The layoffs will continue until (investor) morale improves

Since the beginning by 2023, more than 150,000 people will have been laid off at tech companies, large and small. That is a staggering number of people who have become unemployed.

When you consider how Meta, Amazon, and Salesforce have handled these layoffs, the situation gets even grim.

Salesforce announced in January that it would lay off 10% of its approximately 80,000 employees. Since then it has let people loose mouth size. Amazon also announced in January that it would lay off 18,000 employees, and announced another 9,000 this week. Meta laid off 11,000 people in November and let another 10,000 go in a second round this week. In addition, the company closed an additional 5,000 open recs.

This, some say, brutal, progressive approach to layoffs leaves employees anxious and unsure of their own position as they mourn the loss of valued colleagues who have been laid off.

Investors, on the other hand, seem to value layoffs as a way to lead companies to greater operational efficiency. CEOs are typically less concerned about the well-being of their employees than they are about keeping investors happy.

It could, of course, be argued that these companies have been over-hiring during the recent tech boom and now is the time to find the right size to better fit a changing market. That argument would carry more weight if the companies in question were not profitable. However, large US tech companies are often both profitable and incredibly wealthy, even if their market caps have fallen from record highs.

While there is some truth to the idea that companies have grown too fast in recent years and need to reset, layoffs feel like the worst form of short-termism: sacrificing employees to please investors. Are companies getting at least what they want from investors out of this fiendish deal?

Investor response

If companies want to impress investors with their cost-cutting measures, we can judge how effective their layoffs are by how investors have responded to them.






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