Written by | Shen Kaijie
Responsible for the | Peng Haiyan
Since the rise of the Internet wave, the various head organizations in the field have been active under various flashes. In the past, rapid development has always bridged the contradictions between organizations and individuals. But as formats mature, the relationship between organizations and employees begins to become delicate. During this time, the organization may still be able to jump in front of the stage. But employees are beginning to familiarize themselves with the moment when the dazzling magnesium lamp dims.
Internet giants are frantically laying off employees
Near the end of the year, under the pressure of strategic layout changes and cost reduction, many companies have taken layoffs as one of the means to improve management efficiency. What made this topic a hot topic in the current affairs discussion was iQiyi's sharp layoffs in early December 2021. According to Sina Technology, iQIYI's layoff ratio will reach about 30%, set to all business lines, of which the proportion of layoffs in similar markets, channel cooperation and other departments will even reach 50%.
In 2021, the Internet manufacturers with "scandals" with layoffs are not only iQiyi. The relevant information compiled from public reports includes: ByteDance lays off education and training, online games, and related business personnel in the local life sector. Since 2020, ByteDance has been intensively deployed in the field of education, including the former Qingbei Online School, GOGOKID, Guagualong Enlightenment, and Open English.
After the announcement of the "double reduction" policy, the education sector laid off large-scale employees, compressing nearly 3,000 people. The situation in the game sector is similar, with tighter policy supervision, increased approval risks, and layoffs concentrated in individual R&D game projects under Ohayoo and the Oasis Project. The local life department has not developed up to expectations after more than a year of competition with Meituan and word of mouth, and has become another major disaster area for ByteDance's layoffs.
Quick hand to lay off the commercialization team personnel. According to reports, the commercialization team of Kuaishou Beishang, Guangzhou, and Shenzhen completed the transformation before the end of the year, and some business lines were cancelled, while the remaining business lines will be moved to Hangzhou by the end of December 2021. Employees are forced to choose between moving or leaving. Baidu's layoffs are mainly focused on mobile ecological business groups (MEG) and water drop chips. It is said that the layoffs of the MEG division involve more than 300 people in the game business team, while the personnel who were laid off by Waterdrop Chip are mainly from the consultant team and the insurance sales team.
The personnel changes of the Internet giants have made the topic of layoffs very popular for a while, and the layoff panic seems to be a "ghost" hanging over the end of 2021. According to Baidu Index statistics, the search peak of the "layoff" keyword in December has reached nearly 5 times the average search index for the whole year of 2021.
The management logic behind the layoffs of large factories has changed: high iteration and labeling
In fact, it is not only the layoffs themselves that cause shock and panic, but also the layoffs that occurred in the Internet industry. In recent years, the Internet industry has been one of the main choices for the employment of outstanding talents. The appeal of the Internet industry to outstanding talents can be seen from the direction of fresh graduates from several top universities in China.
According to the 2020 graduate employment quality report, 22.22% of the 5257 graduates of Peking University entered the information transmission, software and information technology service industry, the first of all 8 types of employment unit industries; the number of graduates of Tsinghua University who entered the information transmission, software and information technology service industry in that year was 19.4%, which was also the highest value of the industry distribution of various employment units; and the proportion of graduates of Nanjing University who entered the industry in that year was 25.56%. The proportion of Zhejiang University has reached 29.68%.
Specific to the company, in 2020, Tencent, Alibaba and ByteDance recruited 80, 61 and 33 people in Tsinghua, which was the second, third and tenth place of the student employment units that accepted Tsinghua University that year; in the same year, Tencent, ByteDance and Alibaba recruited 72, 51 and 41 people in Fudan, ranking second, third and fourth; Alibaba, Tencent, Meituan-Dianping and ByteDance recruited 67, 57, 34 and 31 people in Nanjing University, ranking second, third, eighth and tenth respectively.
Not only for the recruitment of fresh graduates, the efforts of Internet manufacturers in the social recruitment end are not too much. According to the People's Daily news, ByteDance plans to recruit 40,000 people in China in 2020 alone, of which the education business is expected to recruit more than 10,000 people throughout the year; and according to NetEase Technology, in the first half of 2020, Kuaishou announced that it would recruit 10,000 jobs, and the total number of employees reached 20,000 at the end of that year.
