After decades of growth, the tech industry, with brands like Meta, Twitter, and Amazon, seems to have finally reached a peak, with the other side of the mountain unfortunately in view.
According to a recent report from NPR, just this month more than 24,000 employees in the industry have been let go, and the company staffing announcements seem to continue.
The ultimate need for these cuts arose due to the growth seen by tech companies with society’s necessary adjustments to Covid-19 lockdowns. Studies show the increase in internet use rose from 40 to 100 percent compared to pre-Covid-19 times. Tech companies scrambled to keep up, and flush with cash, threw labor at the challenge, overestimating both the magnitude and the duration of the trends represented during Covid lockdowns.
Many companies throughout the country are in similar situations, without the luxury of a core business that is “among the most profitable ever built with huge potential ahead,” as Zuckerberg wrote in his letter to the 11,000 employees Meta layed off this week. And, macroeconomic factors are compounding the situation: rising wages, a tight labor market, fears of an impending recession, and the rising cost of capital.
We are in a particularly stressful time, with a lot of unknowns, but at Connors Group we recommend a careful assessment of your business to allow for an optimal response to changing conditions. Company leadership needs to explicitly understand three “states” of business:
Using the knowledge gleaned from observing the company’s three states, align your business model. Ensure you are investing in the right areas and look at factors beyond direct payroll, such as leadership’s span of control, overtime, and scheduling efficiency.
Additional items to review:
Ensure conditions are set for productivity
1. Trained associates
2. Normal Pace
3. Prescribed Methods
4. Standard conditions
5. Capable Supervision
Yes, challenging times are ahead, but knee-jerk reactions to this dynamic economy are dangerous. A careful assessment of your business will provide more clarity and permit greater adaptability in changing conditions. Your business may be at a point where a downslope seems inevitable, but using Connors Group’s suggestions can provide strategy and confidence on your company’s journey.