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Meta's latest round of layoffs will hurt productivity and damage employee morale

Business Insider logo Business Insider 4/19/2023 rknight@insider.com (Rebecca Knight,Tim Paradis)
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  • A month after Meta CEO Mark Zuckerberg announced a second round of layoffs, cuts are beginning.
  • The dismissals are part of a strategy to boost productivity and turn Meta into a talent magnet.
  • But the layoffs are likely to hurt innovation, recruiting, and morale, two experts told Insider.

Mark Zuckerberg, the CEO of Meta, wants the firm to get its beach bod in time for summer by shedding thousands of workers. But like any crash diet, there are risks. 

"Leaner is better," Zuckerberg wrote in a 2,200-word opus of a memo last month announcing the company's second round of major layoffs in four months. 

The latest cuts appear to have begun on Wednesday, and according to reporting by Insider's Grace Dean, seem to have included technical program managers, machine learning engineers, and UX researchers. In a memo posted to an internal employee message board on Tuesday night, Meta told employees that the layoffs will affect technical teams, including those working on Facebook, Instagram, Reality Labs, and WhatsApp, according to Vox.

Zuckerberg said last month that the cuts will affect about 10,000 staffers and some 5,000 open roles, highlighting the U-turn the company has made since last year, when its workforce had nearly doubled since the start of the pandemic.

Layoffs in the industry are widespread and Meta isn't alone in reducing its employee ranks more than once in short order. Amazon also last month announced it was laying off an additional 9,000 employees, on top of the cuts to 18,000 positions that the company disclosed in January. Twitter's workforce, meanwhile, is about a quarter of the size it was when Elon Musk bought the company last year and began conducting rolling layoffs.

Zuckerberg now wants a slimmed-down Meta — part of his "year of efficiency" — to be "an even greater magnet for the most talented people" and a "place to invent the future." Zuckerberg said that at Meta, "people will be more productive, and their work will be more fun and fulfilling."

But telling employees how sunny the future will be while they're looking over their shoulders won't be good for them, for recruiting, or for the company at large, two management experts told Insider. Layoffs can distract workers, crimp innovation, and eviscerate morale. Put simply: Zuckerberg's plan is misguided, they said.

The recent job cuts at tech companies underscore the mistakes that many, including Meta, made by hiring too fast, Sandra Sucher, a professor of management practice at Harvard Business School who's studied layoffs, told Insider.

"You have to step back and say, 'What kind of a reasonable businessperson actually puts people at risk by doubling the size of their organization in two years?'" she said. "What are the conditions that you think would have to hold for that to be a reasonable bet?"

A leaner — and meaner — Meta

Zuckerberg argues that "flatter is faster," so Meta will trim multiple layers of management.

Sucher said that rethinking how to run an organization and looking for ways to make it move faster makes sense, provided the organization does it wisely.

Mark Zuckerberg in a blue shirt: Mark Zuckerberg wants 2023 to be Meta's "year of efficiency." Drew Angerer/Getty Images © Drew Angerer/Getty Images Mark Zuckerberg wants 2023 to be Meta's "year of efficiency." Drew Angerer/Getty Images

But while Zuckerberg might have come up with a plan for a leaner, meaner management structure, he didn't offer many concrete details for how the layoffs will ultimately unfold. Some cuts are occurring now, others are slated to happen next month. And a smaller slice of the layoffs might take through the end of the year.

The latest cutbacks weren't unexpected, yet some workers were upset at the "cold" way the company handled them. 

Sucher said Zuckerberg risks losing some credibility with workers. "All he has tried to do is to say, 'Count on me to make good decisions and at the end of this I'll let you know how this affects you,'" Sucher said.

Rather than resorting to layoffs, Sucher said companies should look at other ways to lower headcount, including natural attrition, buyouts, and hiring freezes. She also said furloughs can be effective for helping companies weather downturns.

Too often, she said, employers don't work through all of the ramifications — and hidden costs — that laying people off will bring, in addition to the obvious toll on workers. "You have to plan for it in order to not have it kill your company," Sucher said.

An attempt at reinvention

At the heart of Zuckerberg's memo lies a central question: To what degree can the company truly reinvent itself? 

Yes, it can change its name. And, sure, it can shift its strategy. But research suggests that most companies have a limited capacity for full-scale transformation. And the likelihood that Meta becomes a fundamentally different organization is small, Anita Williams Woolley, a professor of organizational behavior at Carnegie Mellon University's Tepper School of Business, told Insider.

Zuckerberg's latest moves are likely the result of him trying to return to Facebook's early days as a startup, she said. It's understandable why he might romanticize a time when the company was more nimble and less bureaucratic

But layoffs inject uncertainty and distrust into both current and prospective employees, Woolley said. What's more, "the bureaucracy that Zuckerberg thinks they can remove is built on patterns and routines that are hard to erase," she said. "You don't get rid of it by getting rid of people."

So, what should Zuckerberg do instead? "I would start a new company," Woolley said. "I would ask him, 'What are you trying to do that your current company can't do right now?' Then I would tell him to set up a company to compete with it."

An earlier version of the story appeared on March 19, 2023.

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