Yahoo Finance ‘All layoffs are bad:’ Recent Salesforce and Meta job cuts show even good severance packages won’t soften the blow for workers
Jose Ramos believes Meta executed its recent round of layoffs flawlessly, even if he was one of the 11,000 workers who lost his job in November.
“The execution was just perfect,” says Ramos, who formerly worked in partner operations support at Facebook. Meta successfully limited its security risks and protected customer privacy by restricting access once the layoff announcements occurred—while still being transparent with workers.
“I think they plan these things very, very well,” Ramos says. “The communication was very respectful. I would say even humane—even though it was bad news. They were telling us exactly what was going to happen.”
Yet for all that Meta did right, the job cuts were still a blow. “The layoff process was shocking to many, including me,” he admits. That’s true for most workers affected by the recent layoffs. More than half (52%) of laid-off workers reported they saw no warning signs and were caught by surprise, according to a ZipRecruiter survey conducted in January of more than 2,000 U.S. residents who lost their job in a layoff within the last six months.
As of early March, more than 150,000 workers across approximately 530 companies have been laid off so far in 2023, according to layoffs.fyi. During the fourth quarter of 2022, many major companies started to announce cuts as a result of sky-high interest rates, overhiring during the COVID-19 pandemic, and an uncertain economic outlook. But while some leaders received praise for their compassionate, generous layoff strategies in recent months, others have faced backlash—all of which begs the question: is there really such a thing as a “good” layoff?
Ramos, who hasn’t yet found another job, isn’t unique in thinking that his company handled the layoff well. ZipRecruiter found a full two-thirds of laid-off workers felt their former employers treated them respectfully during the process.
Despite all the praise for his former employer, Ramos doesn’t think there’s really such a thing as a “good” layoff for workers. “I think that all layoffs are bad. But they are, unfortunately, part of our economy, and a system in which companies need to please shareholders,” he says.
A former Salesforce program manager who lost his job in January agrees. “I don't think there's ever going to be such a thing as a good layoff because no one wants to lose their job. Everyone wants to leave on their own terms,” he says. Fortune agreed to keep this employee anonymous as he is in final rounds of job interviews.
“Fundamentally, layoffs are not a good thing for the worker. But how the worker experiences that moment may result in some really good outcomes,” echoes Bruno Yoffe, a manager who was part of the 9% of workers laid off from Asana in November.
A “good layoff” may be more of a myth than a reality for most workers, but sweeping job cuts can be done well, says Lyndsay Dowd, founder of consulting firm Heartbeat for Hire. “The tone and the execution are what matters,” she tells Fortune.
How leaders deliver layoff news is critical
While many of the recent layoff announcements have made big news, others have been relatively quiet. The difference? In a lot of cases, it comes down to how employees felt after hearing the news.
“Your delivery, your choices, the way that you speak to your people, the way that you have your managers communicate the message—really matters. Doing it via a [boilerplate] email is horrible. Doing a company-wide Zoom is horrible. Showing up for your 1:1 with your boss and having HR surprise you—that's terrible. There's so many things that we do wrong, and there's so many ways to make it right,” says Dowd, who helped coordinate layoffs while working at IBM.
There’s always exceptions to those rules—if the communication is handled well. Unlike many CEOs who have been vilified by former employees post-layoff, Stripe’s Patrick Collison—who cut 14% of his workforce in early November 2022—has come through the process without facing overwhelming backlash.
I've never been a part of any layoffs directly [before this], but I'm pretty sure this is not how you go about it—the CEO sending an email out at 5 a.m. to 8,000 people that their roles are gone. It's like dropping a bomb.
former Salesforce employee
Collison did send an emailed letter announcing layoffs to the entire company, but it was notable for the level of blame the CEO took for the layoffs. It showed accountability and provided clarity, Dowd says. “When you do something like that, the people who are left look at you differently. They look at you as a compassionate leader and that is a very important character trait.”
Salesforce CEO Marc Benioff also opted for an email layoff announcement in early January, but his early-morning communication left many workers frustrated. “I've never been a part of any layoffs directly [before this], but I'm pretty sure this is not how you go about it—the CEO sending an email out at 5 a.m. to 8,000 people that their roles are gone. It's like dropping a bomb,” the former Salesforce employee says.
Yoffe, who moved from Pittsburgh to San Francisco in 2021 to take a role at Asana, was also notified he was laid off with an early morning email. “I read my email [that morning], and I just remember my mind went blank and then being like, holy shit, I was just laid off,” Yoffe says. “Elements of the email were thoughtful, but it was pretty harsh.”
"I [was] not just bummed about losing my job. I'm bummed because I liked it. I liked Asana. I liked the people, I joined the company and I really assimilated and identified with the culture—there was a community there,” Yoffe added.
One-on-one manager conversations are best, Dowd says, having a meeting about a layoff face-to-face is optimal, but video conferencing can work if it’s not a mass group call. A majority of laid off workers surveyed by ZipRecruiter say that’s exactly how it went down: 58% received the news in person—42% in a one-on-one meeting and 16% in a group setting.
