More Layoffs in Tech - Twitter Cuts Off Internal Communications for Employees
Monday, February 27, 2023
Late last week, word leaked out that Meta, the parent company of Facebook, was laying off another 11,000 workers. In the fall of 2022, Meta had laid off a reported 11,000 as well.
Hundreds of thousands of tech workers have been laid off in the past year in the country. Rhode Island has seen little impact because it is home to few tech companies.
On Sunday, The New York Times reported, “Twitter laid off at least 200 of its employees on Saturday night, three people familiar with the matter said, or about 10 percent of the roughly 2,000 who were still working for the company. Elon Musk, who acquired the social media platform in October, has steadily pared back its workforce from about 7,500 employees as he has sought to reduce costs.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"The layoffs came after a week when the company made it difficult for Twitter employees to communicate with each other. The company’s internal messaging service, Slack, was taken offline, preventing employees from chatting with each other or looking up company data, five current and former employees told The New York Times. On Saturday night, some employees discovered that they were logged out of their corporate email accounts and laptops, three of the people said — the first hint that layoffs had begun," according to the Times.
Are Cuts Copy Cat Behavior? Do They Payoff?
Jeffrey Pfeffer — the Thomas D. Dee II Professor of Organizational Behavior at the Stanford Graduate School of Business — told Insider that “In many instances, layoffs don't increase stock prices or cut costs. Between things like the cost of severance and the loss of productivity, layoffs have pretty nasty and negative consequences for the company. It's not clear they actually increase profits.”
“The irony is that these same companies were talking a year ago about people as their most important asset, and now they're treating their employees pretty badly, laying them off via email or by abruptly cutting off their access to the company.,” he adds.
Barron’s reports that the data is murky if layoffs drive stock performance. “Some companies found bigger layoffs got a more positive reaction from shareholders. Coinbase was rewarded with a gain of nearly 13% immediately after its layoff announcement in early January. Online furniture retailer Wayfair W –2.35% (W) soared more than 20% on the news it was cutting a 10th of its workforce later the same month,” reports Barron’s.
“On the other hand, deeper cuts didn’t guarantee a bigger rise. Twilio said earlier this month it would cut 17% of its workforce but shares rose just 2% on the day. That could be a sign that a certain amount of fatigue with layoffs mutes the reaction. Twilio’s announcement was its second round of major layoffs in a matter of months,” according to Barron’s.
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