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#JobSearch : Spotify Cuts Over 1,500 Jobs—Here’s How To Cope With Layoffs During The Holiday Season. So, What to Do Right Now? Doing Nothing? Wrong!

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Every December, around the holidays, Spotify unleashes its viral marketing campaign, “Spotify Wrapped,” in which users share their top results for their most-listened music and podcasts. This year, amid the trend, the streaming platform called it a wrap for more than 1,500 of its employees, as the company announced Monday its plan to cut 17% of its staff in its third round of layoffs. Wall Street applauded the news, sending stock prices soaring 7%.

Cutting jobs around the holiday season is widely perceived as cold, brutal and lacking basic compassion. Workers are left jobless and without a steady paycheck and are concerned about their lack of health insurance. Instead of looking forward to some time to relax and enjoy being with their family and friends, the downsized employees must now scramble to write a résumé and seek new employment in a challenging environment for white-collar professionals.

Executives may consider this a way to cut costs and save money, while others view it as a company showing its true colors. It’s clear that when organizations say, “We’re family,” it is not true. Grandma getting fired before Christmas doesn’t sound like something a loving family would do to someone they sincerely care about. Companies that let go of workers at this time of year will likely see backlash and lose respect within the marketplace, making it hard to recruit and retain people.

Say It Ain’t So

There are several reasons why employers see the year-end as an opportune time to cut jobs. By laying off staff in December, companies can realize salary savings earlier by removing employees from the current fiscal year’s books. For public companies, it can boost short-term financials and increase stock prices.

It’s sneaky, but some executives may feel that as people start to take their vacation and personal time off, there will be minimal disruptions as many people won’t be around. To cut costs, pushing out workers will save the company from paying expensive annual bonuses, incentives and sales commissions. It’s also convenient to conduct layoffs amidst the rollout of a yearly holiday campaign, so the buzz around it can drown out the news of downsizing.

On the same day that Spotify CEO Daniel Ek announced job cuts, TwilioTWLO +0.5%, a cloud-based communication platform, said it would also be laying off nearly 5% of its staff after pressure from investors to divest its data and applications unit.

Before the 2021 holiday season, online mortgage startup Better.com’s CEO, Vishal Garg, terminated around 900 employees via a one-way Zoom video. To add insult to injury, Garg referred to his staff as “dumb dolphins.” The company became the poster child for callous video firings after online backlash.

During the financial crisis, Bank of AmericaBAC +0.6% drew public indignation for announcing its three-year plan to cut up to 35,000 jobs in December 2009, after receiving billions in government bailout funds. This led to a deluge of highly negative consumer sentiment about corporate greed.

 

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Article continued …

The Aftermath

Getting a pink slip is detrimental to a worker’s mental health and financial situation. It’s even worse when it happens around the “most joyous” time of the year. For some, it may mean fewer presents under the Christmas tree or opting out of holiday travel to visit family because it is no longer financially viable. Disregarding the fired personnel’s feelings will leave a permanent reminder of the people cast out.

Once word gets out, why would anyone want to remain at the organization? It also presents a hurdle for future hiring, as the news dissuades people from interviewing with the company. Consumers may even boycott its products and services.

There will be public backlash and reputational damage, as the action looks needlessly cold and lacks empathy. Upon learning about the layoffs, talent acquisition and recruiters will descend upon the company looking to poach all the A-players. Current employees will commence updating their résumé and contacting their network to find a new job. The remainers will suffer from survivor’s guilt, resulting in a plummet in employee engagement and productivity.

What You Should Do Right Now

Getting laid off right before Hanukkah, Christmas, Kwanzaa or New Year’s is incredibly difficult. Here are some actionable steps you can take if you are in this position this holiday season:

  • Take some time to process what happened and acknowledge your anger and resentment. It’s okay to vent to loved ones to get it out in the open. After your grieving period, you must take action to move forward.
  • Take care of practical matters, such as asking for emails and phone numbers of people you want to stay in touch with. Ask HR for a letter of recommendation. Find out your rights, any monies owed to you and whether outplacement services are available. File for unemployment benefits and look into your firm’s COBRA health insurance process.
  • Start rebuilding your career and seeking out new opportunities. Update your résumé and LinkedIn profile and perform an audit of your professional online presence. Reach out to people in your network. Ask them about any job leads at your desired companies. Search job boards and apply to positions. While others coast during the holidays, ensure you’re hustling to get noticed.
  • Avoid becoming antisocial because you feel shame about your job loss. Push yourself to stay connected with people during the holidays, as it’s a good time to call in favors and ask for help in seeking new employment.

#JobSearch : What You Need To Know About Layoffs, Hiring Freezes, Inflation And A Possible Recession. MUst REad!

