The headlines are in our faces with greater frequency, and it doesn’t feel like a small economic adjustment
anymore.
This is starting to get serious:
- Amazon – 10,000 job cuts
- Twitter – 50% of its workforce
- Meta -11,000 job cuts
- Peloton – 5,000 job cuts
- Salesforce.com – 2,500 job cuts
- FTX Crypto – Complete meltdown
And that is just the beginning. The list is a lot longer and a lot deeper and it is a clear indication that the headcount bubble is about to burst.
According to the latest data from the Bureau of Labor Statistics, total nonfarm payroll employment increased by 261,000 in October, and the unemployment rate rose to 3.7 percent. Notable job gains occurred in health care, professional and technical services, and manufacturing. The unemployment rate increased by 0.2 percentage points to 3.7 percent in October, and the number of unemployed persons rose by 306,000 to 6.1 million. The unemployment rate has been in a narrow range of 3.5 percent to 3.7 percent since March 2022. In addition, more Americans have dropped out of the labor force or stopped looking for jobs which means the “real” unemployment rate is higher.
When you consider the layoffs from the big companies mentioned above, it feels like a recessionary-like slowdown. The concerning part is why? Why are the Metas and the Amazons, the beacons of “everything good” in US business, laying off so my people?
It’s the economy.
In economic terms, there is a storm brewing that is being fueled by the usual suspects of inflation, geopolitical issues, supply chain issues, the lingering impact of COVID, and the new potential impacts of the next variant of COVID. Throw into the brew changing cultural issues relative to the new ways of working, and new employee expectations and everything is going to be different.
Tough decisions are being made in anticipation of a significantly weaker economy. These decisions are going to transcend every aspect of business from now until the end of 2023 in my opinion.
Based on what I am hearing from the leaders we work with at our client organizations, here are three immediate implications to the bubble bursting on headcount:
Retain the best employees
Now more than ever businesses are going to need their best employees to stay and be even more productive. One of the best ways of doing this is to provide more skills and capabilities training. We have seen a dramatic increase in the requests for more Business Acumen, Business Leadership, and Strategic Business Selling skills to enhance the productivity of their top talent.
Doing more with less
How does it work when a company like Twitter fires 50% of its employees? Does that mean there weren’t needed in the first place? Who does the work now that they are all gone? As businesses cut existing staff and slow down hiring, the remaining staff is going to have to do more with less. The only way to do that is through enhanced skills and capabilities. The remaining employees need to have much better Business Acumen, Business Leadership, and Strategic Business Selling skills.
Executives are going to push employees to “come back to the office”
This is going to be interesting to watch. Elon Musk has been on a rampage about making everyone go back to the office. Other executives who have been quiet during the “great resignation” for fear of upsetting their employees all of a sudden are saying that it’s time to come back to the office. I think this is a mistake. Haven’t they seen the incredible increases in productivity? Do they still not trust their employees to do the work? Individual and team capabilities such as coaching, creating an environment of psychological safety, and even business acumen have greatly increased in the remote workforce and it is irresponsible for these leaders to mess around with a model that clearly works.
