HIRED TO BE FIRED
Nowhere is the current crisis of leadership more exposed than in the tech industry.
In the last 12 months, over 120,000 people have lost their jobs in tech companies.
But this systematic gutting of the American workforce makes no sense. Statistics support the opposite. Firing workers does little for a company’s bottom line. And long term, it costs a company more as the economy returns and workers need to be rehired.
Of course there are companies who actually need to cut costs. But the latest data shows cutting staff to survive is a sure sign the company is failing.
In an article of the Stamford News, Jeffrey Pfeffer, the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University, maintains layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue.
Layoffs are basically a bad decision.
Why do companies do massive layoffs?
Social contagion: Behavior spreads through a network as companies almost mindlessly copy what others are doing.
Even minor players cut staff to join the club with the big boys. Hey, Musk gutted Twitter, maybe we should gut our company.
In the tech industry, workers feel like they’re in an accordion orchestra as companies expand and contract in mindless unison.
Leadership scales to unsupported heights, grows on poorly thought out strategies, weak market research, dazzled by HBR dreams, hires with thoughtless abandon, then fires en masse when the facts of their business catches up with them.