What you need to know about tech downsizing decisions
So, you’ve been downsized. You’ll never work again — definitely not in tech. Time to flip some burgers, right? Not exactly.
While certain prospective employers might view downsized employees as underperformers, Layoff-Aid knows better — it’s more likely you’re being undervalued, rather than underperforming as an employee. To quote Susan Joyce of Job-Hunt-org:
“Being laid off is NOT the same as being fired because it is not considered to be the fault of the employee. It is, actually, the fault of the employer.”
Some might argue that high-performing employees would never be let go — that they are simply too valuable, and that companies wouldn’t get rid of their best talent. Take this piece on Fast Company by Jacob Baardsgaard, who explains how employees should “build value” to avoid the axe. We respectfully disagree.
Does “increasing your value” help save your job when your entire department is let go? Baardsgaard might be right in a perfect world where products, departments, and companies never fail. But, the world ain’t perfect, and failure is a natural part of a healthy startup ecosystem.
As execs and HR teams feel the pain and panic of kicking off a downsize, assessing the most appropriate candidates to let go can be especially difficult.
Why, then, were you let go? Despite the myth that sub-par employees are automatically targeted as the first to go, actual layoff decisions are driven by a variety of popular downsize methodologies, and the fact that they all deliberately ignore the value that individual employees bring might surprise you:
1. Last-in, First-Out (“LIFO”). This is often seen as a “safe” option, and is the one that many corporate attorneys will advise as most appropriate. According to the Balance’s excellent “Downsizing a Business with Dignity” by Alan Downes, this method is defensible in court, reducing the possibility of litigation.
2. Extreme Cost-Cutting. A downsize frequently takes place in order to cut costs. Simplistically, this method targets the top of the payroll, and cuts people with relatively high salaries until a “dollar savings” has been met, regardless of the value these employees bring. Again, note that this strategy doesn’t correlate with “under-performers.”
3. Whole Department or Offering. Cutting entire teams simplifies downsizing decisions for employers. This could mean a group working on a certain product line that will be discontinued, or over-grown departments like this Snap downsize event as reported by Cheddar, where more than 100 of the most sought-after engineers in the world unexpectedly became unemployed.
4. Functional Integration. This is most common during mergers and acquisitions. It can both target entire departments that are being synthesized — think IT, HR, or internal FP&A — or a sprinkling of folks across one or both companies. A recent example of this type of merger-related reorganization can be seen here.
5. Random (or, the “no-method” method). In a surprisingly common trend, companies apply no set criteria for choosing which employees to lay off. Like LIFO, this option is relatively safe in case of litigation. The point of this strategy is to avoid association with any class, race, department, or age — ProPublica’s Cutting ‘Old Heads’ at IBM highlights what can happen to a downsizing firm on the wrong side of this risk.
As you get started on your job search, know that savvy talent acquisition professionals have recruited downsized employees for a long time. Most downsizing has nothing to do with performance, and finding great local candidates while they are job searching is a recruiter’s holy grail. One of our early recruiting partners may have put it best:
There’s no excuse for self-respecting SF Bay Area tech sourcers and recruiters. You either sign up for Layoff-Aid for Hiring or you put yourself at a huge disadvantage.
As for you, job-seeker, we hope we’ve alleviated any burger-flipping nightmares. Your future is bright. While being downsized is never easy, you’ve hopefully gained a better understanding that you really (seriously) weren’t among those who got the axe because of your performance. Hold your head high.
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