When facing problems, maintaining objective and independent judgment may be the antidote to anxiety. Therefore, when facing problems such as layoffs, we might as well first look at the logic behind layoffs, and then find individual ways to deal with them.
On Saturday, I wandered around the neighborhood outside Beijing's five bad neighborhoods and found people everywhere, some in a hurry, some chatting, and the topic was always about layoffs and AI.
Some people say: a certain large factory has recently laid off employees, and the proportion may exceed 20%.
Some people say: our company has been laying off employees recently, and R&D has basically been completely laid off;
Except they're talking.
The major WeChat public accounts are also talking about layoffs: from different perspectives such as human resources, organizational efficiency, per capita output, and enterprise product stage, plus the comparison between competing companies, it is more convincing.
Some people say: AI has been developing really rapidly recently, and I heard that many jobs have been replaced;
Some people say: general-purpose AI may really threaten humanity.
Except they're talking.
The major knowledge payment platforms are also talking about AI: from the latest information (from ChatGPT to MidJourney to Sora and Suno), the parameters and hardware of large models (such as NVIDIA's latest graphics card, the parameters of GPT 5 will be unpredictable), subverting the industry (such as subverting the film and television industry first, and then subverting the marketing industry, etc.), application scenarios and other different perspectives.
In the past few years, I have experienced a lot, thought a lot, seen a lot, heard more, except for making myself more anxious, it seems that there is nothing to gain, just like it is now zero o'clock, and I am not sleepy on the train.
The only time I feel fulfilled and at ease is when I figure out why and focus on doing something meaningful.
Therefore, when it comes to the review, I want to thoroughly understand the ins and outs of it, and let myself maintain objective and independent judgment, which is the antidote to anxiety, so I share it here.
Let's start with layoffs.
First, the "double reduction" is coming: layoffs
In April 2021, I left A, a leading online education company where I had worked for nearly three years. At that time, the price of my company's stock soared from a $73 exercise price to $90, reflecting the bright future and prosperity of online education.
Soon after, I joined B, another top online education company, and my salary increased by almost 30%, and the benefits such as options were quite generous. However, just halfway through the probationary period, the "double reduction" policy was introduced in July, and I suffered the first layoff in my life.
The notice of redundancy was received the night before, and the next morning I was still in the review of the needs as normal, and in the afternoon I signed the separation agreement, and the whole process was quick and crisp.
After working for nearly ten years, I suddenly got a long vacation, and the joy outweighed the loss. But the next day, when I returned to the gate of the community with my bag, I was told that the community had been closed and I had to quarantine at home for nearly half a month.
2. "Business is yellow": layoffs
Two months later, I joined another online education leader, C, in charge of B-end literacy products, which is very familiar to me. Thanks to the trust of my leaders, I was promoted from working independently to leading a small team within six months, and I felt that it was time for me to make a difference.
However, while I was still in a meeting with the top management for a new hardware product project, the next day the product director tearfully announced in an all-hands video conference that the team was disbanded and that we would be merged into another team, and she promised to do her best to find new opportunities for everyone.
The original team of nearly 100 people (including more than a dozen product managers) was almost disbanded, and I was fortunate to be taken care of by the leader and merged into the new team as an ordinary employee. Many of my colleagues who fought alongside me had to find their own way out.
The new leader is good at reassuring people and making it feel like they have a big career to do. However, the assignment was extremely trivial, such as trying to convince the middle office partner of the value and priority of their needs in order to add a new field to the platform. It's like convincing others that you are eligible for help when you need it most, and that you should be prioritized.
A month later, the product director, who had been close to me the day before, started recommending me to other teams within the company on the grounds that the team didn't have a suitable position at the moment.
I was aware of the severity of the market environment, but I was also grateful for this "love" and seriously participated in the interviews of two internal teams (hardware and school business). Even though my skills were up to the mark (or a white lie), I didn't end up getting these positions because of my lack of experience with the product.
At this moment, July 2022 is coming, and the layoffs in July for two consecutive years seem to be the irony of fate, the cold light under the scorching sun.
This is the end of a nearly decade of career in the education industry, and it also unveils the prelude to a new round of layoffs.