In the public perception, the change from rapid expansion and aggressive hiring to downsizing and savings seems to have happened overnight. This large-scale recruitment and layoffs in a short cycle have caused panic, anxiety and resentment among the public and practitioners. It is true that in the past year, the market has undergone huge changes and frequent policies, and it is not difficult to imagine that there is a greater pressure to lay off employees in the Internet industry with high-quality talents and huge labor costs. However, behind this round of layoffs, in addition to external factors, there may also be a boost from changes in internal management logic.
In some Internet companies, affected by the underlying technical thinking, human resource management has also shown a trend of "code". This management method has two management characteristics, one is "high iteration" and the other is "labeling".
High iteration: The typical performance of this feature is that in some organizations, a large number of talents are recruited every year, and talents suitable for the corporate atmosphere and business needs are naturally screened out through a high elimination rate (including active and passive departures). High iteration refers to reducing the consumption of candidate evaluation at the front end of recruitment, absorbing talents with a wide caliber, and letting them run, try, observe, and eliminate while entering the company.
Employees in such companies are like codes that ensure business completion, and organize "code optimization" in rounds of personnel turnover to improve business efficiency. Proponents of high iteration as the underlying logic of human resource management tend to emphasize that in the VUCA era, business development is rapid, job requirements are diverse, and it is more results-oriented to complete personnel screening in a highly iterative way.
Labeling: There are also some organizations that want to characterize employee skills and then carry out meticulous classification management. In an ideal world, when the work content can also be clearly divided into work package management, the matching of employees and work packages will become flexible, and the reuse of personnel will also be completed.
However, in the VUCA era, measuring employees only by results may also have the effect of "carving a boat and seeking a sword", because the value of employees who have made failed attempts cannot be recognized under this system, and the selected talents are only the best choices in the current business situation. The management method of labeling and work package ignores the complex situation of the main characteristics of employees and the coordination of work content.
This way of thinking is no different from the logic behind the labor outsourcing boom that emerged in the 1850s, except that it tries to replace the original "cleaning", "shorthand", and "reception" work packages with terms suitable for modern business scenarios.
Whether it's high iteration or labeling, behind it is the simplification of the relationship between organizations and employees. The "contract" between organizations and employees is not just a simple expression of "the organization pays money and resources, and the employees get the job done." Starting from the psychological contract theory, there are normative, interpersonal and development dimensions to describe the contractual relationship between organizations and employees.
When the organization believes that layoffs are helpless, employees may summarize the layoffs as intentional breaches (violations of psychological contracts) from the underlying logic of the company's past management. The underlying logic of treating employees can be reflected in the psychological contract between the organization and the employee. When the organizational responsibility of the interpersonal dimension and the development dimension is ignored, or the normative dimension is constantly given higher emphasis, then layoffs may be a management decision that is easier to choose.
What is the relationship between layoffs and business performance?
There are internal and external reasons for the occurrence of layoffs. But after the layoffs, what impact will the layoffs have on the enterprise, and can the development of these star enterprises, which have attracted the attention of the industry, be boosted and re-enter the fast lane of stable development?
In 2008, Nokia's development was in full swing, and the net profit growth of the year reached 67%. But in the years that followed, Nokia's profits slid rapidly as a result of the rise of Chinese and other Asian players, while labor costs at its Bochum plant in Germany surged 20 percent.
Internal and external concerns led Juha Akras, then Nokia's vice president of human resources, to close its local factory and lay off 2,300 employees. This action caused a demonstration of 15,000 people in Bochum. The local Government of Germany stepped in to investigate and withdrew the €80 million policy subsidy it had given to Nokia's Bochum plant.
Unions have offered to boycott Nokia's products, media platforms are rife with chaotic factory areas and angry protesters holding photos of Nokia's protests, and even German politicians have begun to publicly criticize Nokia's factory closures. Ultimately, the layoffs cost Nokia more than €200 million, affecting its brand globally, plunging its market share in Germany and estimating a loss of €700 million in revenue and €100 million in profit.
Nokia's layoff case is not only a case of mishandling, but also an explanation for managers to miscalculate the cascading consequences of layoffs. Layoffs can bring positive results for organizations, such as reducing costs and focusing on their main business, but the indirect and long-term responses they bring seem to be often overlooked by managers.
Vanderbilt University professor Tae-Youn Park (Vanderbilt University) and University of Minnesota professor Jason D. Shaw (University of Minnesota) found through meta-analysis that the reduction-in-force turnover showed a clear negative correlation with corporate performance, that is, the higher the layoff ratio, the more seriously negative the performance of the enterprise. The effects of layoffs will be applied to organizations and individuals, including but not limited to:
01. Affect the work performance of employees
According to research by Magnus Sverke and Johnny Hellgren, professors at Stockholm University and the University of Canterbury, a 41 percent drop in employee satisfaction after layoffs in businesses, a 36 percent drop in organizational commitments, and a 20 percent drop in job performance. Michael Quinlan, a professor at the University of New South Wales, points out that the higher the rate of layoffs, the worse the safe environment and product quality within the organization.
