February 01, 2023
Written By:
Kurt Merriweather
VP, Products and Innovation
The Diversity Movement
The COVID-19 pandemic was a primary catalyst for Big Tech’s hiring spree in 2020 and 2021. Remote work took off in ways never experienced before and organizations began hiring in unprecedented numbers. The thought was this new era of remote work and economic prosperity would set a standard for ongoing growth. Fast forward to the end of 2022, with the threat of recession looming and a series of poor earnings reports, and organizations are responding with layoffs to improve financial results. As a result, layoffs are rippling through multiple organizations including Google (12,000 people), Microsoft (10,000 people) and Amazon (18,000 people) (Source: Layoffs.fyi)
This bleak layoff scenario creates challenges for everyone involved – the tech workers who have been displaced, as well as employees that remain in organizations that have just made cutbacks. Although there can be a short-term bump in stock price, most organizations don’t experience the desired financial impact. The result is damaging to brand reputation and declining morale and a drop in employee productivity internally.
Layoffs can create significant employer brand damage for organizations that are not thinking about the negative word-of-mouth impact. When people are not being treated well as they exit, they tell other people – those in their circles and on social media. There are countless stories of team members waking up to the realization that they have been separated with lost email access or reading about layoffs from news articles before they have even been contacted. Future job seekers are paying attention to these signals and will be hesitant to join organizations where people are not being treated well.
Layoffs and Threats to Diversity, Equity, and Inclusion Progress
The lack of diversity in tech has been an ongoing struggle for the industry as a whole and the acceleration of layoffs has exacerbated this situation. Data suggests that women and people of color have been disproportionately impacted by workforce cuts, usually chalked up to the “last-in, first-out” model of workforce downsizing. (Source: Fast Company) In many instances, diversity leaders and DEI programs have been viewed as expendable when the economy tightens.
It is critical, however, that tech executives and board members take a broader view of the long-term impact of the current layoff binge. Years of DEI work is being decimated in an environment where shareholders and stakeholders are demanding that companies take DEI seriously and make authentic progress on culture transformation. For example, more than 70% of job seekers list diversity as part of their job search criteria. Clearly, preserving DEI progress is key in ensuring the organization is set up for future success in areas like talent management and recruiting. When the economy rebounds, you don’t want to be viewed as the employer of last choice.
Keys to Navigating The Downturn
For culture-centric organizations, the way to navigate today's uncertainty is by focusing on growth and intentionally attracting displaced talent using a DEI lens. Attaching a growth mindset to your employer brand, even in a downturn, is a key for success.
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Focus on growth – To paraphrase A.G. Lafley, former Procter & Gamble CEO: The best time to gain ground on your competition is when they are in retreat, when they are cutting their services, and when they are cutting product innovation. This opportunity to gain on your competitors includes investments in DEI. Organizations with diverse teams that operate using inclusive practices drive stronger growth and are more resilient to recession.
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Ramp up your innovation aspirations – There are a host of potential employees that perhaps have not previously considered your organization. Since every company must become a tech company to win in the marketplace, you can revolutionize your business with new, talented employees who have the skills to execute plans you may have not considered.
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Communicate with clarity and compassion – If downsizing is necessary, enlist your leaders and employees in crafting and delivering transparent and empathetic communications to be a culture-first organization. AirBnB provided a model for how organizations should manage communications during a layoff. They focused on outlining their core values in executing layoffs at the beginning of the pandemic and listed commitment to diversity as a guiding principle. People understand that layoffs are part of a difficult economy, but they need to feel represented and understood in the process – whether they are being laid off or facing the challenge internally as friends and colleagues are let go.
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Leverage data in decision making – When you are evaluating the organization, review current employee sentiment in advance to understand how changes might be perceived. Tools like Analytics by The Diversity Movement can track sentiment over time and pinpoint potential areas of risk when organizational changes are made.
A focus on an employee-first mindset will pay dividends in a time where there are opportunities for organizations to utilize diversity principles to hire top talent. There is going to be a redistribution of tech talent and members of younger generations will expect to see DEI as a mainstay of the organizations that they join.
The business world continues to evolve as society transforms. The fact of the matter is that companies of all sizes – and their leaders – must recognize that they are going to be held accountable for how they operate in this new culture. The next billion-dollar tech company is out there now, being founded by people who are viewing change as an advantage and acting with a DEI mindset. Although we can’t predict it, the economic picture will continue to change. Don’t get left behind as the next generation of innovators and leaders will continue to come from unexpected places.
NC TECH is excited to partner with The Diversity Movement to offer a discount to the DEI Navigator, a cost-effective program that ensures long-term DEI success. The subscription platform offers a budget-friendly monthly cost with an enormous return-on-investment via direct help, feedback, and support. Exclusive content includes monthly webinars on topics such as “Measuring the Effectiveness of DEI” and “Recalibrating Recruitment for Retention.”
To access the member discount:
NC TECH and The Diversity Movement Partnership Opportunities