The tech firms that are laying off workers will regret it because the cuts can leave lasting damage
Future job candidates will remember how those organizations managed amid economic uncertainty and how they treated employees as they showed them the door, tech and strategy execs say.
Tech firms that are slashing jobs and laying off staff are making a "major mistake" because future job candidates will remember how those organizations managed amid economic uncertainty and how they treated employees as they showed them the door, tech and strategy execs say.
Big Tech companies including Amazon, Salesforce, Spotify, and Meta, have shed tens of thousands of workers in recent weeks, citing a slowing economy. Google cut 12,000 staffers and Microsoft cut 10,000 jobs, amounting to 5% of its workforce.
In many cases, these firms have operated solely during tech's bull run, raising huge amounts of cash, going public, and hiring expansively. For ambitious tech jobseekers, these companies were seen as employers of choice.
But the mass layoffs and the way they've been handled will remove some of that sheen, experts say. Not only will the layoffs hurt the companies' brand reputations for future recruiting, they will also deflate the morale of remaining workers and dent innovation.
"Every time I see a notice in the news that such and such technology company has cut X percentage of their workforce, I don't forget that," Danny Allan, chief technology officer at software firm Veeam. "So you're sending a message that also has a brand impact that you don't necessarily want to be associated with.
"Employees remember and people looking for jobs remember how organizations acted during the economic downturn."
Layoffs do more than strip people of their livelihoods
Research published in the Harvard Business Review shows that a layoff's short-term cost savings to a company are obscured by the negative press, loss of institutional knowledge, reduced engagement, higher voluntary turnover, and lower innovation — all of which hit the company's bottom line.
One possible explanation for recent spate of mass layoffs is irresponsible hiring, according to Richard Mabey, CEO of contract automation platform Juro, driven by firms over-extending during the boom times.
"The layoffs that are now happening seem to be, not in all cases but in some cases, corrections to that behavior of excess which has happened over the last couple of years, while money has been cheap and easy," he said.
Mabey said that cutting certain teams blindly will lead to slow growth in those areas, affecting future revenue negatively because it's "short-term cash saving, medium-term pain."
Even if layoffs are financially sensible, they can hurt a company's reputation and longer-term growth.
Tech firms that are slashing jobs and laying off staff are making a "major mistake" because future job candidates will remember how those organizations managed amid economic uncertainty and how they treated employees as they showed them the door, tech and strategy execs say.
Big Tech companies including Amazon, Salesforce, Spotify, and Meta, have shed tens of thousands of workers in recent weeks, citing a slowing economy. Google cut 12,000 staffers and Microsoft cut 10,000 jobs, amounting to 5% of its workforce.
In many cases, these firms have operated solely during tech's bull run, raising huge amounts of cash, going public, and hiring expansively. For ambitious tech jobseekers, these companies were seen as employers of choice.
But the mass layoffs and the way they've been handled will remove some of that sheen, experts say. Not only will the layoffs hurt the companies' brand reputations for future recruiting, they will also deflate the morale of remaining workers and dent innovation.
"Every time I see a notice in the news that such and such technology company has cut X percentage of their workforce, I don't forget that," Danny Allan, chief technology officer at software firm Veeam. "So you're sending a message that also has a brand impact that you don't necessarily want to be associated with.
"Employees remember and people looking for jobs remember how organizations acted during the economic downturn."
Layoffs do more than strip people of their livelihoods
Research published in the Harvard Business Review shows that a layoff's short-term cost savings to a company are obscured by the negative press, loss of institutional knowledge, reduced engagement, higher voluntary turnover, and lower innovation — all of which hit the company's bottom line.
One possible explanation for recent spate of mass layoffs is irresponsible hiring, according to Richard Mabey, CEO of contract automation platform Juro, driven by firms over-extending during the boom times.
"The layoffs that are now happening seem to be, not in all cases but in some cases, corrections to that behavior of excess which has happened over the last couple of years, while money has been cheap and easy," he said.
Mabey said that cutting certain teams blindly will lead to slow growth in those areas, affecting future revenue negatively because it's "short-term cash saving, medium-term pain."
Even if layoffs are financially sensible, they can hurt a company's reputation and longer-term growth.