2023 has led to an unprecedented level of layoffs seen in the tech industry. According to the layoff tracking platform, layoffs, an astounding 57,601 employees have been laid off so far this year alone from 185 different tech companies all over the world.
These layoffs are unfortunately a result of a tech downturn that began last year and is likely going to get worse as consumer dependence on technology shifts and interest rates increase. It also doesn't help that there are already fears that 2023 may bring about a global recession, which would only further decrease job security for those who depend on their salaries.
So how do companies decide who to let go when faced with budget cuts? In a nutshell, the decision depends on several main things: seniority, performance ratings or salaries, and skillset/experience fit for what the company needs now or down the line.
The order in which those three things are weighted varies from workplace to workplace - while some might value seniority most highly, others may prioritize individual performance before anything else. What remains constant however is that those who don't offer much value to the company will be more likely to get cut due to their high cost-value ratio.
The business-first approach to layoffs
For instance, if you're a low-ranking employee with comparatively few years under your belt at the company and you don't have a particularly impressive performance rating either - chances are you'll be one of the first people they lay off if they have to make cuts. Likewise, if you're too expensive for the role you play in comparison with other employees with similar experience and skillsets then you stand a higher chance of getting cut because of your cost-versus-value ratio not working out in favor of keeping you employed any longer.
The skills of the employee
Even if you're a highly valued employee with great reviews and many indispensable skills - if there simply isn't enough money allocated for your salary then you too might be shown the door when push comes to shove and tough decisions have to be made regarding who stays on board and whom must leave. Unfortunately, during times like these, everyone in the workplace needs to remember that no one is irreplaceable - only their position is secure at any given point in time given enough resources available for them to remain employed by that same company.
When it comes to layoffs, no workplace is immune - not even tech companies. As the cost of doing business continues to rise and the global economy faces the impending possibility of a recession, companies in various industries are being forced to re-examine their spending.
The seniority of the employee
But how exactly do companies decide who stays on board and who must go when faced with budget cuts? The answer, as you might have guessed, depends on multiple criteria but two main factors usually carry the most weight: a business-first approach and employee skillset/experience fit for what the company needs now or down the line.
The business-first approach means simply that jobs which don't generate much revenue are more likely to be cut first since they aren't essential to keeping operations running smoothly. This means things like product development teams would generally be let go while engineers, sales, and marketing departments remain intact due to their involvement in actively generating income for the company.
On top of this companies also consider an individual's skill set and level of experience when making layoffs - often opting to keep those with newer skillsets and let go of relatively older employees whose abilities may not be up-to-date with current industry standards. For example, if a new coder were brought into a company they could learn programming languages that many of their older colleagues may not have been able to pick up due to lack of time or resources.
At the end of it all however one thing remains constant - no matter how hard you work or how valuable you are for your organization, sometimes it just isn't enough in an economic climate like this one where businesses may have little choice but to make tough decisions about whom stays on board and whom must leave for them to stay afloat.
The ability of an employee to retain their job during layoffs depends on their seniority. Using the last-hired-first-fired policy, organizations are more likely to let go of the youngest and lowest-rung employees while those who have worked their way up through the tiers and levels of the organization will be more likely to keep their job even when times get tough.
The status of the employee in the company
Research has shown that full-time employees are more likely to remain employed after a layoff than contract or part-time workers. Companies tend to subject contractual employees to "at risk" management strategies such as layoffs due to significantly lower employee liabilities for these kinds of positions. This strategy, however, does not always increase the company's financial health and other criteria come into play for firms to make cost-cutting decisions.
This is why seniority often plays a crucial role in deciding who stays and who goes during layoff seasons. In most cases, companies prioritize keeping experienced staff over recent recruits due to their longer-term commitment and greater expertise in work-related tasks. Therefore, if you have been working with your employer for a long time, it could result in greater job security during difficult times.
The financial liability of the employee
When it comes to employee layoffs, finances are one of the main considerations for employers. An employee's financial liability or the amount they cost to retain may be a determining factor in who stays employed and who is laid off during difficult times.
For example, employees who earn a higher wage than their peers in the same job category may be more likely to suffer from layoffs due to their higher costs. This could even include those within management positions as depending on their individual salary, they may cost more than lower-level personnel with comparable education and experience.
In addition, an employer’s decision may also depend on the return on investment (ROI) of keeping a particular staff member. If an employee has a history of producing high output numbers compared to their colleagues then they have better chances at staying with the company even when cuts must be made. This is because when it comes down to it, businesses prioritize staying afloat over personal relationships between managers and staff members.
That said, these criteria should not be taken as guarantees against being laid off in tough economic periods — regardless of job level or seniority. While demonstrating greater commitment or additional responsibilities could help your standing with your employer, you should stay prepared by updating your LinkedIn Profile and resume just in case you need to begin job hunting again soon.
