How Tech Companies Can Better Approach Layoffs in 2023

Sourced Photo
Sourced Photo

Layoffs are a hard reality that tech companies are facing in 2023, and even big-name corporations aren’t immune from this dilemma.

Netflix, Accenture, and Amazon have all contributed to over 168,243 total tech layoffs so far this year, which already exceeds the total number of employees in the industry that were laid off in 2022. Many cited the need to reduce costs as global economic growth slows. To illustrate, Amazon executives stated that the company has to cut costs due to the uncertain economy this year. Thus, the company plans to solve this issue by letting go of more than 18,000 employees.

The decision to let go of employees is never easy. However, if you’ve concluded that it’s a necessary step, there are tried-and-true strategies your business can try to make the process smoother for everyone. Here are three of them.

Break the news with compassion and transparency

There’s no getting around it: layoffs will undoubtedly shake employees’ faith in a company. With this in mind, it is imperative to maintain trust. Airbnb CEO Brian Chesky has been cited as an exemplar of this. Amid dropping rentals due to COVID-19 lockdowns in 2020, he had to lay off 25% of his staff. Even before reaching this verdict, he kept his employees updated through memos regarding his concerns about the fluctuating hospitality industry and the steps the company might have to take to circumvent the risks. Secondly, his 3,374-word letter announcing the decision was delivered with empathy as well as clarity about his process for making reductions, the severance benefits employees can expect, and his gratitude towards all his personnel’s contributions.

Follow Chesky’s example and announce your layoffs with sensitivity. Make sure you consider the announcement from the perspective of your employees, who understandably want to be informed about the layoffs’ repercussions. Apprise them of your decision-making process, detail the aid the company will offer, and underline the respect and sympathy you have for them.

Provide support for laid-off employees

The support you give to your laid-off employees signals to both them and your retained personnel that you care about their needs and that, whatever happens, you want them to land on their feet. When establishing a layoff plan, remember that the goal is to make the transition as easy as possible with the resources you have.

In line with this, consider offering outplacement services for your employees. For example, you can provide career coaching, free courses, and access to exclusive networking marketplaces. These services are designed to give your former employees individualized pathways that will prepare them for today’s recruiting methods. Extending these services will demonstrate your care for the employees you have to let go, ease the anxiety of those who you retain, and potentially reduce the cost for those who require unemployment benefits. In addition to this, ensure that your former staff are fairly compensated in their severance packages so that they have enough financial support as they transition to another role. These severance packages can include a combination of salary, benefits, and other types of compensation.

Bolster support for remaining personnel

Your task doesn’t end when your laid-off employees have officially exited your company. Even if they weren’t let go themselves, your remaining personnel will be experiencing the negative effects of the layoffs in the form of stress, guilt, and frustration. A study published by the Journal of Organizational Behavior warns that these detrimental attitudes can persist in the long term. Fortunately, that same study states that these attitudes can be mitigated as long as you demonstrate to your employees that they have the company’s support.

To start, be honest with any new expectations or expansions of their roles the layoffs might have caused. Next, gather feedback in the form of surveys, and expect the trends they reveal to tend toward hostile. This is a helpful step in itself: it helps employees feel their opinions on the recent layoffs are heard. Just make sure to follow through by conducting initiatives that effectively address the concerns your employees raise. For example, if you see they are struggling with mental health, provide access to therapy services. Finally, reassure your employees that you appreciate their contributions and continuously recognize their efforts and achievements.

Layoffs are difficult to conduct. If you find yourself in a position where they are necessary, make sure you follow these three strategies to administer them with transparency and compassion.


This article features branded content from a third party. Opinions in this article do not reflect the opinions and beliefs of CEO Weekly.