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When will it stop? It’s been a tech layoff era unlike anything we’ve seen since the dotcom bubble over two decades ago—one social media giant famously laid off half its staff in just a week. Still, the work at these firms must go on. But leaders have quite a challenge ahead—with workloads among staffers shifting dramatically.
It won’t be easy. Tech layoffs this year have already exceeded the total number of workers let go in all of 2022—reportedly leaving half of the remaining workforce to take on responsibilities outside their role. Although tech firms knew the layoffs were needed in this economy, experts say they didn’t help their cause by letting people go via email or even text in some cases. “The big problem with technology companies is how they’ve been treating people,” says Chris Cantarella, Korn Ferry Senior Client Partner in its Global Technology Market and a Global Sector Leader in Software.
Now, it’s up to leadership to get the next act right. While it’s true that firms may not have the bandwidth to individually lay off thousands of employees, experts say it’s important for company morale (and thus retention) that organizations take mitigating efforts on behalf of laid-off colleagues. Cantarella cites one major hospitality firm that had to conduct layoffs during the pandemic but gave ex-workers a year of health insurance while actively working to help them find their next job. In a phenomenon researchers call ‘moral elevation,’ merely witnessing an act of kindness causes our biochemistry to respond positively. “The people who are still staying with you are watching how you treat the people who leave,” says Cantarella.
More importantly, leaders need to determine who among their remaining workforce can fill layoff-induced gaps. “If people don’t have the ideal set of skills to perform certain work, they’ll have more anxiety,” says David Marzo, Korn Ferry’s Global Vice President of Solution Design. The key, he says, is to take a methodical approach to reviewing talent and assess who is impacted. A firm can then provide appropriate reskilling, which Marzo says can now be offered in the flow of an employee’s current work thanks to recent developments in AI.
Contract labor will undoubtedly play an increasing role in how firms address labor shortages, according to Marzo. “It mitigates risk in an organization,” he says. Earlier this year, a reported 37% of companies that had recently conducted layoffs were hiring contract labor as replacements. Experts say that in addition to helping share the workload with full-time employees, contractors provide firms with the ability to quickly flex their workforce up and down as demand dictates.
Managers especially need to step up in the wake of layoffs, says Brad Frank, a Korn Ferry Senior Client Partner in its Technology Practice. “They need to articulate how their employees’ work fits into the company’s roadmap.” It’s an opportunity for leaders to connect workers’ additional responsibilities with long-term career development—something our research has shown sets top firms apart. “But those management skills are not necessarily innate,” says Frank. “They need to be trained.”
To learn more about how to best manage your workforce in today’s current climate, explore our Workforce Transformation practice.
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