The running total of tech layoffs for 2023 is just under 170,000, already more than all of last year. Whereas late 2022 layoffs largely affected nontechnical talent in HR and future hiring, this year they have been focused around current business and product priorities, affecting many software engineers. In March, Meta announced it was laying off 10,000 employees after already cutting 11,000 jobs in November 2022. Amazon cut another 9,000 jobs in cloud computing and HR services after announcing 18,000 cut jobs earlier this year.
Though reports suggest between 80 and 90 percent of laid-off tech talent are finding a new tech job within three months, the recent layoffs have had a lasting impact on the remaining employees, their managers and the overall company cultures at the organizations where these massive layoffs are taking place.
According to nearly half of respondents in a TalentLMS survey, these recent layoffs have intensified a toxic climate within organizations. Dimitris Tsingos, TalentLMS co-founder and president of learning technology company Epignosis, says layoffs can create a feeling of uncertainty and fear for the remaining employees.
“When massive layoffs happen it can significantly impact the culture and climate of a company,” Tsingos says. “This climate can lead to decreased morale, lower productivity and increased turnover. It can also intensify existing toxic behaviors, such as unhealthy competition and cutthroat tactics.”
Different game, different rules
The technology industry exists in a paradox of markets. While many other industries are scrambling to retain top talent, the recent massive layoffs in the tech industry have come after tech companies have been growing and raising massive capital over the past few years.
“The fuel for that has been really inexpensive capital,” says Jan Bruce, CEO and co-founder of digital coaching platform MeQuilibrium. Managers and talent leaders now must shift from managing huge capital acquisition numbers to managing layoffs.
“You have to quickly and accurately understand that this is a different game with different rules,” Bruce says. “You have to be able to maintain your sense of purpose in what you’re doing – that’s a lot.”
Those who remain at the company – the “survivors” – are often forced to grapple with increased responsibility, which comes with increased stress and potential for burnout, all while dealing with a potentially toxic work culture. Bruce says a lot of “double-hatting” is going on – workers are covering multiple jobs and consistently asked to do more.
“With stretch comes stress,” Bruce says.
According to the TalentLMS survey, employees said the top contributors to toxic work culture are increased expectations for longer work hours or working over weekends without additional compensation, lack of transparency and communication from leadership, lack of courtesy and backstabbing behavior among colleagues.
Additionally, research from a Boston Consulting Group survey of tech talent earlier this year found that financial compensation was no issue among workers, but dissatisfaction with job security, feeling supported/listened to, work-life balance and flexibility were the No. 1 concerns for tech workers.
An increased “emotional reasoning” goes on when layoffs happen, leading to tensions and paranoia around “being next,” Bruce says. When people are stressed and morale is low, the best thing leaders and managers can do is “listen and communicate,” she adds.
For remaining employees who may start worrying about being cut next, Bruce says managers need to have actual conversations beyond a “how are you doing?” message via Slack. She says discussions that address specific concerns and worries are paramount.
“It’s important to set up – or reset – an environment where people feel comfortable expressing their concerns, as opposed to just disseminating information,” Bruce says. Conversations about why things happened and what comes next can be critical for improving morale, she added.
“It’s crucial to be transparent with employees about what’s happening in order to build trust and prevent rumors or misinformation from spreading,” Tsingos says. “Talent leaders should encourage open communication and active listening between employees and managers, which helps employees feel heard and valued, especially in a climate of fear and uncertainty.”
Strained by stress, strengthened by trust
The managers themselves are at the crux of it all and bearing the brunt of the stress and uncertainty – as much as 30 percent higher than the stress of their teams, according to MeQuilibrium data. Many leaders are elevated to a management role without much experience managing people or teams, Bruce says, which can be challenging and have significant repercussions.
“We know they’re important, but we have to come through for them in terms of support as leaders,” she says.
For managers who may not know what’s coming next, even if you don’t know the answers, being as communicative as possible with transparency is “essential to trust,” Bruce adds. “When teams have trust amongst themselves and with their management, they move quickly.”
