Tag: Redundancies

Amazon joins big tech companies in staff cuts

EmployBridge, the largest industrial staffing firm based on US revenue, is laying off 171 employees across the US, according to a Worker Adjustment and Retraining Notification, or WARN notice, filed with the Georgia Department of Labor. Amazon is also reportedly laying off personnel, while Twitter is adding to its previously reported staff cuts.

Citing according to a source familiar with the EmployBridge layoffs, the Atlanta Business Chronicle reported that the affected employees are a mix of full-time and part-time workers who have back-office support roles such as in information technology support, accounting or human resources.

EmployBridge this month announced it completed its acquisition of Bluecrew, a Chicago-based online provider of industrial workers on a W-2 basis. Atlanta-based EmployBridge places more than 450,000 temporary associates annually via 446 offices in 48 states. It was acquired by Apollo Global Management Inc. in 2021.

Amazon this week also began cutting jobs across the company. Managers have begun informing employees that they have two months to find another role inside the company or accept severance, according to media reports.

TechCrunch reported that the company allegedly plans to lay off 10,000 – comprising roughly 3% of its corporate workforce. The figure would mark the largest “workforce reduction” ever undertaken by the e-commerce and cloud computing giant in its nearly 30-year history.

And Twitter has laid off 4,400 of its 5,500 contractors, CNBC reported. The move follows the layoffs of approximately half of its internal staff. According to a report from Quartz, counting Twitter and Amazon, major tech companies will have laid off 33,000 workers over the last month.

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Microsoft, Salesforce, Meta and Twitter make mass staff cuts

Big names in Big Tech are letting go of staff at what is said to be the most dramatic cull in tech sector history. Meta has laid off more than 11,000 employees thereby reducing its headcount by around 13 percent, while Microsoft announced at the end of October that it’s laying off around 1,000, with numbers still to be confirmed. Elon Musk led the charge, however, by laying off around half of its workforce when he took control of the social media platform on October 27. This, in a bid to run a financially healthier business by taking it private and enhancing his unilateral power as CEO.

Salesforce has joined the avalanche with an announcement of 2,500 redundancies in the US, with the jury still out on whether or not the mass layoffs will reach UK shores.

Meta, the social media giant, is battling falling revenues and rising competition despite reporting profits in excess of £23 billion. Chief Executive Mark Zuckerberg emailed employees on Wednesday morning informing them of the redundancies.

He said: “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” Zuckerberg said revenue growth experienced during the pandemic had not been sustained, ad performance was down, and ecommerce had declined, all in an environment of economic downturn.

He added: “[These factors] caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.” Despite drops in share prices and apprehension around Zuckerburg’s Metaverse development, he has said that investment in Real Labs will continue.

Why? the industry is asking. Since the pandemic, the tech industry has seen an explosion of use of and investment in tech, probably since Facebook’s arrival 18 years ago. The result of rising inflation and reduced revenue seem to be the main reasons for the slew of mass redundancies, even in the face of reporting massive revenue over the last year.

Ken Brotherston, TALiNT Partners CEO said: “First of all, it’s only the most dramatic cull in tech history if you’re under 40. The dot com reverse was quicker and deeper in percentage terms but, of course, that isn’t any comfort if you are one of the people affected. What might offer some succour however is that we still have a pretty robust employment market with a lot of the skills previously valued by these big tech firms still in high demand from lots of other employers.”

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The redundancies equate to 13% of Meta’s headcount

Meta has laid off more than 11,000 employees thereby reducing its headcount by around 13 percent, in the most dramatic cull in its history. The social media giant is battling falling revenues and rising competition. Chief Executive Mark Zuckerberg emailed employees on Wednesday morning informing them of the redundancies.

He said: “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” Zuckerberg said revenue growth experienced during the pandemic had not been sustained, ad performance was down, and ecommerce had declined, all in an environment of economic downturn.

