As a recruiter for a large tech company, Niki Woodall relished the thrill of working through the pandemic-driven digital boom of the early 2020s, a period marked by rampant hiring and exciting prospects for sales growth.
Then, in the middle of last year, the landscape shifted. People returned to pre-pandemic habits. Unsustainably low interest rates gave way to inflation. Consumers started pinching pennies in anticipation of a possible recession. And suddenly, tech companies didn’t need all of those employees.
Woodall and thousands of her colleagues were laid off starting in the fall, part of a cascade of job cuts targeting tech workers throughout the industry. (She spoke on the condition that her employer not be named, citing a non-disparagement clause in her separation agreement.) While Woodall said she doesn’t harbor bitterness toward management, the layoffs were a stark reminder of the transactional employee-employer dynamic.
“I think people should come out of this learning and remembering that we have to trust ourselves before anyone or anything else,” Woodall said this week.
The unprecedented rush to ramp up, followed by industry-wide layoffs now totaling more than 140,000 employees, per data tracked by Layoffs.fyi, is producing one of the tech industry’s biggest tests of workforce trust in recent memory. The job cuts are undercutting confidence in corporate leaders who misjudged the economic winds, stressing out staffers looking for new work, and putting remaining employees under the gun to meet recalibrated growth targets.
While the current bloodletting is hardly the first instance of tech turmoil, the circumstances this time around are unique. Between 2019 and 2022, some of the biggest names in tech doubled their workforce, including Amazon, Meta, and Snap. Others were similarly aggressive in hiring, raising their head count by more than 50%. The list included Alphabet, Microsoft, and Salesforce. (One notable exception: the notoriously conservative Apple, which only added about 20% to its employee count.)
In the past several months, however, each of those companies (Apple excluded) has announced job cuts ranging from 1% to 20% of its workforce. While total head count remains above pre-2019 levels across the board, the widespread layoffs are still sending shockwaves through an industry long resistant to burst bubbles.
“Honestly, no responsible company adds 86% headcount over a period of two years. You only do that if you’re not thinking carefully about the fact that it’s people’s lives you’re messing with,” said Sandra Sucher, a professor of management practice at the Harvard Business School and coauthor of The Power of Trust: How Companies Build It, Lose It, and Regain It. “There are spillover effects that will impact people for a very long time and make people less trusting of organizations.”
For high-level tech executives, the job cuts are primarily a matter of dollars and cents. Declining revenue growth and a gloomy outlook on 2023 demand paring back staff and re-focusing hiring on higher-value departments.
But the retreat will damage some of the goodwill earned through the pandemic when companies generally opted against laying off workers despite the uncertain times ahead.
In a survey of 1,100 people who had been laid off, the marketing firm BizReport found 60% of respondents were less likely to trust their next employer, and 44% reported having less motivation to contribute at their next job. The survey also showed roughly two-thirds of the nearly 800 respondents who kept their positions amid a round of job cuts reported less motivation, feelings of being overworked, and decreased desire to recommend their company to prospective hires.
Sucher said corporate leaders can retain some measure of employee trust by following a three-step process during layoffs: acknowledging and apologizing for the pain inflicted; detailing the rationale behind the job cuts; and taking meaningful action to help staff members land on their feet.
Many management gurus, including Sucher, pointed to Stripe CEO Patrick Collison’s detailed message to laid-off employees in November as a trust-building exemplar. Collison took responsibility for the company’s overinflated optimism, outlined the ways in which his leadership team erred, and offered a generous severance package that included career and immigration support.
“An open and full apology can help CEOs to connect with different audiences to show they have a human and authentic side to them,” Will Harvey, professor of leadership at the University of Bristol Business School, told Fortune’s Orianna Rose Royale.
Moving forward, Sucher said it’s incumbent upon tech leaders to reassess their approach to hiring in anticipation of growth.
“The big questions go into the domain of strategic human resources management, and to having a philosophy of what people mean to you in your firm,” Sucher said.
Woodall, who now works as a self-employed career coach, said many of her former colleagues and recently laid-off clients are embracing resiliency over hostility—though the experience of the past few years has left a few scars.
“The tech folks kind of rode this wave of growth that was exciting, but we didn’t have that long-term experience to lean on, that historically this stuff does happen every 10 to 15 years,” Woodall said. “I think it’s kind of an opportunity for us to deal with the reality that this was business, and in the market, things are always changing.”
Jacob Carpenter