Consider other teams that move quickly, such as first responders, where trust is paramount – without it, things break down, Bruce says.
Tsingos agrees that active leadership is vital to maintaining a healthy company culture. In the TalentLMS survey, employees said leadership and senior management are primarily responsible for the toxic work environment created around layoffs.
“It’s striking that as much as 45 percent of employees say leadership is unaware of the toxicity and lives in a bubble,” Tsingos says.
Conversely, the survey also shows that the building block of a healthy culture includes, most importantly, employee recognition and rewards programs, followed by soft skills training for leadership and employees, introducing bystander intervention training to discipline disrespectful behavior and expanding diversity, equity, inclusion and belonging policies.
Tsingos says most startups that grow do so thanks to their culture and attractive work environment, but founders and investors often kill healthy culture by building management teams that focus on weaknesses instead of strengths and disconnect the company vision from reality.
“Healthy work culture is all about leadership,” Tsingos says. “When selecting your leaders, look for ones that enthusiastically embrace your culture,” he adds.
Step up to ease the layoff fallout
Beyond transparency and direct communication, leaders can follow through on other ways to alleviate the stress workers are feeling – though many companies aren’t. Google reportedly has not followed through on paying in good faith for health insurance and health benefits like maternal and fertility care for laid-off employees.
In April 2023, McDonald’s Corp. closed its corporate headquarters for three days to lay off employees remotely. Many experienced talent leaders have never heard of such a tactic, according to Sandra Sucher, a Harvard Business School professor who studies layoffs.
On the other hand, some organizations have extended digital support platforms to laid-off employees to support their mindset and well-being. Starkly cutting people off from benefits they’ve come to rely on is archaic and something “we need to move away from,” Bruce says. “We’ve got to figure out ways to help people as they get on their feet.”
A MeQuilibrium survey found that 75 percent of respondents are actively open to new job opportunities (even after being reemployed), with the majority of tech workers (laid off or not) flexible about staying in the industry and instead placing a higher value on a cultural fit – something talent leaders and their teams can directly influence and improve.
Health support companies such as MeQuilibrium and WIN can help extend benefits to existing employees to make their transition into a new job faster, healthier and less stressful.
One community-based organization, L&D Cares, founded by talent leader Brandon Carson, aims to be a community by and for development and management professionals to help with transitions. For those in talent management and L&D impacted by layoffs, its no-cost mentoring program is a prime way to assist in career transition.
“How do you look at your own skill sets? How do you describe yourself to other organizations? There isn’t an easy career ladder for many people in the industry,” says Elliot Masie, chair of the Masie Learning Foundation, CEO of Masie Productions and advisor to L&D Cares. “Part of the organization’s work isn’t just to get them back into L&D, but just to get them employed again.”
In some cases, that means going over the “alligator-filled river” between implementer and supplier or vice versa, he adds. But above all, Masie says L&D Cares is about connecting talent and learning individuals with mentors/connections, like Masie, who can get their foot in the door across specialized industries.
As above, so below
Recent reductions in the workforce have highlighted the need for leaders to be transparent and empathetic with employees and ensure they are agile and adaptable in a rapidly changing business environment. For leaders supporting their teams through these difficult and changing times, one focus area can be upskilling and reskilling their existing team.
According to a McKinsey & Co. report, companies that invest in their people with the soft skills of the future are more likely to weather economic downturns, come out stronger and perform at a higher level.
“Focusing on the employees’ growth and career development can not only increase their engagement, satisfaction and confidence, but also help them alleviate their feeling that their job is a security risk,” Tsingos says.
Overall, effective talent management before, during and after layoffs can alleviate stress among the remaining employees and support managers who struggle with expectations from above and below.
“When we help each other in these tough situations, people are generally able to rise to the occasion under incredible circumstances if allowed to,” Bruce says. “You communicate to the people at risk, to the management of people who were let go, to the whole team, to the whole division. And you keep communicating so people know there’s help out there.”
