Will 2023 be the year of layoffs?

Twitter, HP, Amazon already losing thousands of employees

Will 2023 be the year of layoffs?

This year, and next, might be the year of the tech industry reckoning, especially at social media giant Twitter after Elon Musk moved into the C-suite.

The new CEO sent out a memo recently saying that staff had to decide by the next evening if they wanted to stay with the company.

“Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore,” he says.

“This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”

He says that the company will be “much more engineering-driven” and gave staff an ultimatum, according to CNN. Less than half of the roughly 4,000 employees who remain chose to stay, according to Business Insider.

“It feels like all the people who made this place incredible are leaving,” a Twitter staffer told the Verge.

“It will be extremely hard for Twitter to recover from here, no matter how hardcore the people who remain try to be.”

#RIPTwitter was trending on the site, with rumours the platform will be shut down.

Mass cuts

Meanwhile, a more old-school company is also letting staff go in a massive manner.

HP announced plans to cut 4,000 to 6,000 positions over the next three years as part of a transformation plan to cut costs.

The $1 billion restructuring was announced as part of the company’s three-year “2023 Future Ready Transformation plan,” which HP says will result in annualized gross run rate savings of at least $1.4 billion by the end of 2025.

“The company estimates that it will incur approximately $1 billion in labour and non-labour costs related to restructuring and other charges, with approximately $0.6 billion in fiscal 2023, and the rest split approximately equally between fiscal 2024 and 2025,” HP says in a statement.

The computer and printer maker currently has about 51,000 employees worldwide.

Amazon in trouble too

And the world’s largest retailer is also navigating choppy waters.

Amazon CEO Andy Jassy announced that the company will see more layoffs in the coming year, as the e-commerce and data services giant moved to eliminate thousands of jobs before yearend.

“We haven’t concluded yet exactly how many other roles will be impacted, but each leader will communicate to their respective teams when we have the details nailed down,” he says. “We will prioritize communicating directly with impacted employees before making broad public or internal announcements.”

When making the tough decision, employers would do well to handle everything above board, lest a lawsuit from a disgruntled workers ensues.

Employers have to be careful that they comply with all their legal requirements or the cost reduction may not be as much as they hoped.

Employer rights

However, employers have the right to manage their businesses, and as long as they stick to legitimate business plans and stay within the legal parameters, implementation of staff reductions can proceed relatively smoothly.

During the last big economic downturn, a financial services provider reduced its workforce three times over a two-year period. Employees to be terminated were determined by performance ratings and one employee in particular was told in 2010 that he didn’t have a role with the organization any longer. The worker complained about harassment from his supervisor, but the employer didn’t investigate because it had already terminated him.

The worker filed an unjust dismissal complaint, claiming that the restructuring was a lie and his termination was really because of his harassment allegation – he was the only employee in his section to be terminated.

However, an adjudicator found that the restructuring was a legitimate reason for termination and there was evidence of many other employees being terminated, even though none were in the worker’s section.

The decision to fire employees based on their performance ratings was made on a global level and had nothing to do with the individual worker, says the adjudicator in dismissing the complaint.

Whether they are big or small in scale, companies need to handle employee terminations the right way, not only because it’s morally correct but it can be important to the bottom line.

Don’t ‘wing it’

It all begins with having a plan of attack.

“If your organization doesn’t already have some sort of formalized layoff process or precedent or procedure, create one now before it’s needed and when stress levels rise. It’s like a crisis management plan you hope you never have to use it but it sure is nice to have something to start from,” says Alyson House, assistant professor of strategic human resources management at Athabasca University in Alberta.

“This is certainly not the time to wing it.”

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