Nov 8, 2022 - Technology

What to expect when your tech firm is downsizing

Illustration of two cursor hands holding a box full of office supplies.

Illustration: Allie Carl/Axios

As Silicon Valley and the broader tech industry face a season of layoffs, workers are unprepared for the ordeal and management has little experience with the wrenching process.

Driving the news: Meta is expected to announce large-scale job cuts as soon as Wednesday, the first ever in its history. That comes on the heels of major layoffs at Twitter and many other flagship tech firms.

Why it matters: At most companies, layoffs are a business decision for top execs but a deeply personal experience for everyone else.

The big picture: The industry's phenomenal 20-year run of largely unimpeded growth means that most of its workforce doesn't have much idea what to expect from widespread layoffs.

Here's a brief guide:

1. For those laid off, the pain is personal.

  • Even in the best cases, where a company has carefully selected who gets the ax and applied sensitivity to the process, people who are let go can feel a sense of failure — even though, typically, the actual failure belonged to the company and its management.
  • The worst cases — as with Twitter's reportedly 50% cuts last week, made by a new ownership team with little preparation or apparent care — create a broader kind of sorrow among a workforce as well.

2. While no one should shed tears for the managers, they're having a hard time too.

  • Middle managers often find themselves having to select winners and losers from groups of people they handpicked to join their teams not that long ago.
  • Then they have to face the people who are left and help them through what can be extended bouts of anger, depression and survivor's guilt.
  • Workers and managers both face bigger workloads under post-layoff do-more-with-less mandates.

3. For companies, layoffs leave slow-healing psychic wounds.

  • Tech companies often aim to inspire workers with mission statements and caring rhetoric. But once a firm has gone through a round of layoffs it becomes effectively impossible to persuade employees that anything matters beyond the bottom line.
  • After big rounds of layoffs, tech leaders can't just move on as if nothing happened. But they also have to try to rekindle workers' belief that the organization can do big things.

Between the lines: Layoffs that are tied to the shutdown of a specific product line or division can be written off as strategic in nature. Broader layoffs are a sign that a company grew too fast, took too many risky bets, or just never hit overly ambitious goals.

  • Many tech companies overhired during the pandemic and now face tougher times.
  • The people responsible for such choices are rarely the people who lose their jobs — though sometimes, as in Twitter's case, layoffs are made by a new management with a belt-tightening agenda.

To be sure, many tech workers have been generously paid and are relatively well-off compared with other industries. But losing your job is still losing your job.

My thought bubble: I'm a veteran of a dotcom era startup that went public and then laid off half its staff more than two decades ago, and I still get flashbacks.

  • You never forget these experiences, and this year's cuts could reshape how a generation in tech thinks about their careers.

Yes, but: When laid-off developers filled the coffeeshops of San Francisco and other tech hubs after the bust in 2000-2001, they used their newfound don't-give-a-damn state to hatch passion-project ideas.

  • Some of them took off and sparked the next boom. That could happen again.
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