Hiring for tech jobs, a hotbed of opportunity for the past several years, is contracting at a speed nearly equivalent to that of its recent astronomical growth.
The crypto contagion of 2022 likely got many emerging Web3 companies to rethink their ongoing personnel strategies. However, a great deal of traditional and fintech companies, from those that are in early-stage growth to the big (and “stable”) players, are now also feeling the pinch and rethinking how they will manage their balance sheets this year and beyond.
The time has come for companies of all sizes to take a hard look at staffing, which accounts for some of the largest expenses. Difficult decisions about headcounts lie ahead, given an impending recession, inflationary pressures and over-enthusiasm for funding and growth.
Companies – including but not limited to Google, Meta, Amazon, Spotify, Microsoft, Goldman Sachs, etc. – recently cut staff due to the economic climate and uncertain outlook for the rest of 2023. Many of the larger companies are well-staffed and, in good times, even have roles that are likely overlapping.
Having spent close to seven years at Bank of America, I can assure you the conglomerates of financial services and fintech have roles that compliment and intersect one another. While that is a comfortable position to be in, redundancies need to be reviewed during downtimes. With all of this downsizing happening, even with the economic overhangs, a key question comes to mind: did these companies hire too opportunistically or on FOMO?
Thanks for the Memories
When we see the top-performing FAANG companies – Facebook (now Meta Platforms), Amazon, Apple, Netflix and Google (now Alphabet) – laying off employees, it is hard to understand how the people at these giants became redundant so quickly when the tide took a turn.
I’ve spoken with several people who have been personally affected by some of the most recent staff reductions. Some gave 10 or 20 years of their lives to these companies. Then, one day, they were locked out of their computers. They found the remnants of their career wrapped up in a crisp, corporate styled email.
This prompts me to also question whether or not those at the helm of their respective organizations or departments truly understand the individual impact they have when growing and contracting so quickly?
Times are changing
A long-discussed topic is executive and C-suite pay packages. For a long while, executive pay has kept increasing while cuts were made elsewhere. A bit of bright news comes in the form of top executives taking pay cuts to retain staff or show solidarity with organizational setbacks.
Many executives have also offered services to employees who find themselves in a precarious position, showcasing more empathy than has been given in past market cycles.
It’s a tireless movie
Running a company is a balancing act. It is seldom easy. In fact, it is probably one of the hardest things to do. The business doesn’t sleep and, oftentimes, neither do you.
Over the last few years, many companies have expanded to meet the market demands. Some of this happened suddenly – and with no end in sight.
Certain segments of the healthcare industry exploded amid the once-in-a-lifetime COVID-19 pandemic.
One such example is that of Medly Pharmacy, a once-coveted digital pharmaceutical darling we worked with early in their life cycle. In 2019, the executive leadership managed the company with vigor based on passion. They had a strategy and they had an execution plan. They took off like a rocket ship when their product was met with unprecedented demands fueled by the pandemic.
Then this all changed one day. It wasn’t just that the solution failed. Things went from 60 to zero. Their crash happened so unexpectedly – at least to those who were not in the know – that a wind down was all that could be done.
Sadly, they are currently in bankruptcy and the original executives are no longer running the show.
Medly Pharmacy was not the only company in their space that took the ultimate hit in the post-pandemic world. They are just one example of leaning very far into event-driven success. Many others are also fighting for survival.
While cyclicality is par for the course when it comes to business management and economic principles, it is worth taking a look at how each cycle plays out.
Perhaps, given the radical changes markets have experienced over the last two decades, it is also time for hiring managers to have a hard think about how they plan their business to better account for periods of growth and contraction.
In my opinion, examining the rate at which companies hire and fire – based on market events and follow-the-leader psychology – should be incorporated to account for better strategic decisions.
Hopefully this may promote more growth and less contraction in future markets.