In an attempt to explain why the company laid off 12,000 workers, Alphabet CEO Sundar Pichai called for a “rigorous review” of Google’s internal structures and organization. Pichai indicated that the company hired for a different economic reality than it faced and that the layoffs were necessary to prepare Google for the future.
Although the CEO (who earned $280 million in incentives in 2019) said that Took full responsibility for decisions, didn’t say what those decisions were, He also failed to mention that during his tenure at the helm of Google, the company has received antitrust fines worth billions of dollars, despite its intent to excel in AI has been outperformed by OpenAI’s ChatGPT, and its Search engines have seen depressingly worse.
Although he later stated that “all operations above the Senior Vice President level will experience a very significant reduction in their annual incentives,” most of his mistakes, including his own It seems that they have hurt the 12,000 people who were the most fired.
Among the fired employees — via email — were several top performers and longtime employees, including an engineer with the company for 20 years, who described the sudden layoffs as a “slap in the face.”
This type of shirking of responsibility is becoming more and more prevalent in Silicon Valley. CEOs of companies like Amazon, Microsoft, Salesforce and Meta have steered their companies on an unsustainable path, investing in crazy projects and believing that boom Technology driven by the pandemic will be a new normal.
Now those hopes are shattered Tech workers are facing the brunt of these wrong decisionsWhile managers with greater responsibility for mistakes face little or no significant consequence.
Any executive involved in the decision-making that causes hundreds or thousands of people to lose their jobs should be the one to get them out the door. Pichai and other tech CEOs making $280 million a year, not even a million: He should be fired for mismanaging some of the biggest companies in the world.
CEO made mistakes, employees had to bear the brunt
In their layoff announcements, almost all tech companies have blamed the economy. At Amazon, the cuts were necessary due to “supply chain difficulties, inflation and excess productivity” as well as economic uncertainty.
Salesforce CEO Marc Benioff cited the economic downturn as the reason for reducing the company’s workforce by 10%, and Workday laid off 3% of its workforce due to a “challenging global economic environment for companies of all sizes”. has been closed. PayPal CEO Dan Schulman blamed the decision to lay off 2,000 employees on a “challenging macroeconomic environment”.
But in many cases, the real source of concern for these companies comes down to the absurd decisions made by their leaders, whether it’s Mark Zuckerberg, who at the company formerly known as Facebook, has made massive gains during the pandemic. hired and invested billions of dollars in his metaverse. Sunak before cutting 11,000 jobs; Or Tobi Lutke at Shopify, who fired 1,000 people who couldn’t pay for betting on the future of e-commerce.
Many of these companies have made serious strategic mistakes that layoffs won’t fix: Cutting workers won’t suddenly make them more productive or improve their products. Furthermore, many of them remain extremely profitable, which casts doubt on the economic justification for the layoffs.
Microsoft’s profit in the last quarter of 2022 decreased by 12% compared to the same quarter of 2021, but still, it clocked in at $16.4 billion. Amazon posted a profit of $2.8 billion in the most recent quarter, well below the pandemic high of online shopping, but in line with its historical average, And yet, it laid off 18,000 workers.
It seems that when profits—or even future profit forecasts—fall a little, someone has to pay, and it’s certainly not the CEO. When a company chooses to lay off thousands of people, it is optionally fair for others to follow suit, a natural way for a CEO to appear “disciplined” or “responsible” despite harming employees.
While they may protect the CEO’s reputation or please investors, Layoffs are extremely harmful to workers, even well-paid ones, People who are laid off face long-term damage to their careers and to their mental and physical health.
Layoffs damage professional careers and mental and physical health in the long run. Not to mention that the layoffs are of questionable value to the company; Studies have found that layoffs drag productivity, stifle innovation, and can lead to lower profits in the long run. Studies have also suggested that layoffs make life more difficult for remaining employees, especially since many of these companies cut back on some benefits and services that could help remaining workers. Given the human and business losses of layoffs, a CEO’s top priority should be to avoid them at all costs.
Some companies have done it. Apple has managed to cut costs without layoffs, by cutting Tim Cook’s salary by 40% (to $49 million). While you might not necessarily appreciate a company paying out “only” $50 million, it’s clear it’s willing to cut its own pay before resorting to laying off employees. Similarly, Intel’s CEO took a 25% pay cut to avoid mass layoffs and slashed the salaries of his management team by 15%.
In the case of companies that have resorted to job cuts, the main blame falls on the CEOs. They are solely responsible for analyzing the macroeconomics wrong, making terrible investments, and following the industry in an effort to please Wall Street.
And yet, other than a few pay cuts, none of them have faced any real consequences. By focusing on general economic uncertainty, rather than admitting that top management’s mismanagement caused the cuts, leaders can save their reputation and avoid blame.
great power without responsibility
The shifting of blame from these tech companies and their CEOs is unprecedented, Companies that have sworn allegiance to the all-powerful manager apply completely different evaluation criteria to senior managers than to other employees.
Because of this pernicious admiration for the most powerful person in the company, companies are trying to save money any way they can except by cutting salaries or firing their most responsible and most expensive employee: the CEO.
CEO pay increased by 1,460% between 1978 and 2021 and The ratio between the average salary of employees and CEOs went from 20 to 1 in 1965 to 399 to 1 in 2021, And it’s not like this staggering pay increase has made bosses better at their jobs.
Top managers leave companies when they anticipate recession and always treat workers as if they are disposable, even during a booming economy. The analysis reveals that these staggering pay packages are not fair.
When top executives make a serious mistake, they almost always get the benefit of the doubt. Modern managers lack real accountability or oversight, sometimes reporting to a board of directors, which are often flexible. They are largely insulated from the consequences of their actions, even if they perform poorly.
If another type of employee made a series of decisions that led to a 2-point drop in profitability, Will be threatened with dismissal or fired outright, Instead, CEOs of technology companies have harmed people who in many cases were doing their jobs well. And while many employees in tech and other industries have received generous severance pay, they pale in comparison to what failed managers receive on their way out the front door.
Take Hertz car rental company, for example, which laid off 10,000 people in 2020 as it headed for bankruptcy, while paying its managers $16 million in bonuses.
If CEOs at the top of an organization are expected (and paid for it) to be a visionary god, They should be expected to take that responsibility and pay the price when they mess up, To a point, the boss should be as accountable as the people he employs.
There is no reason why the highest paid and best behaved member of a company should not be evaluated.
If companies are reluctant to fire top managers, well, CEOs should focus on real management and execution to grow their companies sustainably.
Instead of focusing on short-term investor relations and public acclaim, They should spend time running their business and help improve the products they see fit. The CEO, the most powerful and influential person in the company, is now a person who receives all the benefits of the company’s success without being affected by any of the company’s failures.