How Meta and Google are using recession fears to slow hiring and cut benefits

How Meta and Google are using recession fears to slow hiring and cut benefits

For nearly two decades, top tech companies like Google and Facebook (now Meta) were known for hiring fast, luxury amenitiesand corporate cultures of abundance.

But now, as rising inflation, the war in Ukraine and other macroeconomic factors have caused marketers to cut their advertising budgets, Big Tech’s work culture is changing. In recent months, Google and Meta drastically slowed employmentreduce benefits like employee travel and laundry roomand started reorganization of the department. Employees fear deeper staff cuts ahead. Some economists say that these moves are a sign that we are headed for the ua “white collar recession”, or the decline in the number of jobs and the security of professional workers, not only in technology, but also in other high-skilled industries.

There’s a lot more to these shifts, though. The external economic pressures are real – but it’s also a good excuse for wildcats like Google and Meta to clean house.

As Google’s parent companies Alphabet and Meta grew into corporate giants worth $1 trillion and $385 billion, respectively, they grew their staff to over 150,000 and 80,000. Now, economic circumstances give management an opportunity to reset expectations, pressure staff to do more with smaller budgets and show some workers the door.

“At companies like Facebook and Google, for the longest time costs were unlimited,” said one Meta executive who recently left the company and spoke on condition of anonymity for fear of professional repercussions. “There was a lot of fat in the organizations. It is very healthy to reduce that fat. … The party is over.”

It’s not just executives who think some big tech companies have become too bloated, but also some ordinary employees. In front 2020 Presidential Primary ElectionRecode reported that Google and Facebook employees donated the most to candidates like Elizabeth Warren and Bernie Sanders who wanted to break up Big Tech, arguing that downsizing these companies could return them to their less successful and more productive startup days.

Google and Facebook are still the two most profitable companies in the world, whose annual revenue is comparable to the total GDP of some countries. Unlike smaller technology companies, they can afford payroll and times of economic crisis. But, some industry insiders said, it could be in these firms’ best interest to cut more than necessary to boost productivity and demonstrate to shareholders that they are financially responsible. Meta’s stock prices have fallen about 60 percent in the past year, and Google parent Alphabet has fallen about 30 percent over the same time period.

Both Google and Facebook have frankly warned employees that for those who stay, the company will start demanding more from them. Google CEO Sundar Pichai said in an internal memo to July, reports CNBC, that Googlers “need to be more entrepreneurial” and work with “more urgency, sharper focus and more hunger than we’ve shown on sunny days.” Meta CEO Mark Zuckerberg put it more bluntly company all hands in Juneaccording to the New York Times, saying, “I think some of you might decide that this place isn’t for you and that self-selection is fine with me… Realistically, there are probably a bunch of people in the company who shouldn’t be here.”

For employees exposed to this executive pressure, it feels like overnight their job security is no longer so secure. Although the cuts at Facebook and Google have only recently begun, many employees are already feeling the change.

One current Google employee told Recode that just a few months ago, employees were coming to Google’s regular meetings, which the company calls TGIFs, with regular questions about whether they would get raises in line with inflation. Now, the employee says, the more common question among employees is whether there will be layoffs.

“All talk of compensation is disappearing because people are scared,” they said.

One Google employee Recode spoke with said most of their peers are embracing the cost management measures.

“People were really understanding,” they told Recode. “because at the end of the day we still have a lot better than other people.” However, they added that the company’s recent cutbacks and emphasis on productivity “have created a sense of nervousness and uncertainty about what we can expect from the company going forward.”

That nervousness and uncertainty extends to future employment prospects. Normally, Googlers unhappy with their jobs could easily seek an offer from Meta, Apple, or other nearby tech giants vying for talent; these days, most tech companies have slowed hiring.

“There’s definitely a sense of, ‘wait, there might not be a chair at another tech company if the music stops here,'” said one Google employee.

The fact that in just a few months, the dynamics of the technology industry have been turned upside down and that employees now have less influence over their employers, represents one of the most significant shifts that the sector has experienced since the dot-com bust of the early 2000s.

In a cynical way, that Googler reasoned, even if management’s talk of productivity doesn’t represent more real efficiency, is effectively working to get workers to stop asking for more benefits. And it shows shareholders that Google is serious about its stock.

Google and Meta have seen their shares drop significantly over the past two years, largely due to rising inflationwar in Ukraine, changes to Apple’s privacy settingsand increasing competition from TikTok.

“When there’s a recession or when things get soft, I think these very well-run companies take that as an opportunity to streamline things internally,” said Keval Desai, a former Google executive from 2003 to 2009 who now heads a venture capital firm. he founded, SHAKTI. “I believe that smart companies take advantage of opportunities and make unpopular decisions.”

But unpopular decisions can be difficult to implement. And improving productivity at large corporations like Facebook or Google is not as simple as simply making demanding employees work harder.

Some Googlers Recode spoke with said they think executives should focus on giving teams clearer direction to be more productive.

“There’s this fear that people aren’t working hard enough, but what I see is a lot of people working hard with unclear business priorities,” the Google employee said. “They may not be making the best business decisions, but they don’t know it.”

One example: Google doesn’t seem to be clear on how much it wants to prioritize its hardware line. The company appeared to be moving forward with development of its next Pixelbook laptop until it canceled the latest planned release and disbanded the team working on it earlier this month, The Verge reported.

And in March, Google fired 100 Google Cloud workersgiving them 60 days to find new jobs within the company — which some employees petitioned against, asking for more time. The layoffs came despite the fact that Google Cloud, while still an unprofitable division, is growing revenue significantly.

Laszlo Bock, co-founder of jobs software company Humu, who led Google’s human operations teams from 2006 to 2016, said he agrees with the idea that some big tech companies today are not as operationally disciplined as they could be. and that it could be time for change.

“I think there’s a way for companies to navigate this, and that’s to have a clearly articulated set of principles about how and why you want to change.” Bock said.

At Google, the company is increasingly focusing its research efforts on AI, and at Meta, the company is prioritizing VR/AR work to support its metaverse plans, as well as its TikTok competitor, Reels.

Google recently made big cuts to its internal research lab, Area 120, on projects that weren’t directly focused on AI. Meta also has supposedly reduced its new experimental product division to focus exclusively on Reels. More broadly, Meta plans reduce workplace consumption by 10 percentthe Wall Street Journal recently reported , in part through downsizing — and has begun quietly disbanding some teams, giving employees 30 days to find new jobs within the company.

Some Meta employees are trying to find new positions on projects related to the metaverse, which Zuckerberg has made a top priority, said one employee who recently left the company.

“Definitely in the past six to nine months, it’s been crazy [Reality Labs], and especially within the metaverse product group,” said a former Meta employee who recently left the company. “Everything else seems less certain in terms of the company’s future.”

Some employees and industry experts worry that cutting costs too much could backfire by stifling employee innovation: the very kind of creativity that has made these companies great.

“Traditionally, the way you drive productivity is to manage more tightly, set targets, cut costs. And the way you drive innovation is to give people more freedom and flexibility and room to experiment and fail,” Bock said. “So I’m not sure how you increase productivity and increase innovation at the same time.”

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