On Layoffs and Their Inhumanity

This interview with Jeffrey Pfeffer, Standford Professor of Business, got me thinking, again, about the wave of tech layoffs throughout 2022. For which there is not even a sign of it slowing down as of the first weeks of 2023.

I went through two separate layoffs in 2022. The first was early in the year, in February, and the second around October. Each of these was at a different company. Both times I wasn’t laid off. I deliberately don’t want to say that I haven’t been affected because everyone does, regardless if laid off or staying. Maybe left behind is a more appropriate way of phrasing the latter. Of course, the situation was very different from many of my colleagues since my financial stability wasn’t immeditaely at risk.

In many ways, the first company was the forebearer of the wave, which was about to be let loose, crashing over the industry. Going into hypergrowth before product market fit was established, or differently put, they have mistaken other signs for product market fit. Ultimately, they had to start raising money early in the year, but with no numbers to show.

As Pfeffer argues, layoffs kill people. Increasing the odds of suicide by 2.5x, in some places, and mortality by 15-20% in the 20 years that follow. They also affect everybody else, the managers who carry out the layoffs and the employees left behind.

Most eye-opening of all, layoffs are rarely based on evidence. Why did so many tech companies lay off significant portions of their workforce? Because other companies do the same! Aptly put by Pfeffer that this is “basically an instance of social contagion”. Every announcement praising the new efficiency, but guess what, layoffs don’t actually work to improve a company’s performance. He continues that they often don’t cut costs over the long run, as the economy recovers, companies need to hire people back. Or as he puts it: they are buying labour at a high price and selling low.

Tech companies always love to point out how much they care about their values and people (“we are a family!” after all). Without a doubt, this is primarily an employer branding strategy and one of the first things to fall by the wayside.
In our capitalist system, a company’s primary goal is to increase shareholder value. When the markets are up, this can certainly include creating a supportive environment for employees. But guess what happens when the first signs of shareholder value decrease come into view? Of course, you guessed it, layoffs. Naturally they are always executed “in line with company values”, as every press release assures us.

The one thing we can do is always remember that business is business, after all, companies insist on this in bad times. What employees need to start doing is insisting on this at all times, even when times are good. For my part, I’ll try harder to see through the bullshit and hope systemic shift, or as Pfeffer puts it:

We ought to place a higher priority on human life.