As Meta Platforms, Alphabet and other Silicon Valley behemoths look to lighten payrolls after years of feverish hiring, one clear target has emerged: middle managers.
Meta will cut some layers of management, CEO Mark Zuckerberg said on the company’s earnings call Wednesday, naming 2023 “the year of efficiency.” The company let go of more than 11,000 employees last year, accounting for 13% of its workforce, in its first major layoff. “This is just the beginning,” said Susan Lee, the company’s chief financial officer. The stock staged its biggest single-day rebound in nearly a decade after reporting revenue that beat expectations.
Meanwhile, recent layoffs at Alphabet revealed a startling stat: Google employs more than 30,000 managers, according to comments by Fiona Ciccioni, Google’s chief people officer, made to employees. The company eliminated 12,000 jobs this month, or 6% of its workforce.
At Intel Corp, managers’ salaries will be cut along with those of top executives in an effort to shore up cash as the company faces intensifying competition and a slump in demand for personal computers. While HR experts agree that taking a pay cut for executives during turbulent economic times is the right move — from the perspective of shareholders and employees — the pain doesn’t usually spread through the ranks.
Beyond tech, similar cuts are unfolding. FedEx Corp. The company is slashing global officer and director jobs by more than 10% to make it “more efficient, agile,” according to CEO Raj Subramaniam in a memo to employees.
The moves come as middle managers everywhere are under increasing pressure both from above — less to receive missives from their bosses — and below — to implement return-to-office policies and navigate new hybrid work arrangements. For. A recent survey by Slack Technologies Inc.’s Future Forum found that middle management is the most fatigued of all organizational levels. Some 43% said they’ve been burned out.
In techland, management is especially under siege. The belief that the world’s top tech companies need little more than core engineering teams is perhaps best embodied by Elon Musk’s “hardcore” Twitter 2.0. Since taking over, Musk has laid off 7,000 employees at the company. “Elon, what’s the biggest mess on Twitter right now?” Musk was asked onstage in October. He answered: “It looks like 10 people are ‘managing’ for every one person coding.”
This narrative of inefficient bureaucracy and the “lean and mean” organization dates back to the 1980s when Jack Welch, CEO of General Electric Company, and other business giants adopted downsizing and restructuring to stay competitive in the face of globalization and technology. . Change. But studies have shown that for many companies this reduction in force was temporary. The ranks (and salaries) of middle managers skyrocketed in the 1980s and 1990s, leaving many American corporations, as one economist put it, “fat and mean.”
At Google, management was once a bad word. In the company’s early days, the rule of thumb was that product and engineering teams would be overseen by directors with 25 to 30 reports, said Kewal Desai, a former product management director who joined in 2003. The entrepreneurial spirit that can flourish in its flat organizational structure, he said.
Desai said of Google’s reasoning, “In a fast-moving industry where technology is developing rapidly, where we have to be miserable, we can’t do anything for a bunch of people, but some. Can’t even.”
The model served Google well, though it came at a cost, said Desai, who is now the founder and managing director of SHAKTI, a San Francisco-based venture capital firm. With few managers on board, few Google teams developed similar products, and the company lagged behind in the cloud computing market, where customers require greater organization and predictability.
“The next decade of Google, I think, was a response to some of those side effects,” said Desai, who left the company in 2009. “Google, in some ways, went to the opposite end of the spectrum.”
A representative for Google did not immediately respond to a request for comment.
Above all, though, the current spate of layoffs in Silicon Valley is mainly to placate investors who think tech workers have been coddled, according to Peter Capelli, a management professor at the University of Pennsylvania’s Wharton School.
“People announce layoffs because it sounds good, it’s what investors like to hear,” Capelli said.
He said many companies are announcing job cuts as many others are doing. If they don’t, they have to justify that choice. Although he noted that there is an element of political theater in the blockbuster job cut numbers: Companies are laying off more than ever before.
When managers are let go, he said, “it doesn’t necessarily lead to efficiency, and there’s really no loss of productivity.”
Wayne Cascio, a professor at the University of Colorado Denver Business School, goes a step further, finding in his research that companies that delay layoffs the longest during a recession see higher stock returns two years later than competitors. who are quick to shed headcount.
Capelli said that making a company’s workflow more efficient requires a lot of effort, analysis and planning. In the short term, if the leadership hands out pink slips without such preparation, anarchy reigns.
“You’ve got to cut people out before they figure out what they do and how they get things done,” he said. “The next phase is a lot of people doing two things at the same time. You could say it is efficient in a way, but the cost is huge – things are not done well, or not done at all. She goes
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