April 15, 2023 - In terms of economic stability and job certainty, 2023 has turned out to be no different than its predecessor. The year has started with big tech companies laying off significant chunks of their workforce, leading to speculations of impending recession. After witnessing a hiring spree during the pandemic, tech giants such as Amazon, Facebook, Microsoft, and Alphabet have now turned south and lay off over 50,000 employees in the past month.
The reasons behind these drastic measures are many, including pandemic-inflicted losses, ongoing global inflation, disruptions caused by the Ukraine war, and a shortage of experienced tech talent. Amid such dire straits, companies need to re-stabilize their workforce and clear the air of fear.
A report published by Layoffs.fyi states that the ongoing layoffs are a part of the efforts that big tech companies are making to build a strategic resistance against an assumed impending recession, and deeper layoffs can be expected in the following months.
So, in such dire straits, how can companies re-stabilize their workforce and clear this air of fear?
We live in a time where there is an increase in the popularity of skill-specific job roles and a global shortage of skilled talent. According to a report by Imarticus Learning, 70% of tech employees are opting for upskilling courses amid layoff scare.
This means upskilling is now no longer a plausible option to bridge the skill gaps but has become mandatory for organizations to retain top talent. This is why it is wise for companies to start investing more resources into their L&D efforts and have an efficient skill development strategy in place.
By promoting skills development, companies can restructure their existing workforce, save efforts and manpower spent in finding and hiring new talent, gain back the trust of their employees, and prepare themselves for new job portfolios that can come into the picture because of future technological disruptions.
Additionally, skill development can help companies control expenditures and costs, as developing in-house talent can be a better alternative to finding, hiring, and training someone new.
All methods that reduce layoffs revolve around one common motive- ‘cost-cutting’. Instead of laying off its workforce, companies can try alternate ways to save costs. For example:
Reducing discretionary spending and focusing more on productivity over leisure.
Implementing small cut-downs on alternate spending so the cash flow remains constant and employees don’t fear for their future.
In the worst-case scenario, you can also try salary rollbacks, where employee salary can roll back to the amount before the last increment. Employees would prefer a temporary rollback over losing their jobs.
Pay cuts can be another option. If you are aiming to reduce x% of cost by laying off employees, it’s better to cut down salaries to save that x% than firing people.
Furloughs can also help prevent lay-offs for a short period. For those unaware, furlough is a mandatory but temporary leave of absence where a furloughed employee works a reduced schedule or takes unpaid leave for a specific period. Furloughing is better than laying-offs as it represents a temporary separation between a company and an employee, unlike lay-offs.
As skill leaders, now is the right time to think about your organization’s skills and intelligence first and not get distracted by what other tech giants are doing. Other alternatives that we discussed above may sound ‘easier said than done,’ but skills development is something that is well under your control. All successful organizations are blessed with top talents that need to be groomed for further opportunities. It’s always a safe call to rely on your experienced in-house employees to turn the tide and adapt to future market predictions.