Elon Musk’s Twitter is a case study on how not to fire people

Layoffs are coming to Silicon Valley. If tech companies don’t want to make a bad situation worse, they’re better off dealing with layoffs.

Twitter laid off half of its employees last week. Stripe fired 14% of him. Now Meta is reportedly preparing to lay off thousands of employees. This is the first layoff in the company’s almost 20-year history. Other tech companies may soon cut their jobs for the first time as they deal with weaker ad sales and economy-wide headwinds like inflation and rising interest rates. However, how these layoffs are implemented not only impacts current financial performance, but can have a long-term impact on the success of these companies.

Either way, Stripe being praised for enforcing thoughtful layoffs is better than Twitter for clearly not doing so.

Experts say compassionate layoffs are meant to be as small as possible and only as a last resort. They are clearly communicated and done with respect. I also care about the feelings of those left behind and the workload.

In other words, the exact opposite of what Elon Musk did on Twitter last week.

The layoffs at Twitter began at midnight after a week of fear and uncertainty and a very long time. Many of the roughly 3,700 people who were laid off weren’t even told through their masks or managers. Rather, I learned of my dismissal when I was unable to log into my company email.

Ideally, layoffs are done on a case-by-case basis, according to Liz Petersen, manager of the Human Resource Management Institute’s Knowledge Center. If that’s not possible, the next best thing is a video followed by a phone call. Email is the “lowest level option”. Obviously, if you’re laying off half the company, it becomes harder to do individual meetings.

Brooks E. Scott, executive coach and CEO of Merging Path, told Recode: “We have some employees who have been there for years. At least we don’t owe them a phone call or a Zoom or something?”

“People remember these things about the company culture,” he added.

The manner in which the layoffs were carried out also appears to have been rather arbitrary. In some cases, Musk eliminated entire teams he thought he didn’t like. communication When Machine learning ethics team. Other reports said he focused on the amount of code his engineers wrote rather than the quality of the code, and asked his manager to write a sentence defending the hiring of his employees.

Workers have already sued Twitter for violating labor laws by failing to provide sufficient notice, but the company appears to be paying for the two months of non-working to avoid lawsuits. is. Advertisers have paused spending over concerns that the company has undermined several key content moderation roles, and in total they account for 90% of Twitter’s revenue. .

Even those who made the cut on Twitter were horrified and confused. Added to Google Docs. Some employees who remained at the company told reporters they wished they had been fired.

The situation was certainly a far cry from Stripe’s layoff last week.

So the CEO wrote a company-wide letter explaining why he was laying off 14% of the company, and then contacted affected employees individually. CEO Patrick Collison not only blamed the wider economic environment, but also himself for over-hiring and a steep rise in operating costs. He expressed what appeared to be genuine grief over the loss of his employees and said he set up alumni email accounts for them so they could stay in the loop with the company. Crucially, he communicated how the company will take care of retiring employees (a 14-week retirement certainly helped soften the blow).

The situation on Twitter may be an anomaly due to the inclusion of wildcard masks, but his decisions nonetheless have cascading effects on his company.

If you have to lay off an employee, it’s best to do it as compassionately as possible, says Robin Erickson, vice president of human capital at The Conference Board, who studies how businesses behave in times of crisis. say. But it’s better not to fire anyone. Layoff savings are often short-sighted, she says, and rarely help a company’s financial performance beyond a quarter or two. She also has many negative consequences such as loss of organizational memory, productivity and morale. Layoffs can also lead to burnout, with remaining employees picking up the slack and, as a result, more people leaving.

Twitter employees are reporting an insane workload to make up for all the job cuts and work on Musk’s new project. According to Platformer’s Casey Newton, many of his Twitter employees still didn’t know who their manager was as of Monday. Meanwhile, the manager has at least 20 direct reports of her, and other employees say he works 20 hours a day.

Importantly, layoffs, especially poor layoffs, negatively impact a company’s future employment prospects.

“Who wants to work in a place that treats people poorly?” Erickson said. “Organizations that have laid off workers will have a hard time getting back on their feet as they try to hire more workers.”

Twitter may run into this problem soon. The layoffs weren’t fully considered, so the company has already reached out to dozens of former employees to rehire them. It can be difficult.

According to CompTIA’s latest analysis of Bureau of Labor Statistics data, the technology job unemployment rate is remarkably low at 2.2% and the sector continues to grow. Outside of the tech sector, the job market remains strong. Employers added an unexpectedly high 260,000 jobs to her last month. Experts have dubbed the economic downturn a “job-filled recession,” but it doesn’t seem to have affected jobs yet.

Layoffs do happen, but they don’t have much of an impact on an otherwise healthy job market.

Employers are often reluctant to fire people because it was very difficult to hire them in the first place. Companies that laid off mass workers early in the pandemic were handicapped when the economy came back online. Twitter’s high-profile layoffs and precarious conditions make it an unattractive place for employees to attend.

Silicon Valley companies haven’t always dealt with recessions, but how they behave now will affect their ability to grow when the economy improves.

UPDATE Nov 8 10:35 AM: This article has been updated with details about Musk laying off his entire team and new working conditions on Twitter.