Before accepting a job at Twitter, 23-year-old Iris Guo turned down five other offers. Twitter paid well — $180,000 a year including bonuses and equity — and it's a well-established public company. What could go wrong?
A lot: Late last month, Twitter pulled the rug out, rescinding Guo's offer for an associate product manager role, along with a handful of others. "You wouldn't expect a big company to do something like that," Guo, who graduated from college in December, tells Axios.
Why it matters: Tech companies are hitting the brakes on record levels of hiring over the past two years. It's happening so fast that instead of the usual mix of layoffs and slower backfills, employers like Coinbase, Redfin, Twitter and some startups are rescinding lucrative job offers — a practice last seen widely during the financial crisis.
- It's a surprising trend, coming at a time of record unemployment and labor shortages, showcasing the economy's current weirdness and fast-changing nature.
State of play: This is a trend picking up speed, as more leaders are seeing rescission as a feasible strategy, says Erin Grau, cofounder of Charter, a media and services company focused on the future of work.
- HR leaders are now looking at this as a cost-cutting strategy, she says. "A lot of people who never thought this was an option, it has now become an option."
Besides being disappointing and frustrating for those suddenly without jobs — it's also a bad look for the companies. "It's totally embarrassing and going to damage your employer brand long-term, eroding trust with candidates and current employees, too," Grau says.
- Taking back job offers also could be a sign that an HR team is just not aligned with the folks in operations. It signals a lack of "discipline, and smart planning across the business if this is the situation you find yourself in."
- "A lot of companies were over-hiring, part of this is really a correction on that," says Lars Schmidt, founder of HR search firm Amplify.
Yes, but: Rescinding job offers is better than layoffs, experts say, and a way to quickly reduce what is often a tech company's top operating cost — payroll.
- Twitter and Coinbase are paying severance to those whose job offers they rescinded. "Better than nothing, for sure," says Guo.
- One product manager who saw his $300,000 a year role at Coinbase vanish, tells Axios he almost would've preferred a layoff. "At least I would have [Coinbase] on my resume," he says. He's now scrambling to get his old job back, and get out of his agreement to rent a new apartment — since he no longer needs to relocate.
What the companies say: "While it’s necessary to slow our headcount growth in light of the macro environment, we deeply regret the impact this has for the affected candidates," L.J. Brock, Coinbase's chief people officer wrote in a blog.
- In a tweet, he also said Coinbase will provide legal assistance to anyone needing visa-related help in the wake of having their offer pulled.
- "Obviously, we understand this is not a great situation for us or the candidate," a Twitter spokesman told Axios. The decision was "influenced in large part by the global macroeconomic environment," the company added in a statement, noting layoffs are not planned.
- "I’ve never rescinded an offer before, and I hope I never have to do it again," said Jeff Mahacek, the VP of product design at Redfin who acknowledged on LinkedIn that he made the decision to freeze hiring and rescind a few job offers.
The bottom line: This is a bummer, but it's a phenomenon so far mostly confined to tech, and mostly for roles that pay extremely well. Given the relative health of the job market, these workers will likely get snapped up fast — though, the market is weird, as noted above.
- Guo says she has an offer on deck from a startup she rejected in favor of Twitter. "I wish I had chose [that company] at the time," she says.
