Why are so many tech companies laying large numbers of their workforce off? Copycat behavior, says professor Jeffrey Pfeffer.
Over recent months, tech companies have been laying workers off by the thousands. It is estimated that in 2022 alone, over 120,000 people have been dismissed from their job at some of the biggest players in tech—Meta, Amazon, Netflix, and soon Google—and smaller firms and starts ups as well. Announcements of cuts keep coming.
Here, Pfeffer, professor at the Stanford Graduate School of Business, talks about how the workforce reductions that are happening across the tech industry are a result mostly of “social contagion”: Behavior spreads through a network as companies almost mindlessly copy what others are doing. When a few firms fire staff, others will probably follow suit. Most problematic, it’s a behavior that kills people: For example, research has shown that layoffs can increase the odds of suicide by two times or more.
“We ought to place a higher priority on human life.”
Moreover, layoffs don’t work to improve company performance, Pfeffer adds. Academic studies have shown that time and time again, workplace reductions don’t do much for paring costs. Severance packages cost money, layoffs increase unemployment insurance rates, and cuts reduce workplace morale and productivity as remaining employees are left wondering, “Could I be fired too?”
For over four decades, Pfeffer, professor of organizational behavior, has studied hiring and firing practices in companies across the world. He’s met with business leaders at some of the country’s top companies and their employees to learn what makes—and doesn’t make—effective, evidence based management. His book Dying for a Paycheck: How Modern Management Harms Employee Health and Company Performance–And What We Can Do About It (Harper Business, 2018) looks at how management practices, including layoffs, are hurting, and in some cases, killing workers.
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