3. "The environment has changed": layoffs
In September 2022, I switched careers to the SaaS industry, which is not an emerging industry, but it is a dynamic field. The compound growth rate of the industry has remained above 20% for several consecutive years, the market size has reached the level of 100 billion, and my company has just completed the financing of more than 100 million.
However, I did not expect the layoffs to come so quickly and again at this point in July.
Half a year has passed since I entered a new industry, a new enterprise, a new business and a new team, and I have experienced many intense product deliveries. What started to be a small team of 10 or 20 people was almost halved overnight, but fortunately, thanks to my hard work since I joined the company, I was able to keep my position.
Four months later, a second wave of layoffs came, and within a week the fighting was resolved, leaving a large number of empty workstations. Four months later, the third wave of layoffs began, and only a quarter of the original small production and research team of nearly 20 people remained, and only one-fifth of the original product team of more than 10 people remained.
In the product team I belonged to, the number of product managers also decreased from 5 to 3, and then from 3 to 2, and finally only 1 person remained.
Some of the partners who "graduated" went to sell insurance, some became insurance brokers, some returned to their hometowns, some were repeatedly "released pigeons" by employers, and some found better positions. Could it be that the ultimate destination of Internet people is really the "three guarantees of life (security, cleaning and insurance)" and "triathlon (Didi, takeaway and express delivery)"?
All this happened in just three years (from the "double reduction" in July 2021 to March 2024), as if it has experienced a long industrial cycle. The original "buyer's market" in the Internet industry has completely transformed into a "seller's market", and the "golden three, silver and four" that used to be recruited has become a thing of the past, and layoffs have become the norm.
At the same time, with the rapid development of general artificial intelligence from GPT3 to GPT3.5 in 2022, GPT4 in March 2023, and Sora in February 2024, AI has also begun to penetrate into the white-collar workplace (AI automation has already completed generational replacement in the blue-collar market), which is integrated with the phenomenon of layoffs.
This begs the question: Is it AI that is making you lose your job, or is it something else?
Fourth, the nature of enterprise layoffs
The following is a table summary of the layoffs in well-known Internet and technology companies in 2022 and 2023 in China and China:
Please note that this data may not be entirely accurate, as some companies may not disclose specific layoff figures, or the number of layoffs may change over time. In addition, there may be other undocumented redundancies due to limited sources of information. These figures mainly reflect the trend of layoffs in the Internet, technology and online education industries in the global and Chinese markets.
The following are the layoffs of domestic enterprises from July 2021 to April 2022:
From these figures, one conclusion can be drawn: enterprises in the Internet/technology/online education/SaaS and other industries have been laying off employees since 2021, no longer pursuing high-speed growth, but pursuing stable growth and achieving profitability.
If the above data is too macro and abstract to make you feel the "freezing cold", we can further focus on the financial reports of two leading SaaS companies in China.
According to the financial report data of Company A, from 2018 to 2021, the company experienced a period of rapid growth. However, after entering 2022, two data indicators are particularly noteworthy: operating loss and average annual personnel efficiency.
- In terms of operating loss, in 2022, compared with 2021, it will decrease from 3.252 billion to 558 million, a decrease of 82.82%;
- In terms of average annual efficiency, it increased from 349,000 to 767,000, an increase of 119.7%.
Average annual efficiency = annual turnover / number of employees, generally used to simplify the measurement of the operational efficiency of the enterprise, the larger the value, the greater the business value generated by each employee, and the SaaS industry standard is 400,000.
As can be seen from the data of Company A, although the number of employees decreased significantly (from 4,494 to 1,952, a decrease of 56.5%), the revenue decreased only slightly (-4.7%). This shows that the company has significantly increased output per capita by reducing the number of employees, thereby significantly reducing operating losses. This change may be due to the company's improved operational efficiency or the optimization of the cost structure through layoffs.
Through an in-depth analysis of the personnel changes in different positions and years of enterprise A, we can draw the following conclusions:
1. The decline in the proportion of production and research personnel: from 44% in 2016 to 27% in 2022. This change shows that as enterprises enter the mature stage, the degree of dependence on product research and development is reduced, and the value of production and research personnel in the enterprise is relatively reduced.