View this interactive chart on Fortune.com
Of the approximately four in 10 workers who were informed of the layoffs virtually, 13% reported receiving a phone call, while about 12% got an email. But about 7% of workers reported they were laid off via text message.
After companies share the news, the follow-up is the next most important step, Dowd says. Is the company sending out a 30-page, jargon-riddled severance agreement that forces employees to dig for details or are they providing a user-friendly guide? “If you are a smart leader, you’ve got to take care of your people.”
Don’t underestimate the value of a good severance package
Money talks—even in the midst of a layoff. The generosity of a severance package goes a long toward softening the blow, Dowd says. Essentially, a generous severance package not only shows affected workers that their time with the company mattered, but it also provides some breathing room as they look for a new job.
“It really matters,” Dowd says, adding she’s seen some really bad examples of this, where people who have been with a company for 20 years receive three weeks’ worth of compensation. “That is like a gut punch. But the ones who really honor those loyal employees, it leaves a different feeling.”
In the case of Meta, CEO Mark Zuckerberg clearly outlined the details of the company’s severance package, which included 16 weeks of base pay plus two weeks for every year of employment. "The severance package was fair,” Ramos says. “I hope I can find a new job before having to start taking money from savings."
Asana’s severance package, which included a minimum of 60 days of pay along with other benefits, was a relief amid the upheaval, Yoffe says. “I had my money. I did a little bit of math, and I was like, I'm kind of good—we're not going to need to tap into stuff until halfway through the year. So my circumstances were very, very fortunate.”
Across the board, only about a third of laid off workers surveyed by ZipRecruiter received any severance pay. Yet among those who did, the average was about 16 weeks. That’s much better than the median of nine weeks that laid off workers can get through state unemployment benefits.
In addition to severance pay, about a quarter of laid-off employees received some type of career and job-search assistance, according to ZipRecruiter. But Dowd says that while these services can be helpful, it depends on how they’re presented to workers.
“I almost found myself sort of frustrated with the employment assistance benefits that they offered,” Yoffe says of Asana’s career assistance support, explaining it was outsourced to a different company. “The last thing that I wanted to do was talk to somebody new and get all this coaching. I was healing, and I just didn't have the mental space to do that. So I didn't take advantage of that,” Yoffe says.
“In comparison to other companies, I would say the structure, the formalities of the layoff was like a C. It was better than nothing, but it wasn't the best. Not overly generous, not super stingy. It felt very formulaic,” he says.
Workers want transparency
Layoffs happen—and employees understand that. But it’s jarring to go from hearing one minute that a company is meeting or exceeding its financial goals to hearing that you’ve been laid off in an effort to retrench.
In the case of Salesforce, the former employee says the layoffs were so shocking because there was no real warning. “Our numbers were good, and I figured we kind of passed the wave of layoffs in December, so we would have been good to go. But that wasn't the case at all. It was a complete, complete blindside,” he says.
“I don’t think transparency was provided here at all,” he continues. “Just be honest with us.”
Not all companies conducting layoffs are facing the same fallout that Salesforce is—something the former worker chalks up to leadership. “It's easier to be a CEO when a company's doing well. But when it comes to delivering layoffs to over 8,000 people and impacting 8,000 lives, that's when you really see the character of who's in charge.”
In describing Meta’s layoff process as a good one, Ramos credits a lot of that to the company’s transparency. “I have seen a lot of misunderstanding and negative information about Meta. I think that it is a really remarkable company,” he says. “Every Thursday, we had this company chat where [Zuckerberg] shared information and he accepted questions—very hard questions—from anyone. I've never seen something like that.”
But that transparency needs to carry through the hard times as well. Yoffe’s frustration with Asana’s layoff process was the lack of solid communication. “The way it was handled wasn't consistent with our expectations and our experience with the business, which was a lot of transparency, communication, and thoughtfulness when it came to why certain decisions are made.”
A good or bad layoff has consequences far beyond just the headlines at the time of the cuts. Those who remain with the company are watching how the process is handled as well and it can have a huge impact on their motivation, productivity, and ultimate retention. “You have to remember who's left,” Dowd says.
For those impacted, it’s worth remembering that a layoff is not the end, Dowd says. “It's just the end of a chapter.”
And for some like Yoffe, they may come away from the experience in a better place. “Now that I have employment that's objectively the same or better, it's easy for me to say it was a great thing that happened. But I wouldn't have chosen it,” he says.
“I learned so much about myself and I'm grateful that I was thrust into this issue to solve. I didn't know that I had this amount of perseverance. I wouldn't have been able to tell you that about myself if I wasn't posed this challenge. I'm really grateful for that.”
This article appears in the April/May 2023 issue of Fortune with the headline, "A 'good' layoff is a myth for workers."
This story was originally featured on Fortune.com
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