He added: “[These factors] caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”

Michael McCartney, Employment Partner at Fladgate commented: “Meta’s announcement that it plans to make significant job cuts in response to the current macro-economic environment comes very soon after similar cuts were imposed by Elon Musk following his purchase of Twitter, demonstrating that there is a real impact on advertising revenues in the social media sphere. It would be surprising if either company adopted the approach P&O Ferries deployed recently when it sacked 800 seafarer without prior warning. This is because UK employment law requires an employer to consult with elected representatives (or Trade Unions if there are any recognised) for a minimum period of 30 days, where it envisages 20 or more redundancies and, for at least 45 days, if that number exceeds 100 redundancies. The company is also required to send a notice called an HR1 form to the UK government and if it fails to do this, its directors run the risk of criminal liabilities.

Social media firms (even more so than a travel company) are bound to be conscious of the negative publicity for any failure to comply with employment laws even if the financial penalty (which amounts to 13 weeks’ pay per employee) alone is not enough of a disincentive.”

Florence Brocklesby, Founder of Employment Law Specialists Bellevue Law also commented: “Redundancies are, sadly, a fact of life, and delivering difficult news is never easy. But how a restructuring is conducted is hugely important, not only for those leaving the business, but also for those who remain and the company’s wider reputation. Good processes combined with humanity are key to navigating a challenging time safely and with dignity.

“Twitter’s handling of its current restructuring has shone a light on how redundancies in the tech sector should – and should not – be handled. Just a few days ago Twitter announced plans to let go of 50% of its staff, with swathes of employees finding themselves suddenly locked out of company systems. Meta needs to avoid making those same mistakes today.”

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Tech companies were responsible for the highest number of redundancies in September

According to GlobalData, around 90 companies announced layoffs in September 2022, which is a considerable increase from the previous month. The data and analytics company’s News Database notes that this reduction in labor is a result of negatively impacted business sentiment amid cost cutting, high operating expenses, and the current economic crisis.

According to GlobalData’s Job Analytics Database, the number of jobs available for application (‘active jobs’) continued to fall in September 2022, as the pace of job closures and removals from career pages (the ‘jobs closure rate’) was higher than the rate of new job postings. The research also indicates that many companies are planning to restructure or realign their businesses, which could result in employees being laid off. In September 2022, companies that laid off employees as part of a restructuring strategy included Netflix, Meta, Wipro, HCL, Twilio, Credit Suisse, and Snap.

Furthermore, according to GlobalData’s latest report, ‘Global Hiring Activity – Trends & Signals Q3 2022’, over 300 companies announced layoffs during the quarter ending September 22.

Sherla Sriprada, Business Fundamentals Analyst at GlobalData, commented: “Of particular interest is Meta, which announced both a hiring freeze and team restructuring to reduce expenses and realign objectives. The company’s job postings fell by 23% in September 2022 over January 2022.”

Rachel Foster Jones, Thematic Analyst at GlobalData, said: “Meta’s headcount shows no sign of increasing this year. The company, like much of Big Tech, is trying to cut costs as it grapples with a weak advertising environment and a tough macroeconomic climate. This is the tip of the iceberg for Meta. Meta is also facing fierce competition with Tiktok, regulatory hurdles and an incredibly costly and currently unprofitable metaverse ambition. Meta cannot afford to cut its hiring freeze short.”

GlobalData’s research indicates that technology companies were responsible for the highest number of layoffs in September. For example, tech company Twilio, as part of its restructuring strategy, laid off 11% of its workforce. The company’s job postings also fell by 72% during the same period.

The banking & payments industry was another key sector affected by layoffs.

Sriprada continues: “Credit Suisse laid off 5,000 employees as part of a restructuring plan, with the company’s job postings falling by 32% in September 2022 over January 2022. Meanwhile, the Goldman Sachs Group laid off 25 investment bankers in Asia. However, job postings rose in India (22%), Singapore (16%), and Hong Kong (8%) in September 2022 over January 2022.”

In the retail industry, Rent the Runway is planning to restructure, which will involve streamlining its organizational structure and increasing operating efficiencies. The company also witnessed a drop of 74% in job postings in September 2022. Other companies experiencing the strain include The Gap, PVH, and Wayfair.

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Nearly all major tech firms have slowed headcount growth

Microsoft Corp. has announced layoffs across multiple divisions, according to media reports, joining many other tech firms that have cut staff in the unsettled economy.

