Why do companies do holiday layoffs?

What do Twilio, Spotify, and Bending Spoons have in common? They’re all tech companies that laid off employees right before the holidays. Simultaneously, many of those people were going into debt to pay for their holiday gifts.

Does anyone see something wrong here? I do.

Yes, I know the main reason companies lay people off at this time is to look good in their fourth quarter. They’ve got to make that final quarter’s financial numbers look good to their venture capitalist investors, private equity owners, or stockholders. But, come on — does anyone take those numbers seriously?

We all know what companies are doing. If they’ve been going downhill all year, what’s the point of firing people at the 11th hour? I know it’s cosmetic; you know it, too. No one really believes your company suddenly got better in the last month of the year unless you’re a retail company, sales were good, and you exceeded your numbers.

Besides, as my friend and fellow TechCrunch writer Ron Miller put it, “Layoffs are always cruel and awful and often completely unnecessary, but laying people off in December, while discussing the company holiday parties, is the worst and so totally tone deaf.”

Cruel? Yes, cruel. As John DesJardins, an advisor at early-stage startups, pointed out, “Most of them have been done without any triggering revenue change or economic event, just a change in the dynamics/focus of investors.”

Exactly. Everyone has been frightened for the past two years by the prospect of a recession. In case you haven’t noticed, it never arrived. True, tech companies might well  have over-hired after the COVID-19 pandemic receded, but that doesn’t explain why Amazon, Cisco, Meta, Microsoft, Google, IBM, Red Hat, SAP, and Salesforce, to name a few, laid off so many tech workers in 2023.

But it’s towards the end of the year that things really start to go wrong and it’s gotten to the point where I now expect job cuts along turkey dinners and hoiiday carols.

It didn’t used to be this way. In the 1970s and ’80s, companies knew putting people out of their jobs right around the holidays looked bad. How bad? Try Mr. Potter, the villain of It’s a Wonderful Life, bad.

A few years ago, a study found that one in five corporate executives are psychopaths. That’s about the same number you’d find in a jail’s population. Among ordinary people, only one in 100 ior so s prone to such Machiavellian, narcissistic behavior.

I’m surprised it’s only one in five. I have known many of the top tech CEOs of the last 40 years. Billionaires, I have to tell you, are not particularly pleasant or happy people. Some of them are also not nearly as smart as you might think.

Take, for example, Elon Musk. As he continues running X/Twitter into the ground, laying off most of its staff along the way, Musk almost literally spit in the face of his advertisers at The New York Times DealBook presentation. Who does that?

A macho management style might play well on Fox Business News or CNBC, but it is no way to run a company. Neither is culling jobs just before the holidays.

Every time you do that, your company’s reputation takes a knock. It’s also short-sighted. Eventually, if your business becomes successful, you’ll need to hire again. How many great people will you get tomorrow when your layoff history is only a business news site or Glassdoor click away?

In case you haven’t noticed, workers are getting a lot more picky about jobs. For example, Amazon workers are quitting rather than returning to their offices. They’re not the only ones. The top-down, return-to-the-office movement is running into a lot of pushback.

Instead of firing the rank-and-file at year’s end, take a long hard look at your expensive executives and managers. After all, they’re the ones who hired all those “excess” people. Isn’t your personnel problem really mismanagement at the highest levels?

If I were in charge of a large company, I’d be focusing much more on management performance and who exactly I’ve been hiring as executives rather than working out how many worker bees I can eliminate to make the bottom line look good. I’m willing to bet that my year-end performance numbers would be much better next year than the fake numbers of this year’s 4th quarter.

Copyright © 2023 IDG Communications, Inc.

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