News Analysis

Layoffs and company culture: what next?

by Dan Byrne on Mar 13, 2023

Layoffs and company culture are a combination that could cause a lot of trouble, especially during the current wave of redundancies centred on global tech companies.

Tens of thousands of employees have been let go at short notice. Sometimes – as with Elon Musk’s Twitter – the employees have been locked out of their working lives at the click of a button – Slack access cancelled, and office clearance revoked. 

It’s enough to leave a bad taste in anyone’s mouth and should serve as a warning for corporate leaders. 

Because while the dismissed employees may not set foot on office premises again, their remaining colleagues will; if they carry these bad memories forward, there is a real risk to corporate culture.

Quick recap

You’re probably aware of the current tsunami of mass layoffs, especially at tech giants like Twitter, Google, and Meta. 

Generally, these organisations needed more personnel during the pandemic and hired with few restrictions. Unfortunately, their company strategies didn’t give much thought to the longer term, and now – with less staff needed, greater expenses, and more market uncertainty – companies are firing en masse. 

Insider Intelligence estimates that over 150,000 tech workers were laid off in 2022, and over 100,000 have been laid off so far in 2023.

Why does this matter to corporate leaders?

  • First, the leaders of these companies will have to explain to shareholders why the layoffs are happening – sometimes extremely soon after mass hiring. This isn’t a good start. 
  • Whether intentional or not, the manner of the layoffs indicates how the board and senior management view the employees they are working with. Dismissals are never easy, but cold or punitive measures will go down particularly badly. 
  • In the same way, how the remaining staff and managers fare after their colleagues are gone gives a similar indication.

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Picking up the pieces

The last point above will shape the organisation’s cultural outlook for months, if not years, after the layoffs have occurred.  

American management consulting firm Korn Ferry recently warned that asking people, especially managers, to do more with less was a bad idea if it not thought through. 

Imagine the countless teams in tech companies worldwide who have been left with reduced staff, new staff, a new manager, no manager, and still expected to do the same work. 

What is the board’s role in managing this?

The board is an essential source of company culture. 

Good culture builds over time through hard work, but it can collapse due to an abysmal state overnight with drastic changes like layoffs that are not appropriately handled. 

From there, it can be hard to recover. 

This is the real danger in the layoffs we’re experiencing at present. They’re happening fast, many employees are losing their jobs, and the remainder must do the same work with much less capacity. 

This is a tough ask in itself, but if it becomes clear that the board and management simply “expect it” without negotiation, then employees’ outlook on organisational culture is bleak.

In summary

Tech layoffs have continued for some time. Some organisations have had multiple rounds and do not expect to finish just yet. 

Corporate leaders in these situations may be tempted to get through it as quickly as possible. Still, rushing can easily make remaining employees believe that they simply don’t care. 

From there, leaders must decide whether they are happy to take such a big risk with their hard-won culture.

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