Microsoft declined to say how many jobs had been cut, but a source told Axios that the layoffs numbered under 1,000.

In a statement to Axios, the tech giant said: “Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead,”.

The move is yet another example of large tech companies cutting jobs after earlier moving to slow or freeze hiring as the broader economy cools, Axios reported. Nearly all the major tech firms have slowed headcount growth, with many freezing all but essential hires. A number of companies have already moved to cut jobs, including Snap and Flipboard.

Microsoft has not said how many people had been laid off, nor which departments were impacted. However, The Washington Post reported layoffs affected the wargame simulation division and the Xbox gaming division.

Microsoft had 221,000 employees as of June 30, an increase of 40,000 people or 22% from the same point the prior year, GeekWire reported. It was the largest annual increase in employment in Microsoft’s history, based on data tracked by GeekWire.

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How HR teams can manage difficult staffing decisions effectively

Fashion retailer Missguided has come under fire for the way it recently announced a number of redundancies.

Following its collapse into administration due to increased supply chain costs, inflation, and weakened consumer confidence, the Manchester-based retailer announced that 80 staff members were being made redundant.

Although redundancies are not good news for most employees, in the case of Missguided, it was how the announcement was handled that sparked controversy.

The i newspaper reported that staff were advised via two separate phone calls – one for staff whose jobs were safe and another for those who would be losing their jobs.

Ex-employees have claimed that:

  • Staff who were not working at the time as they were on holiday or maternity leave found out via colleagues and social media posts that they had been made redundant
  • Staff were only given 20 minutes’ notice ahead of the phone call
  • Staff did not know that two separate phone calls had been arranged
  • Staff were muted during the call and given no opportunity to speak
  • Employees who had lost their jobs were told not to return to the office and that their belongings would be returned to them
  • Security guards stopped sacked staff from entering the Manchester offices.

With remote and hybrid working, it is no surprise that companies use Zoom and other online mediums to announce major company decisions.

Missguided are not the only company to have taken this route. Earlier this year, P&O Ferries told hundreds of employees via a video recording that they were losing their jobs with immediate effect and were being replaced with cheaper agency staff.

Similarly, online US mortgage firm Better.com made 900 employees redundant via a Zoom call. Later, CEO Vishal Garg apologised for failing to show adequate “respect and appreciation” for the employees involved.

In 2020, workers at the ride-hailing firm Uber were told that they would lose their jobs via a three-minute video Zoom conference call.

Even though digital communications make sense in large organisations, hearing that one has lost a job via broadcast communication is less than ideal. Hearing the news from a line manager is a much better option.

Redundancy processes are stressful for employees and HR teams, so the process should always be handled sensitively and professionally. Honesty and clarity are key components of successful support.

Adele Edwin-Lamerton, Senior Associate, Employment at Kingsley Napley, said: “Due to the increase in hybrid working, meetings which previously would have only taken place in person now frequently occur remotely. Although this can feel impersonal, what is key is that the appropriate process is followed. It’s not so much the medium which is used, but the message it conveys which is important.”

“However pressed they are for time, employers should remember that they need to adopt a fair process and consult with their employees.”

Professor Jonathan Passmore, Senior Vice President at CoachHub, commented: “… as part of the C-Suite’s wider communication remit there is also a role to be played by a broadcast communication during the process of letting an employee go. This communication should explain more about the background to the decision, taking responsibility and sharing in the pain which such decisions cause for the individual, their family and the wider community, if the firm is a large local employer.”

“Technology is a facilitator of communications, but just because we can, does not mean we should. Leaders need to leverage technology while not losing sight of the humans who are receiving such messages. A broadcast message ensures everyone receives the same message, at the same time, but its strength is its weakness, as not every individual is the same. For some a redundancy may be welcome news, for others a mild disappointment, while for many it provokes both a financial and personal crisis.”

“At present, leaders have little training on digital communications and few organisations have protocols. As we move forward in 2022, business schools need to look again at what a leader in a hybrid world looks like and adjust what they teach. Meanwhile, organisations must look critically at their processes to ensure they still concentrate on the people which make up their organisation, putting into place support mechanisms such as workplace and career transition coaching, to help their employees navigate recent years’ life changes.”

