Middle Managers Emerge as an Alear Target for Layoffs in Tech

In an effort to reduce payrolls after years of feverish hiring, Meta Platforms Inc., Alphabet Inc., and other Silicon Valley giants are focusing on the middle management ranks.

‍

Mark Zuckerberg, Meta's new CEO, said the company's 2023 "Year of Efficiency" will include cutting layers of management. Meta laid off over 11,000 employees last year, 13% of its workforce, in its first major layoff. According to Susan Li, the chief financial officer of the company, this is just the beginning. In the wake of a revenue report that exceeded expectations, the stock jumped the most in nearly a decade.

‍

While Alphabet laid off staff recently, Fiona Cicconi, Google's chief people officer, revealed a startling fact: Google employs more than 30,000 managers. One thousand jobs were cut, or six percent of the company's workforce, this month.

‍

As Intel Corp. faces intensifying competition and a slump in personal computer demand, the company will slash managers' pay along with top executives. In turbulent economic times, executives are wise to take a pay cut - from the perspective of shareholders and employees - but the pain is not usually spread throughout the company.

‍

The tech industry is not the only one experiencing cuts. A memo to employees from FedEx's CEO Raj Subramaniam states the company will reduce global officer and director jobs by more than 10% to increase efficiency and agility.

‍

It comes at a time when middle managers around the world are being pressed both from above - getting missives from their bosses asking them to do more with less - and from below - ensuring return-to-office policies and figuring out how to work in hybrid arrangements. Those in middle management are the most exhausted among all levels of the organization, according to a survey by Trade Algo. Burnout affects 43% of respondents.

‍

The tech world is under a special siege when it comes to management. As an example of Elon Musk's "hardcore" approach to Twitter 2.0, perhaps no company has embodied this conviction more than Elon Musk. A total of 7,000 employees have been laid off since Musk took over the company. The question was, “Elon, what's the one thing most broken about Twitter at the moment? ” According to Musk, there are 10 people managing every person coding on the platform.

‍

Since the 1980s, when General Electric Co. CEO Jack Welch and other business titans decided to downsize and restructure in order to stay competitive in the face of globalization and technological advancement, this narrative of inefficient bureaucracy and lean and mean organizations have existed. Many companies have however seen their workforces reduced temporarily as a result of this change in management. Many American corporations became fat and mean in the 1980s and 1990s as middle managers swelled their ranks (and their paychecks).

‍

A bad word used to be associated with management at Google. Former product management director Keval Desai, who joined the company in 2003, says that in the early days, product and engineering departments were overseen by directors with 25 to 30 reports. His goal was to find self-starters capable of flourishing in Google's flat organizational structure who can thrive in the company's flat organization.

‍

According to Trade Algo, Google's rationale is that it can't afford to have just a few people acting as human routers of information in a fast-moving industry.

‍

SHAKTI, a San Francisco-based venture capital company, is now led by Desai, who founded and operates the model. But it came at a cost, he said. In the cloud computing market, where clients require greater predictability and organization, Google fell behind because it had few managers on board.

‍

A lot of Google's side effects, according to Trade Algo, had an effect on the company in the next decade. According to Google, "the opposite was true in some ways."

‍

I requested a comment from Google, but a representative did not respond immediately.

‍

According to Peter Cappelli, a management professor at the University of Pennsylvania's Wharton School, the current round of layoffs in Silicon Valley is primarily intended to placate investors who believe tech workers are coddled.

In Cappelli's opinion, layoff announcements sound good to investors because they sound good to them.

‍

Several companies have announced job cuts because other companies have as well, he said. In the event that they do not, then they will need to explain why they made that choice. He emphasized there are often more telegraphed layoffs than are actually carried out in blockbuster layoff numbers.

‍

He said letting go of managers doesn't always result in productivity increases, nor does it necessarily lead to efficiencies.

‍

Cascio finds, in his research at the University of Colorado Denver Business School, that companies that delay layoffs the most during downturns have higher stock returns two years later than companies that cut headcount quickly.

‍

Effort, analysis, and planning are required when it comes to improving a company's workflows, according to Cappelli. Without this kind of preparation, leadership can hand out pink slips without preventing chaos.

‍

A person gets cut before they figure out what they do and how to accomplish what they are supposed to do. As we move into the next phase, we expect a lot of people to work both jobs at once. Even though that might seem efficient, the costs are pretty high. Things don't get done well, or at all."