2. The proportion of sales and marketing personnel has increased: from 24% in 2016 to 54% in 2022. This significant growth reflects the increased value of the contribution to the business as the business matures and sales and marketing become more important drivers.
These data reveal the changes in the demand for talents in enterprise A at different stages of development. In the early stages, companies may focus more on product research and development to build a technological advantage and product line. As the product matures and the market stabilizes, companies turn to invest more in sales and marketing to promote revenue growth and market expansion.
By analyzing the situation of B, another leading enterprise in the SaaS industry, we can see the following trends:
1. The relationship between personnel growth and revenue growth: From 3,941 people in 2019 to 8,562 people in 2021, the substantial increase in personnel scale during this period has not brought about an increase in average annual human efficiency, indicating that the growth of personnel and revenue growth are basically synchronized, and this growth model is often called "heap head growth". This shows that the business is not operating more efficiently, but is driving business growth by increasing the number of people.
2. Personnel optimization and cost control: After entering 2022, the number of personnel began to grow against the trend, decreasing from 8,562 at the peak to 5,704, a decrease of 33.4%. This drastic reduction in headcount is often referred to as "workforce optimization" or "graduation" and is actually a cost control measure by a company in pursuit of stable profitability.
Layoffs are essentially a strategy for companies to shift from the pursuit of high growth to the pursuit of stable profits.
That is, without affecting revenue as much as possible, enterprises can increase per capita output by cutting costs, especially labor costs, to double human efficiency, so as to achieve stable profits. This strategy can help companies maintain strong financial health and competitiveness in the face of economic volatility or market uncertainty.
Fifth, the logic of enterprise layoffs
When a company lays off employees, it will give priority to the line of business, then the job personnel ratio, the job competency, and finally the cost performance of a single person.
The first is the line of business.
In a multi-line of business architecture, it will consider whether to abandon certain business lines (such as Apple giving up car manufacturing, Byte giving up education and games, New Oriental giving up K12 education, etc.), while in a single business line, unless the enterprise closes its doors, it will not consider giving up business lines.
The second is the post-to-personnel ratio.
In the layoff strategy, the job-to-staff ratio is the second consideration. The proportion of jobs required changes at different stages of the enterprise and at different stages of the product.
For example, the proportion of production and research personnel in SaaS company A has decreased from 45.8% in the early days to 27%, while the proportion of sales and marketing personnel has increased from 35.5% to 54%. This shows that as the product enters the maturity stage, the marginal value of production and research decreases, while the importance of sales and marketing increases. In contrast, the demand for operational services and functional personnel has been relatively stable.
The third is job competency.
Job competency is the third consideration in a layoff strategy. When focusing on a role, the key is whether the person left behind is capable of fulfilling the functional requirements of the position.
This involves two aspects: work engagement and job fit.
Work engagement includes negative engagement and positive engagement. Negative engagement relates to the length of effective work (e.g., is there always being late, taking time off; is there always going downstairs to smoke and hang out during working hours?) and the degree of basic functional completion (e.g., is there always delaying the delivery of outputs?, is there a fear of trouble and tries to reject the customer's request??), and is the words and actions hurting the engagement of other team members?), while positive engagement focuses on proactive outputs (e.g., whether there are active outcomes that are not within the scope of the job responsibilities?). For example, take the initiative to share and explore the application of AI, or actively seek solutions to solve customer complaints, etc.).
Job matching involves a variety of capabilities, such as business capabilities, user/customer service capabilities, problem solving capabilities, product architecture design capabilities, and project management capabilities. Enterprises will evaluate whether employees can ensure that they are matched with jobs, and even whether they have the adaptability and learning ability of one person to work in multiple positions.
The fourth is the cost performance of a single person.
In a layoff strategy, the cost-effectiveness of a single person is the fourth consideration. This is mainly based on two core elements: growth ceiling and cost performance. When faced with the choice of two employees in the same position, if there is not much difference in job engagement and job matching, the company will prioritize cost performance and growth ceiling.
