Layoffs and its impact

Table of Contents

At a company I worked in, A senior leader used to start the town hall or quarterly business review meetings with, "Think, if this is your company..."

During a restructuring, he got laid off; the man dedicated his day and night to bringing the product to seven-digit revenue.

...

Some time ago, my ex-employer Elastic laid off 13% of staff. I left Elastic two weeks before the layoff. When I was leaving, there were no signs of layoffs. Instead, I was assured that layoffs would not happen.

Around the same time, GitHub laid off their India engineering team; roughly 100 engineers were laid off, and the team was built in the last few years.

...

Apart from the usual rumours like, layoffs are done for no concrete reason.

So, what makes an organization layoff staff it hires after a lot of "thought" process.

Reasons

Public Markets

Public Markets are always quite fast in reacting to macroeconomic conditions. Even though the management says otherwise, public markets force leadership to take certain decisions about product strategy, growth or revenue generation.

Investor sentiment changes if a company's growth prospects look dim. This is deducted via quarterly results, analyst reports, and media articles, competitor events.

Revenue, Runway, or Growth

New initiatives and labs teams are trimmed when the revenue outlook is dim. Because doing so will improve the numbers on the balance sheet, ultimately helping runway and/or growth.

Employee Performance

Regularly, most companies conduct a layoff of 5-10% of staff who are under-performant. Several reasons, like work performance, ethical conduct, and team fit, could be considered before laying off an employee.

Impact

What is the impact of layoffs on Organisations?

Layoffs impact the employer brand of an organization. Organizations will only want to perform layoffs if it is crucial.

Employer brand is capital that the organization has built over the years, which communicates the organization's culture, values, mission & vision. These are important for hiring and retaining talent. Layoffs effectively erode employer brand.

Layoffs also trigger internal fear among other employees, increasing the chances of attrition.

What is the impact of layoffs on Individuals laid off?

It is a no-brainer that layoffs affect individuals mentally and economically. Most people might not have anticipated the sudden news of being laid off.

Post-layoff, the individual might not firmly believe in any founder's culture, ethical and vision statements.

Conclusion

I don't advocate for layoffs, but it is also a necessary evil that forces leadership to do. It has its pros and cons.

The employees need to take note of living off themselves, planning for the risk of being laid off.

This also brings the erstwhile discussion of "moonlighting" at orgs. Because when orgs can't guarantee job security, employees will diversify risk.

Perhaps, this is the new "new normal"!

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