Meanwhile, Vanderbilt University professor Tae-Youn Park (Vanderbilt University) and University of Minnesota professor Jason D. Shaw (University of Minnesota) also found that high layoffs lead to increased self-employment rates. Organizations tend to fall into a very unstable state due to layoffs.
02. Influence the ability of organizations to innovate
A study of Fortune 500 tech companies by Teresa Amabile at Harvard Business School found that the organization's 15 percent layoffs led to a 25 percent drop in the number of their innovative inventions.
03. Affect customer satisfaction
Researcher Paul Williams et al. found that for sales-type organizations, layoffs can significantly affect customer satisfaction, and when customers find that their consumer companies have laid off employees, they will have a greater probability of choosing alternative products.
04. Influence the careers of laid-off employees
Professor Wayne Cascio from the University of Colorado points out that corporate layoffs are more than just a job deprivation of a laid-off employee. According to the follow-up survey, only 41 percent of laid-off employees can find jobs that are similar to or higher than their original jobs after one year, 26 percent of employees can only find jobs that are lower than their original pay, and even 21 percent of employees cannot find jobs.
The impact of the layoffs is likely to run through the overall careers of these employees, and a study from Columbia University found that employees who were laid off in 1982 still had a 20 percent gap in salary levels with their peers (colleagues who were not laid off) until 20 years later. Even the impact of layoffs is not just on the pay level, with sun yat-sen researchers pointing out that laid-off employees are 83 percent more likely to have health problems and 6 times more violent than their peers.
05. Affect the working status of survivors
Survivors are those who remain on the job after layoffs. The average manager intuitively believes that survivors should be thankful to keep their jobs and work harder. But this is not the case. Originally used to describe a range of psychological reactions and behavioral traits of people after a disaster, "Survivor Syndrome" was introduced to the field of management studies by Brockner to describe the psychological impact of layoffs on people who witnessed the layoffs of their colleagues but kept their jobs.
Scholars generally believe that layoff survivors exhibit psychological reactions such as morale, low job and organizational satisfaction, cynicism, insecurity, loss of trust and loyalty to employers, and guilt. This psychological response and emotional experience can reduce the survivor's work positivity, which in turn affects organizational performance.
Layoffs are another beginning
For individuals who are unfortunate enough to be dismissed in this Internet layoff storm, the end of 2021 is an unprecedented winter, but from a longer historical span, this time the trend is not more severe than other periods. In fact, since the beginning of the epidemic, the wave of layoffs has been spreading around the world. In 2020 alone, the announced layoffs include: SAS and Norwegian Announced 90% Layoffs; General Electric (GE) Aerospace Industry Cuts 10 Percent, or About 2,500 People; and Retail Cosmetics Aggregator Sephora Cuts 3,000 Jobs in the U.S. Market.
In fact, since 1979, layoffs have become a "stress response" for enterprises under the realistic conditions of fierce competition, uncertain market environment, scientific and technological progress, and changeable policies. And since the era of scientific management in the early 20th century, managers' perception of employees has gradually changed from rich and multidimensional people to the aggregation of various indicators; some managers also enjoy the power given by the organization and are accustomed to making various evaluations of the managed in a condescending manner.
The index attachment and identity antagonism brought about by this management trend can easily make managers lose their physical feelings about layoffs, weaken the judgment of the consequences of layoffs, and stimulate the further popularization of layoff practices. But the prevalence of layoff practices will not directly give it more legitimacy, and discussions about layoff decisions will continue.
Are layoffs an inevitable severance of a hero due to environmental change and business development, or is it simply a cost-saving measure to avoid brutal discussions about organizational performance? The answer to this question is probably "the authorities are clear, and the bystanders are confused."
Today's research has pointed to a negative relationship between layoffs and organizational performance. Managers need to be careful about adopting a layoff strategy, noting the cascade of ripple effects it can have, both for the organization and for individual employees. When the organization does march to the moment of last resort, it is hoped that managers can comprehensively consider the various consequences of layoffs after unifying corporate values and the underlying logic of the organization's treatment of employees, and then promote the layoff plan openly and transparently. After all, sometimes layoffs are not the end, just another beginning.