Navigating Turbulent Waters: Deciphering Tech Industry Layoffs and the Future of Employment Relations

Let’s address the elephant in the room. There has been no shortage of news about mass layoffs in the tech and IT industry, specifically after the COVID period. These layoffs must not be confined to the tech industry due to the ongoing situation around the world, which must have impacted other sectors and organizations as they look to safeguard themselves from financial loss. I am picking on the tech industry specifically as the curve of hiring and firing within the last few years has been steep.

I clearly recall reading news articles during the lockdown period informing of the difficulty recruiters were facing trying to find good candidates for vacant positions. Candidates had the luxury of having multiple offers in their hands due to the resource crunch prevalent during that period. Much to the chagrin of these recruiters, many of these candidates supposedly rescinded their acceptance by joining competitor companies for some extra money. At that time, the question was about the morality of ditching employers for money, as it was termed as an unethical practice. How swiftly the narrative has shifted over the past few months. Of late whoever I have spoken to in my peer group and friend circle, they all have conceded that we are living in difficult times where planning for the future has become extremely complicated. The future is uncertain, and the situation has become volatile with mass firings and layoffs.

This has come at a time when the tech industry has reported record revenues and profits, and it is puzzling as to why and how we got to this situation in the first place. The explanation given ranges from the benign “We hired too many” to the futuristic approach of “We are gearing up for the AI revolution.” Whatever may be the situation, it raises a lot of ethical questions about the approach and the timing of the layoffs.

The management of tech companies have a fiduciary responsibility to maximize shareholder value. It is the cornerstone of management. Ensuring the organization increases revenues and remains profitable quarter on quarter and year on year is also the goal of any organization. Coming off record-breaking financial numbers and all time high stock prices, the management of these companies deserve a standing applause, job well done! To tide through the difficult period of the epidemic was no mean achievement. But we also need to ask ourselves, what are our assets and how should we manage these assets?

An organization is nothing without its employees. The employees make or break an organization. They are the core of the machinery, the heart of the body, and the gears of the locomotive that strategize ideas and implements them with some elbow grease. As organizations reap the benefits of implementing artificial intelligence at the workplace, they have been quick to layoff employees who were no longer required or whose skills might not have a future in the long term. At the pace at which AI is developing, that day might not be far when organizations would replace maximum number of its employees with AI. Some jobs like copywriting and customer service have already become redundant. Can you imagine a company without employees; just AI running the show? The other aspect is the customers. Would customers deal with companies which have purely AI running the show? That can be the topic for another article in the future that I might write, but you probably got the drift of what I am building on.

A lot of tech companies have been doing employer branding activities for years if not decades. Best place to work, best employer, Freaky Friday, Manic Mondays, Cool place to work, and whatnot. The goal was to attract and retain the right kind of talent. But any student of psychology can tell you that all these things work only when the “hygiene” aspects of employment are taken care of. The first and foremost among them is job security. With one negative news coming after another of mass layoffs, what must have happened to all those who were still working in the organization? I have been in that situation myself, and believe me, it is not a nice feeling despite the fact that I had not been fired. The whole jingbang of bests rings hollow.

It creates havoc at the workplace. Work becomes secondary. It is all gossip and rumors that pervade the workplace. In the current scenario, this is actually more depressing as many employees of big tech companies have been made redundant despite being top performers and being with the same organization for years together. Just with a click of a button, their access to their company laptops was revoked, and the association was broken without them even being informed beforehand that they would be let go off. All this after the hope and assurance of growth and monetary benefits of performing hard at the workplace. The method smacks of insensitivity and lack of vision.

There is a funny way of putting it across in my language. It literally translates to the functioning of the workplace like running a trader’s shop where employment is based on the whims of the trader. A loss for one day would mean that the employee working in the shop could be fired. But here these companies are coming off of record-breaking numbers. Of course, I am not privy to the internal financial situation at these organizations, but to the common man and to the employees of these organizations, it seems unfair. There should be a more “humane” way to work around difficult situations.

Let us be honest, top executives in organizations are paid handsomely and for some reason. The reason being to ensure they take the right decisions. The decision to retrench is guided by the principle of ensuring growth of stakeholder value. And they are doing a magnificent job of it. As an incentive to these executives, they are offered stock options and ensuring stock prices stay high ensures that they gain monetary benefits. But in terms of hiring and firing employees, are they taking the ethical decision? I stick to it being an ethical question because there is no right or wrong decision when it comes to ensuring the company’s profitability. I mean firing people is a no-brainer. Even if you make a high school student the CEO of a company and ask him to increase profitability, the first thing he would do is to cut down on expenses, the easiest of them would be to let go off people. Where is the expert decision-making in this process? After all top executives who are paid handsomely are expected to devise ingenious solutions, firstly while hiring and then while making the difficult decision of letting go off employees. Who takes the responsibility of over-hiring in the first place? What does AI hold for the future? Is there acceptability from customers for AI-enabled services or organizations in the real world especially in the services industry?

