed out: Mark Zuckerberg told investors on the company’s July earnings call that he planned to “steadily reduce head count” over the coming year, and that “many teams are going to shrink so we can shift energy to other areas.”
The changes reported out of Google have apparently hit around half of the employees of the company’s 100-plus-employee startup incubator, Area 120, where a number of projects have been canceled. Google didn’t immediately return Protocol’s request for comment, but Sundar Pichai has spoken publicly about plans to cut costs, slow hiring, and make the company 20% more productive. On Friday, he reportedly told employees at an all-hands meeting that announcing job cuts to the whole company was “not a scalable way to do it,” but that he would “try and notify the company of the more important updates,” CNBC reported.
To find out what this all means for Big Tech and the rest of the industry, I spoke with Colleen McCreary, Nolan Church, and Steve Cadigan — three people-leaders who have led HR at companies like Credit Karma, DoorDash, Carta, and LinkedIn.
Moves like these are common in Big Tech. Giving employees 60 days to find another role is a “pretty normal big-company proposition,” said McCreary, the chief people, places, and publicity officer at Credit Karma. “Projects get spun up, projects get wound down.”
- Cadigan, the first CHRO at LinkedIn and author of the book “Workquake,” agreed, noting that he’s seen companies use this practice throughout his career. It “raises the employability” of affected workers “if you really believe they’re good people and you really did just cancel that project — it’s not about poor performance.”
- That said, a 30-day deadline to find a new job “feels pretty aggressive in a big company,” said McCreary, who sees 60 days as “much more normal.” Sixty days also allows companies to avoid triggering WARN requirements, which — depending on how many employees are let go in a given location — can require 60 days of pay, McCreary said.
- “Deeper cuts” are expected to follow these 30-day notices at Meta, WSJ reported, citing anonymous sources. Indeed, Zuck told investors in July that he expected the company to “get more done with fewer resources.” (Since last year, Meta has cut its 2022 expense guidance to between $85 billion and $88 billion, down from between $91 billion and $97 billion.)
Big Tech has plenty of reasons to keep job cuts quiet.
- Layoffs are a huge threat to an employer’s brand and hurt morale internally; they leave companies “scarred for a long period of time, both internally and externally,” McCreary said.
- Large tech companies are “really good with controlling the narrative” and know that the word layoff is “a hot button for the press,” said Church, the former chief people officer at Carta, who co-founded the executive talent marketplace Continuum.
- Still, quietly cutting jobs carries its own reputational risks. “Your staff knows if you’re not treating people fairly — if you’re taking people out with sniper shots in the night, metaphorically speaking,” Cadigan said.
For at least eight years, big tech companies have been hoarding talent — both from startups and from each other — as a competitive strategy, said Church.
- That has meant tolerating some bad hires and underperformance — the “bunch of people at the company who shouldn’t be here,” as Zuck put it bluntly over the summer.
- “That was an OK trade-off in the previous macro environment,” Church said. Now, even Big Tech is feeling the pressures of a worsening economic situation, and leaders are “trying to stay on this high wire between public market investors who care about cost cutting and winning the war on talent on the other.”
One thing we know: More performance management is coming. McCreary said she gets a call from a CEO or head of HR “once a week” on how to do a layoff — but she’s also “hearing a lot more about, ‘How do you do performance management?’”
- Giving underperforming employees honest feedback leads some to quit on their own, helping companies avoid terminations and other methods of reducing head count, said Cadigan.
- While serving as LinkedIn’s CHRO a decade ago, Cadigan championed managing underperforming employees out of the company as an alternative to involuntary terminations (while butting heads with the board, which wanted to see more employees fired, he said).
- Offering this kind of straightforward feedback is “something very few companies are good at,” Cadigan said. “If we’re doing this right, we’re helping people figure it out on their own without having to fire.”