In 2022, the tech sector experienced a significant increase in layoffs, making it a challenging year for the global labor market. However, recent announcements from companies such as Twitter, Meta, Stripe, HP, Cisco, and Coursera offer valuable lessons on how to handle layoffs in a sensitive and effective manner. These case studies provide guidance for employers facing similar challenges in the future.
With financial pressures continuing to build, organisations across all sectors are evaluating what changes may be needed to secure against further economic uncertainty.
Layoffs tend to be a pragmatic financial decision undertaken for the good of the business, used by startups to extend their financing runway and by Big Tech to balance the books when things don't go as forecasted. Yet what we’ve seen this year is that employers must also consider the needs of the impacted employees during the process—or risk going viral for all the wrong reasons.
Companies need to handle layoffs more proactively than ever in today's digital era. Workers have become increasingly comfortable posting about their job situations and actively seeking connections for new opportunities on social media networks like Twitter or LinkedIn. These social posts will become more frequent as layoffs continue, turning a once-taboo topic into an opportunity for positivity, growth, and even new job opportunities.
It’s up to employers to ensure that those tweets reflect as positively as possible on the layoff process. Otherwise, their brand—and their ability to hire workers in the future—will be on the line.
Getting the layoff communications and wider process right for outgoing, remaining, and future employees are critical. For outgoing employees, in a high-stress and high-emotion situation, it reaffirms that they will be supported and to what extent. For those remaining colleagues, a compassionate memo will feed their trust in the company leadership to do the right thing.
For future employees, the public narrative around the company’s layoffs will help them understand the brand’s values and personal alignment, how the leadership values its employees, and ultimately, if it is somewhere they can envision themselves working.
The headlines coming out of the tech sector at the end of this year say it all. Twitter provided an unfortunate example of how not to manage a reduction in force when it halved its 7,500-strong workforce—causing a significant outcry from employees, users, and the media; raising legal questions about the process; and endangering the future of the company. Showing how an organisation can deliver bad news in a better way is the edtech firm, Coursera. In a note to employees later made public, CEO Jeff Maggioncalda transparently explained the layoff decision-making process in a way that provides clarity and encourages trust. And there are few others who handled the wave of layoffs in a more compassionate way.
The examples from 2022 demonstrate that communications surrounding a layoff or reduction in force must be empathetic, but also well-informed and drawn from a holistic layoff strategy. For example, it’s critical that business leaders, HR and communications teams all properly understand how deep the cuts must go. This will prevent the organisation from repeatedly going back on its word that ‘this is it,’ which will only open the door for other employees to leave for ethical and moral reasons. Doing so puts the company further behind on its recovery plans and results in an expensive campaign to attract new talent to what can be viewed as a sinking ship.
In an era of omnipresent social media, 2022 has shown us the urgency of revising how employers approach layoffs. An organisation might think that the short-term pain of a fumbled layoff will be forgotten soon enough, but the lasting effects of such actions will stay with them and may well hinder their future hiring agenda.
In 2023, and beyond, it is therefore incredibly important for layoff communications to take ownership of the situation—be it financial issues, macroeconomic matters, leadership mistakes, or strategy errors—and acknowledge the human cost of the reductions compassionately.