News: Not only non-managerial staff, CEOs & team leads are getting laid off too


Not only non-managerial staff, CEOs & team leads are getting laid off too

CEOs like Sundar Pichai of Alphabet, Tim Cook of Apple, and Jamie Dimon of JPMorgan have experienced reductions in their pay as companies adopt a trend of corporate austerity.
Not only non-managerial staff, CEOs & team leads are getting laid off too

Firms might choose to cut executive positions as part of extensive restructuring endeavours aimed at cost reduction. Furthermore, changes in strategy and merger initiatives may lead to layoffs among executive ranks.

It's not just rank-and-file employees feeling the effects of widespread layoffs and cost-cutting measures since the Great Resignation. Research from Live Data Technologies in 2023 revealed that almost half of all job cuts were at the manager level or above. 

These leadership layoffs accounted for nearly double the share of total terminations compared to the previous five-year average. According to CNBC, data from Challenger, Gray and Christmas shows that over 1,500 CEOs departed from their positions last year. 

This marks the highest number of departures since Challenger began tracking this data in 2002. Investors often advocate for executive layoffs to tackle financial challenges and meet growth targets. 

Companies may opt to eliminate executive roles during broad restructuring efforts to reduce expenses. Additionally, strategic shifts and merger activities can prompt job cuts at the executive level. 

While executives with high salaries may face termination for their role in financial difficulties, it's typically rank-and-file employees who experience the most significant impact during periods of downsizing when companies face financial struggles, said Forbes in a report. 

Rising inflation, operating expenses, and interest rates, coupled with the rapid expansion of artificial intelligence, have compelled companies to restructure their operations, cut costs, and optimise their budgets. 

Shareholders, activist hedge funds, and corporate boards have responded by reducing the compensation of top chief executives. CEOs such as Alphabet’s Sundar Pichai, Apple’s Tim Cook, and JPMorgan’s Jamie Dimon have faced pay cuts amid the prevailing trend of corporate austerity

Zoom's chief executive and founder, Eric Yuan, announced a 98% reduction in his compensation and forfeiture of his bonus as the company undergoes a 15% workforce reduction. 

Furthermore, major Wall Street investment banks like Goldman Sachs, Morgan Stanley, and Citigroup have implemented significant cuts to managing director and senior leadership positions. 

After noticing excessive hiring and escalating labour costs at Meta, CEO Mark Zuckerberg expressed concerns about the proliferation of managers within the company. During an internal Q&A session, he remarked, "I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing the people who are doing the work." 

Zuckerberg highlighted that the company had become overly bloated with staff and expenses. Consequently, he declared 2023 as the "year of efficiency," a term used to denote the removal of highly paid managers who have amassed large teams without contributing significant value. 

However, this approach carries repercussions. With fewer managers available, there's a decline in the number of supervisors capable of guiding and coaching their teams effectively. 

This situation leads to an increased workload for the remaining managers, exacerbating the already high levels of burnout experienced in managerial roles. According to a recent survey by the UKG Workforce Institute, 86% of managers are grappling with job burnout, including 73% of C-suite leaders.

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Topics: Leadership, #Layoffs, #HRTech, #HRCommunity

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