This unwanted situation has caused a lot of strife in the minds of future employees as well as current employees. All the hard work done on employer branding has gone down the drain. It leaves a bad taste in the mouths of the people who have been fired. And trust me, word spreads fast. Future aspirants seek out people who have worked in the organizations where they aspire to work. It would not be a nice conversation that these 2 will have. Especially when someone is laid off not due to their job performance but because of redundancy, simply because their employer wanted to increase profits. They didn’t care enough that the employee was working for years and slogging hard to prove his productivity. Employer of the year? Nah, doesn’t hold any value anymore especially when it comes off a trusted source. No, it wouldn’t stop people from applying at these companies or the queues at their walk-ins getting any shorter. However, the quality of future employees does definitely take a beating. Perhaps not in terms of technical skills, but definitely in their dedication — the ethical qualities of these employees that we discussed in the first part of this article. Throw in a few extra bucks and off they would fly. This is even more significant considering the generational change being seen at the workplace, Generation X and Millennials at the helm of affairs and Generation Z joining the organization. The latter displaying a transactional attitude, devoid of emotions. Do we inculcate a sense of relationship or do we treat them without emotions?

This is where the role of the human resource heads is vital to shape the decisions keeping in mind the impact on human capital in the near and long term. Nowadays HR departments have been reduced to hiring-firing departments. You see them once during hiring and the second time during your exit. It is the responsibility of strong HR departments to impress upon the management to take care of the image of the organization as a trusted employer. Not merely as a checkbox exercise, but also to possess a high emotional quotient to evaluate the long-term consequences of decisions made by the executives. Employer branding activity is not only a branding activity, it also should resonate with the employees within the organization for what it stands for. This ensures the organization attracts the right talent and retains them for the longest period possible. With such mass layoffs and sorry stories to come across, all the hard work done of many years has been eroded quite literally is a matter of a few months.

Let us take a step back and ask ourselves this question — are we seeing a change in the employee-employer relationship? Long-term commitment and loyalty might take a back seat knowing that employees and employers would not bat an eyelid before ending their relationship to gain financially. Who knows, we might be seeing a gradual shift in the social agreement that an employee and employer have? Gone are the days of the Japanese philosophy of lifelong employment where the employer would ensure employment even in times of financial distress and in return the employee guaranteeing loyalty and dedication. In the future monetary factors might just be the deciding factor to continue this social agreement between the employee and employer. This might be due to a generational shift I discussed earlier. This can lead to an impact on the overall quality of work being produced since quality is built over a period of time and unknown issues like employees leaving without serving notice periods cause a setback to operations.

So how do the employees navigate this difficult period since their dream companies have suddenly turned villains overnight? Firstly, it is very important for individuals to do their due diligence before accepting an offer of employment. What is the company culture like? What is the team like? How is their future manager like? What is the attrition rate of the company they want to work with? There is no right or wrong answer for these questions — to each his own. And it all depends on the life stage a person is in. Some people want growth, others want better work-life balance. It varies from person to person and from one stage of life to another for an individual. Wants change every year. Something that you might desperately want this year might be secondary the next year. It is very important to know what you want in life and then base your decision on those things that matter the most to you. Taking decisions purely based on financial aspect might not be the best decision that you can take. And being pragmatic also helps — you can’t get everything. And it is fair enough to say that there is no dream job or dream company.

Employee-employer relations have been changing in the past and will change in the future as well. With the COVID epidemic enabling remote working across the world, the talent pool for companies to choose from has expanded dramatically. On the other hand, working remotely has meant that employees aren’t emotionally attached to the companies that they work for. Ties can be cut off anytime and office perks like free parking, vending machines, and other freebies don’t really matter anymore. As the world grapples with political, financial, health, and environmental issues, it is pertinent to point out that we need to treat both professional and personal relationships as symbiotic. When big tech companies start to layoff employees it causes a domino effect in the industry. Smaller companies take a hint from much bigger companies of resource reorganizations and in many cases are dependent on those companies for contractual work. I don’t intend to conclude the argument that companies should bleed by keeping unproductive staff. No, that is not the point. The point being that inspite of such financial gain and prosperity for these companies and for their top executives, they are still going ahead and firing employees even top performing ones. The question is ethical, of propriety. Can they re-skill these employees and even if they have to let them go, can it be done in a more humane way and assisting them during troubling times. There can be no financial gain if people are out of jobs and can’t buy products and services. Employees are assets and not physical resources. Figuring out priorities, setting expectations, and working towards achieving goals would help employees in the long run as well. Money at the end of the day is just an enabler to achieve happiness. Happiness is achieved when you do what you truly like doing.