Paul Holcroft, Associate Director at Croner, suggests: “Being made redundant can be an incredibly distressing time, so it is essential that employers maintain regular dialogue with affected staff.”

“Given the complexity of a redundancy procedure, employers should provide individuals with a clear explanation of their rights and a timeframe for when decisions will be made. This reduces any unnecessary stress and ill feeling among the workforce. Employees with a minimum of two years’ service are eligible for a reasonable amount of time off to look for new work or to arrange training for future employment.”

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VC-backed companies under pressure with bleak macro-economic and geo-political outlook

Swedish “buy now, pay later” company Klarna has announced its intention to lay off 10% of its global workforce in a pre-recorded video message. Klarna CEO Sebastian Siemiatkowski cited “the war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession” as the reasons for the layoffs.

This news comes off the back of a report which emerged last week, stating that the Swedish company’s valuation fell by 30% from the $45.6 billion valuation it received last June.

Even with the decreased valuation and layoffs, Siemiatkowski reassured employees that “Klarna continues to hold a strong position in the market” and says he remains “relentlessly optimistic about Klarna’s future.

BNLP businesses boomed at the start of the pandemic, where lockdowns meant that customers had little else to do with their time but shop.

More than two years on, however, luxuries are just not in the budget of many consumers, and clearly, retailers are feeling the pinch. With ever-increasing fuel costs, utilities rising by 50%, NHI contributions increasing, food prices rocketing, and inflation expected to reach more than 10% by year-end, consumers are tightening their belts. BNLP businesses, such as Klarna, have insights into these sentiments, with their product being used by 17 million people in the UK.

Klarna is not alone in its troubles. Grocery delivery start-up, Gorillas, has also recently announced its intentions to cut 300 jobs – around half the employees at its Berlin headquarters. Gorillas are also looking at pulling out of Italy, Spain, Denmark, and Belgium. According to a TechCrunch report, the company has a large debt to suppliers, with a burn rate of $50 million to $75 million.

More venture capital-backed companies will likely announce layoffs and hiring freezes as they prepare for tough times ahead. Layoff tracker, Layoff.fyi reported that in Q2 of 2022, over 13,000 tech start-up employees had been let go.

Other casualties of the current negative macroeconomic outlook include AI start-up BeyondMinds, which recently closed its doors, and healthtech business Kry’s reduced its team by 10%.

Siemiatkowski admitted that Klarna’s decision to reduce numbers was one of the “hardest” decisions in their history but a necessary move to stay “laser-focused on what really will make us successful going forward.”

“While crucial to stay calm in stormy weather, it’s also crucial not to turn a blind eye to reality,” he added. “What we are seeing now in the world is not temporary or short-lived, and hence we need to act.”

Ken Brotherston, TALiNT Partners CEO also made comment: “The US and European tech markets are very turbulent, inflation is high and the war in Ukraine and ongoing supply chain issues in China all create a perfect economic storm. The impact on employment/hiring is less clear as there are structural shortages in many markets but it’s clear that buyers are spending less and this results in diminished demand for retail staff.”

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But will Omicron undo gains made in the economy?  

According to the latest unemployment stats released by ONS, there were 29.4m employees in the UK. This is an increase of 257,000 on revised October 2021 figures and up 424,000 on pre-pandemic February 2020 figures.

However, ONS stated that redundancies made at the end of the furlough scheme could be included in the Real Time Information (RTI) data for a few more months. But responses to the business survey, stated that redundancy numbers are likely to be a small number of those employees still on furlough at the end of September.

The latest Labour Force Survey indicates that employment rose by 0.2 percentage points from August to October with the number of part-time workers decreasing dramatically during the pandemic.

Decreasing employment rates among young people (those aged 16 to 24 years) have been notable during the pandemic, with unemployment and economic inactivity rates increasing by more than for those aged 25 years and over. But according to the survey, there was an increase in the employment rate and a decrease in the unemployment rate to below pre-coronavirus rates.

