Off the back of revenue slumps last quarter and a tough economic outlook, the tech industry is going through a tumultuous time. More than 120,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a site that tracks this data.
Just this month, Meta announced it is eliminating 13% of its staff, which corresponds to roughly 11,000 employees. Netflix, Robinhood, Coinbase, Twitter, Stripe, and Tesla have also announced layoffs within the past six months.
From a public relations perspective, events like mass layoffs are perilous: communications and messaging—both internal and external—can decide the future viability of the business and mitigate reputational risk with key stakeholders. Tech firms’ communications responses to the current layoffs have varied, providing us with key lessons.
Thanks to a pandemic-fuelled boom and heavy investment, tech firms—especially Big Tech—have enjoyed soaring profits; low interest rates meant investors were quick to reward bold ambitions and fast growth. Tech firms poured this money into expansion, making the talent market a key battleground on which firms could differentiate themselves. Silicon Valley firms in particular gained a reputation for sky-high salaries, vast modern campuses, and increasingly generous perks.
But this year, the cracks started to appear: in March, for example, Meta announced that they were axing the free laundry service for employees, marking the start of declining profits. The firm’s corporate messaging at the time, however, positioned this as a result of increased investment in new technology and metaverse projects. Mark Zuckerberg’s early November letter to employees announcing Meta layoffs put forward a different narrative, referencing a post-pandemic slowdown, macroeconomic downturn, and increased competition.
The narrative shift that Meta employed highlights a crucial lesson in communications planning and messaging. Let’s look at two communications strategies from two of the firms above regarding layoffs in a bit more detail to better understand the key role crisis planning can have: Twitter and Stripe.
“Extremely messed up!” Elon Musk posted on Twitter regarding unspecified activist groups he blamed for a fall in Twitter’s revenue, the same day he announced that he was cutting roughly half of the firm’s 7,500 strong workforce. It’s also a pretty good summary of how things have gone for Musk since his $44 billion purchase of Twitter in October.
I know I said I would look in detail at Twitter’s communications strategy but there hasn’t been one. Instead, here is a quick list of things that have gone wrong:
- Internal communications regarding layoffs were leaked.
- Employees took to social media, including Twitter, to air grievances about the layoffs.
- Twitter management tried to bring back some workers they fired (as it turns out, they still needed them).
- Musk publicly fired an engineer who corrected him on Twitter.
- Employees critical of Musk on Slack were fired. Musk confirmed this publicly and sarcastically called them ‘geniuses’.
- Musk gave remaining employees an ultimatum: commit to ‘hardcore’ work with ‘long hours at high intensity’ or receive three month severance pay.
As you can tell from this list, there has been much for the media to sink its teeth into. Indeed, the reporting has been constant and damaging; Twitter continues to lose advertisers and revenue, an issue that continuous public catastrophe has not improved. Unsurprisingly, many reporters made efforts to reach out to Twitter for comment. It turns out that the firm did not have a plan for how to communicate the layoffs externally. Even more shocking, management axed Twitter’s communications team as part of the layoffs.
Is it possible to do layoffs well? Arguably not, but Stripe came close. The firm’s external and internal communications have been excellent, setting a high bar for the industry. While mass redundancies are never positive, Stripe’s messaging has treated people with the respect and honesty they deserve.
In early November, CEO Patrick Collison published the note he had sent to all Stripe employees announcing a workforce reduction of 14%. It was clear, generous, and took responsibility for over-optimism in the internet economy and overly rapid growth in operating costs.
The letter has been widely lauded on LinkedIn and in HR circles, as well as in mainstream media (including in Business Insider and Fortune) as a model for communicating layoffs with clarity and compassion.
There’s no doubt this letter was written in conjunction with a sophisticated external PR plan. There will be some that count this as more than a little cynical. I am not trying to convince you whether that is true or not, but the fact is, it works.
The layoffs and subsequent communications strategies (or lack thereof) provide key lessons for firms. First and foremost is preparation. We cannot always predict major geo-political and economic shifts, and firms will face unexpected tough times. Having a crisis communications plan in the event of mass layoffs or loss of business continuity is vital to mitigate risk and reputational damage.
We also recommend that firms know their key messages and audiences well in advance of any crisis. While this is bread and butter for any communications team, it becomes vitally important during times of stress. Having consistent messaging cuts off potential rumours and leaks, the likes of which we have seen recently at Twitter. Furthermore, knowing where to share your story can play a huge role in shaping perceptions. There is a reason that the positive Stripe story ran in Fortune and not in Bloomberg.
At Greentarget we offer in-depth crisis planning for our clients, helping to identify key messages, audiences, and media targets for any scenario. We also offer bespoke media training sessions to prepare spokespeople to be credible, empathetic, and clear.
There is no end in sight for the moment for the tech industry due to continued revenue loss and a bleak macroeconomic outlook. Apple has announced a slowdown in hiring and Amazon plans to lay off 10,000 employees before the year end. These firms will struggle to navigate these waters; a clear communications plan is a vital tool to minimise media scrutiny and potential ridicule.
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