FinanceLayoffs and Recession

Why are there waves of layoffs, generally and in a single company?

You’ve already seen the mass announcements of tech layoffs in 2022 and 2023. You can even track it in the website:

What’s even more surprising is that these layoffs are happening in waves, and in a single company. Facebook / Meta announce layoffs in November totally 11,000 employees (13% of their company), and most recently announced another 10,000 (additional 13%) totally 25% from what they had in 2022. And we’ve already seen these multiple waves with Amazon and Twitter (this one is probably special in itself). One can only assume that we’ll be seeing much more waves soon. Here’s some information on both a micro and macro scale on why these waves happen…

On a micro scale: Why are there waves of layoffs in a single company?

Waves of layoffs in a single company can occur for several reasons:

  1. Cost-cutting measures: Companies may initiate waves of layoffs as a cost-cutting measure to improve their financial performance. This may happen when a company is experiencing financial difficulties, has declining revenue or profits, or is seeking to increase shareholder value.
  2. Restructuring: Companies may initiate waves of layoffs when they are restructuring their operations, such as consolidating departments, merging with another company, or entering a new market. These changes may require a realignment of the workforce, resulting in layoffs in some areas and hiring in others.
  3. Technology changes: Companies may initiate waves of layoffs as they adopt new technologies that make some jobs or roles obsolete. For example, as companies automate certain tasks or move to a digital platform, they may no longer need as many workers in certain positions.
  4. Performance issues: Companies may initiate waves of layoffs when they are not meeting performance goals or when certain business units or products are underperforming. In these cases, the company may need to reduce the size of the workforce to improve its financial performance.

Overall, waves of layoffs in a single company are often the result of changes in the company’s strategy, performance, or operating environment. While layoffs can be difficult for those impacted, they may be necessary for the long-term health and success of the company.

On a macro scale: Why are there waves of layoffs happening?

There are several reasons why waves of layoffs occur in industries, including the tech industry:

  1. Economic downturns: Economic downturns can cause companies to cut costs and reduce their workforce, leading to waves of layoffs. During a recession or economic slowdown, companies may experience decreased demand for their products or services, leading to a decline in revenue and profits. To maintain their financial viability, they may need to reduce their expenses, which often includes layoffs.
  2. Industry changes: Industries are constantly evolving and adapting to changes in technology, consumer preferences, and other factors. When an industry experiences significant changes, such as the emergence of a new technology or a shift in consumer behavior, companies may need to restructure their operations, leading to layoffs.
  3. Mergers and acquisitions: When companies merge or acquire each other, they often need to eliminate duplicate positions and streamline their operations. This can lead to waves of layoffs as the companies integrate their operations and consolidate their workforce.
  4. Company-specific issues: Some waves of layoffs may be due to company-specific issues, such as mismanagement, declining sales, or a shift in strategy. In these cases, the company may need to restructure its operations to remain competitive or address other challenges.

Overall, waves of layoffs can be caused by a variety of factors, but they often occur when companies need to reduce costs or adapt to changes in the economy or their industry. And I think we’re just at the start of it for 2023.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More in:Finance