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From Meta To Twitter: How Layoffs Can Fail To Produce Desired Results

The effect on an employee won't be relief of being retained in a layoff cycle; rather it would be fear that there's no job guarantee and that the sword of layoffs is looming large over his/her head.

Updated: May 25, 2023 11:36 AM IST

By Sankunni K

From Meta To Twitter - How Employee Layoffs Can Have Adverse Impact On Company's Productivity
From Meta To Twitter - How Employee Layoffs Can Have Adverse Impact On Company's Productivity (Image: Freepik)

New Delhi: Layoffs aren’t news anymore. How big the company is and how many employees it has laid off make news nowadays. Why do companies resort to layoffs in the first place? The simple reason is that most organisations see layoffs as the most effective cost-cutting measure.

The next question should be why companies go for cost-cutting measures. The answer to this is manyfold, however, the primary reason is to cut losses. And what comes after cutting losses is subjective. Some companies may expect to see increased profit levels, even though that may not happen eventually.

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What stands true is that not a lot of organisations seem to care about the impact layoffs could have on an employee who has been retained. The effect on an employee won’t be relief of being retained in a layoff cycle; rather it would be fear that there’s no job guarantee and that the sword of layoffs is hanging over his/her head.

Let’s get into specifics.

How Have Layoffs Affected Twitter?

Elon Musk in April confirmed that he has fired 80 per cent of Twitter employees. The micro-blogging platform had “just under 8000 employees” when Musk acquired it; now, the number has been reduced to less than 1,500.

On November 5, 2022, Twitter’s then head of Trust & Safety Yoel Roth made a series of tweets in a thread to reaffirm that the layoffs that had happened so far at Twitter (including 15 per cent job cuts at Trust & Safety team) had made little or no impact on the performance of the micro-blogging platform.

Even Elon Musk retweeted it saying “Excellent summary of Twitter’s Trust & Safety from the head of the team”. However, the same Yoel Roth put down his papers just five days later, on November 10, 2022, a day after Musk rolled out the $8-per-month Twitter Blue subscription that came with verification checkmarks.

“I was weighing the pros and cons on an ongoing basis. I knew what my limits were and by the time I chose to leave, I realized that even if I spent all day every day trying to avert whatever the next disaster was there were going to be the ones that got through. And Blue verification got through over written advice prepared by my team and others at Twitter. We knew what was going to happen. It’s not that it was a surprise. It failed in exactly the ways we said it would,” Roth said in an interview.

Let’s come back to the latest case.

Yesterday, when Florida Governor Ron DeSantis was in a live conversation with Elon Musk on Twitter Spaces, where he announced he would be running for the Republican presidential nomination, the site crashed multiple times due to some glitch. Multiple times outage happened at Twitter post Musk’s takeover. Some of the former and current Twitter employees have told Reuters that?mass layoffs would put the platform at risk of crashing during times of high traffic.

How Layoffs Have Affected Meta?

Yesterday, Meta employees received the news of the final round of previously announced layoffs. Mark Zuckerberg in March had announced that the company would be eliminating 10,000 positions.

While Meta promised faster product development and decision-making sending its shares up more than 100 per cent so far this year, employees have said some important work and planning has been at a standstill, reported Bloomberg. The company is still deciding on its product roadmap for the rest of the year, while it sorts out resources following cuts in the tech group, the report quoted a person familiar with the matter.

During the layoff period, Meta employees have been unsure of who to collaborate with, how to shift responsibilities on their teams or who would be cut next, some of the current and recently let-go employees told Bloomberg.

What Companies Get Wrong About Layoffs

The traditional idea of layoff is that it’s an employer’s last resort during recessions to save money. In today’s world, companies continue to cling to the idea that reducing staff will provide the best, fastest, or easiest solution to financial problems.

However, the poor treatment of employees looks short-sighted and is contrary to companies’ own interests.

Layoffs Destroy Trust: On Edelman’s 2022 Trust Barometer, eighty-five percent of respondents rated job loss as their top concern. The connection between effort by an employee and reward by the company is severed by layoffs.

Long-term Impact on People’s Health and Finances:?Harvard Business Review points towards a study which suggests that being?laid off ranked seventh among the most stressful life experiences — above divorce, a sudden and serious impairment of hearing or vision, or the death of a close friend.

As per the report which quoted experts, it takes, on average, two years to recover from the psychological trauma of losing a job.

Layoffs Impacting Companies:?The report on the impact of layoffs by Harvard Business Review touches upon a studies spanning across two decades. It says the majority of firms that conduct layoffs do not see improved profitability, whether measured by return on assets, return on equity, or return on sales.

“Layoffs are especially hard on the performance of companies with a high reliance on R&D, low capital intensity, and high growth. Market response to layoffs was also less positive than might be expected, with three-day share prices of firms conducting layoffs generally neutral. Higher valuations were given for layoffs perceived as helping firms in financial distress return to profitability as well as those that were strategic and forward-looking. Layoffs undertaken only for the purpose of reducing costs tended to lead to drops in share price,” the report said.

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