Numbers of job vacancies continued to rise to a new record of 1,219m jobs – that is an astounding increase of 434,500 from pre-COVID figures of January to March of 2020.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation (REC), commented: “The issue of labour shortages is hugely challenging for employers right now, as vacancies continue to hit new highs and unemployment remains low. But the real elephant in the room is rising inactivity and a smaller UK workforce – people either not in the UK or not looking for work. Reflecting this, overall hours worked are still well below our pre-pandemic numbers. This is a huge challenge to business and government. New approaches to recruitment and workforce planning are needed – and genuine partnership between government and employers on skills, unemployment support and sensible immigration rules.

“We don’t know yet how the Omicron variant will affect the jobs market, but it is clear that supporting businesses to retain staff and maintain cashflow was a successful strategy in 2020, and we may need to dust off those plans again if we are headed for a longer period of restrictions.”

James Reed, chairman of Reed, also commented: “There’s been plenty of talk from doomsayers that the Omicron variant will plunge us back into economic despair, but the outlook appears much more optimistic now compared with the first COVID-19 wave we faced in March 2020.”

He continued: “While some may want you to think the omicron variant has tipped the battle against COVID-19 in the virus’s favour, the reality is that, according to our jobs data, there are better opportunities and better negotiations for workers to have with employers than ever before. It’s currently the best time in fifty years to look for a new job and I’d urge anyone thinking of a change in career to begin their search for a fresh start in the new year.”

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While young people have been hit hardest by the pandemic on the employment front, the long-term impact might turn out to be greatest on those aged 50 and over.

A report released by the Office for National Statistics (ONS) last week found that those in the 50-plus age group had been more affected than those in the middle age groups and that many were worried about their future.

This group had the highest increase in redundancies in the three months ending in February this year and was also the most likely to be working fewer hours than normal during the period.

The long-term implications of the recent trend could have a profound impact, with the ONS report stating that, “older people who become unemployed are more likely to be at risk of long-term unemployment than younger people”.

Furlough end looms large

According to the ONS, more than a quarter of furloughed workers (1.3 million) are aged 50 and over and 30% of those people think there is at least a 50% chance they will lose their job when the scheme ends.

Indeed, outplacement specialist Renovo recently warned that while the current labour market appears relatively robust, the true impact of the pandemic will not be felt for another six to 12 months.

Rhys Moon, director at Renovo, said: “It’s impossible to tell how large our economic injury is, until we rip off the government’s furlough plaster.”

But while ripping off the plaster will undoubtedly impact older workers themselves, other experts have pointed out that it is companies too that lose out when experienced workers leave.

Sarah Loates, of Loates HR Consultancy, said: “We have seen a mass exodus of older workers, with companies haemorrhaging corporate memory, as employees leave with know-how gleaned over many years.

“Older workers are an untapped goldmine of talent, with a wealth of experience, life skills and wisdom.

“Employers should consider simple strategies ranging from targeted attraction campaigns and flexible roles to intergenerational learning, such as reverse mentoring, whereby more tech-savvy employees train older workers.”

Are employers missing a trick?

Indeed, Paula Gardner, Founder at Redundancy Recovery Hub, pointed out that tech skills can be learned, whereas the knowledge gained by many years of experience in a particular job often cannot.

She added that this was particularly relevant given the fact that many companies were planning on adopting hybrid working going forward. A Microsoft report in March predicted hybrid working was the next great disruption, revealing that 66% of business leaders were considering redesigning their office space for hybrid work.

“I would say that older employees are probably the ones best suited to a hybrid model of working. They no longer have small children and can get on with their work from home with the space and peace and quiet to perform well,” said Gardner.

“They have learned their craft so don’t need that ‘learning by osmosis’ that younger people often do. They can just get on with it. They also have years of business wisdom and people skills behind them. Companies just need to recognise this.”

Karen Watkins, Founder at Rowan Consulting, pointed out that while HR teams undoubtedly have a role to play in making sure older workers are not lost to businesses, the government should also be doing more.

“When you consider the huge amount of funding and focus that has gone into the younger generation in terms of the Kickstart and various apprenticeship schemes, there does appear to be a huge gap in initiatives that cater for this potentially forgotten generation,” she said.

Photo courtesy of Canva.com

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