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The current job market feels like whiplash. Coming out of the pandemic, there was a huge pent-up demand for workers to help companies get back up and running. The job market was so hot that discussions centered around the Great Resignation trend with about 4 million Americans quitting their jobs on a monthly basis. Job seekers boasted about having numerous offers to choose from and companies complained they couldn’t find enough workers with the required skills and experience.

Seemingly overnight, everything has changed. Americans have woken up to the new reality of inflation. In an effort to keep the economy afloat, the Federal Reserve Bank and the United States government injected trillions of dollars into the marketplace, sending stimulus checks to families, enhanced unemployment benefits and other fiscal measures.

The fear and consequences of inflation may lead to a recession with massive job cuts, hiring freezes and job offers rescinded.

Why Should I Care About Inflation?

At first, U.S. Treasury Secretary Janet Yellen and others in the Biden Administration said that inflation was “transitory”—it wasn’t. As it turned out, inflation hit 40-year record highs. The costs of everything, ranging from gas to home prices, soared.

When the cheap money previously flowed into the economy, venture capitalists invested billions of dollars into tech startups. The prices of stocks and cryptocurrencies rose to dizzying heights, as both professional and novice investors bought and traded securities with the confidence that everything goes up.

Unfortunately, nothing goes up forever. Runaway inflation has pricked the everything-goes-up bubble. One of the results was that the spigots of cheap money were turned off, and the party was over. Instead of aggressively hiring, tech companies started cutting back and laying off personnel.

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Article continued …

Why Fed Chair Jerome Powell Is Important

To understand what is happening, we need to pay heed to Federal Reserve Chairman Jerome Powell. In talks with Congress, Powell said that he needs to considerably raise interest rates to beat down inflation.

When interest rates rise, the costs of loans, mortgages and credit cards go up. The extra costs eat into the consumers’ pocketbooks. With less discretionary income, families will hold off on expenditures. They’ll spend less, make fewer purchases and avoid dining out as much or traveling as they used to. As the consumers constrict their spending, the economy will slow or even contract. This causes a recession.

While Powell didn’t say he is purposely causing a recession to battle inflation, his policies, based on history, could potentially lead to it. The rate hikes make it more difficult and expensive for companies to access capital, boosting the likelihood that the U.S. goes into a recession next year.

Are We Headed Into A ‘Hurricane?’

Jamie Dimon, the CEO of JPMorgan and one of the most respected Wall Street leaders, gave a stern warning to investors. He advised people to prepare for an upcoming economic “hurricane.”

At an investor conference in June, Dimon said, “That hurricane is right out there down the road coming our way.” The chief executive added, “We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”

With the cost of capital starting to rise, tech and other sectors will pull back on growth, enact layoffs, impose hiring freezes and rescind job offers. During the year of over-exuberance, revenue and profits were not as important as achieving growth and scale. When a downturn happens and money is costly and not free-flowing, unprofitable companies will be headed toward trouble. If startups still have sufficient funds left from rounds of capital raises, they can buy time. Those that burned through their funds may be headed for trouble.

Layoffs, Hiring Freezes And Jobs Rescinded

Since May, tech startups have laid off nearly 27,000 workers, according to layoffs.fyi, which tracks publicly announced job cuts. Tesla CEO Elon Musk, who said that he had a “super bad” feeling about the economy, said the electric car manufacturer would cut 10% of its workforce. Musk, who also is in the midst of buying Twitter, said that there may be possible layoffs at the social media site.

Microsoft said in May that it would slow hiring in its software group. Meta also announced that month a hiring freeze for some teams.

Dara Khosrowshahi, CEO of Uber, informed employees through email that the ridesharing app company would start to treat hiring like “a privilege.” The chief executive said Uber’s decision to pump the breaks on hiring is due to the “seismic shift” in the market.

In June, Coinbase, the large cryptocurrency platform, announced on its corporate blog, “In response to the current market conditions and ongoing business prioritization efforts, we will extend our hiring pause for both new and backfill roles for the foreseeable future and rescind a number of accepted offers.” The cryptocurrency exchange platform then let go of around 18% of its workforce—or about 1,100 people.

Gemini, the crypto exchange founded by the Winklevoss twins, said a “crypto winter” is coming. The meteoric rise of cryptocurrencies and fervent hyping and buying of digital assets are falling back to earth. Gemini felt the change in the temperature of the markets and economy. In response to “turbulent market conditions that are likely to persist for some time,” Gemini is downsizing 10% of its astronauts—a term it coined for its employees. Two other digital asset platforms, Crypto.com and BlockFi, said they are laying off people as well.

Fintech unicorn Bolt announced it would lay off workers, as the tech bubble is slowly bursting. Klarna, a Sweden-based fintech company in the buy-now-pay-later space, announced plans to lay off about 10% of its global workforce, in a pre-recorded video message.

Robinhood, Netflix, Peloton, Cameo, Noom, On Deck, Workrise and others have also announced layoffs or temporary freezes.

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Forbes.com | June 23, 2022