Specifically, the priorities for price/performance and growth ceilings are as follows:
- Those with lower wages and higher growth ceilings
- Those with similar salary differences (within 1,000-3,000) and high growth ceilings
- Those with large wage differentials and high growth ceilings
- Those with small wage differentials and low growth ceilings
This means that companies are more likely to retain lower-paid employees with higher growth potential, even if they have similar levels of job engagement and job fit.
6. What do you do in the face of layoffs when supply exceeds demand?
In the face of different layoff logics, you need to adopt corresponding strategies.
First, you have limited options for line-of-business layoffs, but you should pay special attention to the following two types of roles:
- New business jobs in large companies: These jobs are usually not improved within 1-2 years and can easily be abandoned, leading to layoffs.
- Small business positions that have not completed PMF (Product Market Verification). Again, these positions are prone to being abandoned.
Therefore, when you have a choice, you should prioritize the following job sequences:
- The core business post of a large enterprise
- The core business post of small and medium-sized enterprises
- Small and medium-sized enterprises with a single business
- Small business posts in large enterprises
- Small and medium-sized enterprises with multiple business lines
The basic logic is that the more the core business of the enterprise, the safer the corresponding position.
Second, in order to remain competitive in the case of downsizing, you need to push the boundaries of your capabilities so that you have more options in the face of job changes.
Specifically, you can expand your capabilities in the following four directions:
- Sales direction: Seize all sales-related opportunities to learn how to communicate with customers, understand product pricing and quotation strategies, and understand the differences of competitors in the minds of customers, so as to improve the ability to sell products.
- Operation direction: From the customer's point of view, output content (such as user research, policy analysis, practical cases, etc.) to empower marketing and sales, and assist customers in success and implementation, so that the product is more scenario-based in practical application.
- Business direction: The product is the solution, and the business is the demand. You need to grow into a business expert, not just focus on the product itself. For example, if you are a product manager of an HR SaaS product, you need to understand relevant business knowledge such as talent management, leave system, salary system, individual income tax policy, social security/provident fund system, etc.
- Service direction: improve service capabilities, that is, how to serve more users (including internal collaborators) in a limited time to improve user retention rate.
By expanding your capabilities in these areas, you can increase your adaptability and flexibility in the workplace, thereby reducing the risk of being made redundant.
Third, when faced with competent-style PK-style layoffs in the same position, you need to arm yourself on three levels at the same time to improve the likelihood of staying.
- Baseline: Corresponding to Performance B, you are required to ensure basic work engagement, such as attendance on time, not asking for leave at will, and responding to customer problems in a timely manner.
- Mid-line: Corresponding to performance B+, you are required to build a reputation among customers and internal employees, solve problems through professional competence and responsibility, and achieve practical results.
- Go live: Corresponding to performance A/A+ (or even S), requires you to actively embrace new technologies and capabilities, such as AI and plug-in, and achieve breakthrough results in your work. When any boss lays off employees, they don't prioritize laying off high-performing employees. So, by working on the baseline, midline, and upper line, you can increase your competitiveness in the event of layoffs.
Fourth, in the cost-effective layoff of a single employee, the key is the cost performance and growth ceiling.
While the level of compensation is determined at the time of recruitment, and a salary cut may not be ideal, the upper limit of growth can be controlled through individual effort. For example, improve learning ability, including the acceptance and practice speed of new systems, new technologies, and new businesses, as well as cultivating daily reading habits, actively researching competing products, and learning policies and systems.
In addition, being curious, not only focusing on matters within the scope of responsibility, but also actively paying attention to business operations and customer dynamics, and adjusting work behaviors accordingly, such as actively cooperating with colleagues, are all important aspects of raising the ceiling of personal growth.
By working on these efforts, you can improve your value for money in the event of layoffs, thereby increasing the likelihood of staying.
Mindset is crucial when dealing with the challenges of layoffs and career advancement. Here are some key mindset adjustments:
- Avoid complacency: Don't be complacent about past accomplishments, stay humble and aggressive. For example, during the contraction period of the enterprise, the old employees at the founding level who are less motivated may be laid off due to the slower service response.
