The recent waves of sweeping layoffs in large tech companies are deeply unfortunate and painful, but not surprising. We’ve talked about the fallacy of the ‘wartime’ CEO, and the free flowing capital markets that made tech companies believe that growth was never-ending. Those companies could overinvest, manage poorly, and largely ignore what wasn’t working. When the markets falter, as we’ve seen recently, those behaviors had to be re-evaluated.
Tech was an incredible growth engine. The leadership and management of those tech companies felt able to make promises that were ultimately not sustainable. Companies could be both purpose driven and generous with perks and benefits and salaries, with the unspoken assumption that this was possible…as long as the business supported those expenses. Yet, as we’ve seen recently, as soon as a business couldn’t support those things, purpose and employee care became secondary.
The lofty statements of value, the generous salaries, the ‘perks’ that enabled employees to focus solely on their jobs: all of those things were revealed to be secondary, but had never been sold as such. They were billed as primary entitlements, core to who those companies were. The reality is that those companies are no longer the outsiders, the upstarts or the innovators – they are pillars of our economic system, large bureaucratic purveyors of services that we take for granted. These services have become utilities, and these companies are being run the way utilities are run. They are profit and loss businesses, with attention to economics first and foremost. Now there is massive dissonance inside these companies, where behaviors of leadership and management are at odds with the promises made. We’re seeing anger, disappointment and disillusionment, and a new generation of a workforce far less willing to unquestioningly engage with how things have worked.
At Talentism, we view this as another indicator of economic evolution, away from people willing to accept that leaders aren’t held accountable for the problems they created, while the labor force suffers. There is an increasing level of distrust for business institutions and the leaders who run those businesses. When capital markets started to falter, leaders didn’t behave like the people who recognized the priority of their labor force. They acted like most other business leaders have acted through time.
This leads to ongoing growth and confusion in the talent world. People with the means to do so are questioning what kind of company they should work for, if even those initially contrarian, do-no-evil companies have become just like everyone else. This also creates an opportunity in the startup world – it’s a choice to see business success as an outcome of unleashing potential, rather than developing talent as something to pay attention to only if the money is flowing.
The majority of these business leaders aren’t cartoon villains. They do want what’s best, and find themselves in untenable positions of not being able to fund their business, or not being able to attract employees with stock options. The fundamental problem is our system, which is based on beliefs that don’t make much sense but common wisdom dictates seem to have worked in the past. These beliefs – of profit as the most important outcome, of increasing share value for stakeholders as being the ultimate responsibility – are rarely challenged, so we’ve gone ahead and built businesses consistent with them. We’re all existing inside a system predicated on beliefs that don’t match human nature, so we’re destined for serious effects like sweeping layoffs.
Despite all of this, at Talentism we are incredibly optimistic about the future. Because we believe that the companies that adopt the primary business focus of potential, the ones that come out of this time and thrive, are going to win. They will produce better products at lower prices with less waste, they will have employees who develop better personal mastery and will be better contributors to a conflicted and complex world. Those companies will be attractive to customers and talent, and will learn faster and evolve in an unknowable world. When that happens, it will fundamentally drive change.
We believe there is a hard-earned lesson to draw out of this for the leaders who have just experienced the pain of moving from a cheap capital system to a constrained one, who have apologized for having to lead a RIF and who are now contending with this new reality. Some of them are becoming aware that they were a part of, and partially responsible for this system. For the many leaders who are feeling this deeply, know that this didn’t happen by accident. If you are wasting money to get ahead of problems that are inevitable and will eventually catch up with you, the system is working as designed. Use the moment that upends your worldview to take stock of what you’re doing, what you are a part of, and what you can change.