‘Loud Layoffs’ at Tech Companies Are Sending Mixed Messages to Other Employers

Recent bouts of layoffs in the tech sector have been “loud layoffs,” as they were made by companies that are household names: Apple, Google, and Microsoft, to name a few. According to a new report, although these loud layoffs may make it seem like the labor market is in trouble, most companies are not actually planning to reduce their workforce.

A recent survey by law firm Littler Mendelson found that three of every five organizations are not currently considering layoffs, compared with the 24 percent of respondents who said their business is planning to downsize. Moreover, three-quarters of business leaders say they’re confident that their current state of business is good, and about the same number are confident in where their company will be in 12 months, according to the report.

Though positive, this data doesn’t necessarily mean the labor market is off the hook. Execs’ optimism didn’t extend to the tech sector, for instance, where 87 percent of leaders reported they’re concerned about how an economic downturn might affect their workforce management, compared with 77 percent of all respondents. Further, in the tech industry, 60 percent of respondents are already conducting layoffs, per the report.

But Littler Mendelson’s research suggests that many companies are continuing to prioritize hiring and retention, in an effort to ensure they don’t drop employees prematurely and struggle to hire them back—a phenomenon that was prevalent during the pandemic.

“Some companies that are content with their current workforces have decided to try to avoid layoffs in favor of maintaining stability of their workforces, and instead try to reduce excess overhead through controlled spending and natural attrition of their workforces,” Littler Mendelson shareholder Terri M. Solomon was quoted in the report as saying.

“We are also seeing, though, an increase in RIFs [reductions in force] during the last six months, particularly in business sectors that substantially ramped up their hiring to cater to the needs of consumers during lockdowns. We have also seen many companies make business decisions to discontinue certain lines of business that have proven to no longer be profitable, and pursue other lines of business, thus leading to reductions in staff serving the discontinued businesses.”

That means it’s hard to predict whether a company will have a hiring freeze, be planning layoffs, or even be hiring new workers in 2023. (Around half of executives surveyed said they were planning to or considering bringing new employees on board.)

For those considering layoffs, Solomon advises watching out for legal liabilities that could outweigh the costs of downsizing, like discrimination claims and compliance with the Worker Adjustment and Retraining Notification Act. Keep in mind that you may need to follow certain requirements if the workforce is unionized, too, and separation and release agreements are necessary if severance pay is offered.

“An issue that is often overlooked is the effect that layoffs have on the remaining employees,” Solomon adds. “In addition to following the many steps necessary to effectuate a RIF, it’s important for employers to communicate with the continuing employees and take measures to preserve morale.”

From: BenefitsPRO