- Avoid uniqueness cognitive biases: Don't think of yourself as irreplaceable, stay sensitive and adaptable to the market. For example, the only employee in the company who is familiar with a particular system or business gives up on progress because they think it is irreplaceable, and is eventually fired when the company lays off employees.
- Avoid negativity: Don't give up, keep a positive attitude towards work and confidence in the future. For example, after two rounds of layoffs, the "survivors" who felt stable stopped being aggressive due to a lack of confidence in the development of the company, and were eventually eliminated in the new round of layoffs.
Successful employees put themselves in their boss's shoes and work to improve their abilities so that they can maintain options when laying off employees.
When a business lays off employees, bosses often seek out employees who can solve key problems, so keeping a learning attitude, embracing new technologies, and solving existing problems will help you stay competitive in the event of layoffs.
Someone said: "I wish I would be laid off, and if I am laid off, I will start a business, and my buddy has resources and connections, so he can go to him"
Some people also said: "I'm just waiting for it to lay me off, it's boring to consume every day, change the city, change the rhythm and start a new life"
If you have plans to start a business, change jobs or change your life, it is advisable to start preparing before you are affected by the layoffs. Use your spare time to research the market, validate ideas, prepare for the transfer, and more, so that even if you face layoffs, you'll have a better idea of where to go and give yourself options.
We can't repeat yesterday's story every day, but we expect to get different results, and we encourage you~
To sum it up
The macro environment is changing, and layoffs are unstoppable, what should you do?
To ask you is to ask myself.
The essence of layoffs is that enterprises have shifted from the pursuit of large-scale growth to the pursuit of stable profitability (human efficiency is the core).
The logic of corporate layoffs is:
- If the business is not working now, then the business line will be eliminated. Typical examples are Apple's abandonment of cars, Byte's abandonment of games and education, etc.;
- If the value of the job falls, then it shrinks. Typical such as product, R&D, design, etc.;
- If the value of the post rises, then expand. Typical such as marketing, sales, etc.;
- If the work is not engaged enough, then it will be cut. Typical such as not working enough hours, arriving late and leaving early at will, or going out for a stroll without reason, etc.;
- If the professional ability is not strong, then it will be abolished. Typical examples include the inability to formulate standards, the inability to refine the methodology, and the inability to effectively obtain results;
- If it's not cost-effective, then cut it. Typical such as high salary and low output, high level no output, etc.;
- If the growth ceiling is limited, then it will be removed. Typical examples are sticking to one's own opinions and not learning new technologies and new businesses.
To address the challenges of layoffs and AI, you can do the following:
- Choose the right line of business: If possible, proactively abandon small or new businesses from large companies to avoid becoming a preferred target in the event of layoffs.
- Stay engaged: Make sure you're engaged and don't become the target of layoffs due to work attitude issues.
- Expand your competence: Expand your boundaries to become a versatile employee who can take on multiple roles and increase options in the event of layoffs.
- Embrace change: Proactively learn new businesses, changes, and new technologies and use this new knowledge to empower yourself and stay competitive.
- Avoid complacency: Don't be complacent about past accomplishments, stay humble and aggressive.
- Avoid uniqueness cognitive biases: Recognize that no employee is irreplaceable, and maintain sensitivity and adaptability to the market.
- Avoid negativity: Don't give up, keep a positive attitude towards work and confidence in the future.
- From the perspective of the boss: understand the needs and challenges of the company, and look at the problem from the perspective of the boss to better adapt to the company's development direction.
- Plan ahead: Think about your career development and prepare ahead of time so that you can make informed choices when laying off employees. With these strategies, you can improve your adaptability and competitiveness in the workplace, so that you can better cope with the challenges of layoffs and AI.
postscript
After discussing how to deal with layoffs, we may have more peace of mind. In the face of the challenges posed by AI, we will continue to discuss them in future articles, hoping to gain more stability and preparation. Best wishes!
Columnist
Xing Xiaozuo, WeChat public account: Xing Xiaozuo Home, everyone is a product manager columnist. An online education product that focuses on Internet education and likes to study user psychology.
This article was originally published on Everyone is a Product Manager. Reproduction without permission is prohibited.
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