Sadly, our industry is undergoing another of its periodic spasms of layoffs. Most of the major software companies—Google, Microsoft, Amazon, Meta and many others with the exception of Apple—have announced significant layoffs. Almost all of us have experienced this and it’s certainly no fun. Still, we tell ourselves that it’s understandable. After all, it is—at least according to management—a choice between pain for a few or the company going out of business.
It’s a nice story but according to much research it’s just not true. The research shows that layoffs almost never make sense. They don’t really save much money and almost always incur unexpected costs. Why do them then?
Melissa De Witte has an interesting article over at the Stanford Graduate School of Business that discusses the findings of Jeffrey Pfeffer, a professor of organizational behavior at Stanford. Pfeffer says that most of the current layoffs are copycat layoffs, implemented simply because all the other tech companies are doing them. Pfeffer makes the case that layoffs are bad for employees and bad for the companies that implement them.
Pfeffer says that layoffs almost always fail to address the real problems such as an ineffective strategy, too little revenue, or a loss of market share. It’s easy to make this into a management versus worker screed but regardless of your feelings about that it does seem fair to point out that layoffs are often the result of management failing at their jobs and making the workers pay for that failure.
Take a few minutes to read De Witte’s article. It will change the way you think about layoffs.