The era of happy tech workers is over

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Silicon Valley as we know it — with its radically transparent corporate cultures, empowered employees, flat hierarchies, and flimsy perks like sleeping pods and free food — is fast disappearing. And it is unlikely to return.

For nearly two decades, technology companies ushered in an approach aimed at making employees happy with benefits designed to seamlessly integrate work and life. They made wellness programs and unlimited vacations, initiatives that prioritized the whole person, standard terms of employment. This, along with high salaries and equity packages, was a way to not only win, but dominate the battle for talent. The rapid growth and success of Silicon Valley companies, driven in part by their unique way of interacting with people, has reshaped the work culture for a generation.

Times, as they say, are changing. The industry faces an uneven macroeconomic environment and a volatile stock market that puts pressure on public technology companies and creates a less than ideal IPO environment for private companies. Tech executives are now optimizing more for profitability than for growth at all costs, sometimes at the expense of long-held beliefs of the organization.

The shift is most apparent in the recent spate of tech layoffs. There has been much public debate over the disruptive layoff of half of Twitter’s 7,500 employees, a move that was made under its new owner, Elon Musk. Haphazard and rolling, the firings were painful to watch. The employees who have stayed have had to endure greater workloads in significantly smaller teams. But while outsiders may have viewed these layoffs as impulsive, they seemed to have set the environment for other tech companies to follow suit. In 2022, the tech industry laid off more than 150,000 people. In the first weeks of 2023, Microsoft announced the cut of 10,000 jobs. Amazon reported 8,000 more than it originally asked for.

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According to multiple media outlets, Meta and Amazon use stack ranking for their employees, a controversial approach to evaluating talent. Popularized by GE in the 1980s (although the company later abandoned it), the process has managers rate their employees on a forced curve. In general, only 20 percent are considered top talent and 10 to 15 percent should be classified as low performers. While there are benefits even in the best of times, the practice can create a competitive work environment that emphasizes employee betterment. With redundancies looming, people of the lowest rank are usually the first to leave.

The layoffs are part of a new era of bosses, the idea that management has given up too much control and needs to push it back from workers. After two decades of fighting for talent, CEOs are using this period to adjust to management’s years of indulgence, giving them a generation of entitled employees.

To stimulate innovation and involvement, LinkedIn started the incubator program in 2012. A perk that encouraged employees to come up with approved ideas that they could work on full-time for up to three months was generous even by Silicon Valley standards. Then there were the many lavish events that served to visualize the corporate culture. It was common for employees to attend elaborate themed parties with the following new Instagrammable experience. If you happened to work at Uber in 2015 and attended the corporate event in Las Vegas, you were treated to a private performance by Beyoncé.

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Executives across industries are leaning on their new bosses and ending pandemic-era work arrangements and incentives. Reed Hastings, Netflix’s co-founder and co-CEO, said at the start of the pandemic that he “didn’t see a positive” in working from home, and the company apparently only allows some remote work. TikTok reportedly told employees it was stopping gym membership and Wi-Fi allowances as well as $45 daily meal allowances for employees not tied to the company’s major hubs in its own attempts at restraint. These changes are bellwethers.

Not all tech workers see these shifts as signals. I recently spoke with a Meta product marketing manager who was fired. I assumed she would be apprehensive about her job prospects; instead, armed with a three-month severance package and decent savings, she remains optimistic. With nearly 79 percent of software engineers and nearly 76 percent of marketers being laid off in technology within three months, her optimism wasn’t necessarily unfounded.

However, a few things are now true that ensure that the shift in technology workforce culture is not just a snapshot, but a redefinition of how technology companies will be run.

Together, Meta and Salesforce lost more than $700 billion in market cap last year. Both companies are now dealing with activist investors who have taken prominent positions in their stocks. The activists have called on the companies to reduce costs, reduce non-strategic investments and, particularly in Meta’s case, aggressively reduce headcount. Managers have less capacity to hire employees and invest in initiatives that are not directly related to the operation of the business.

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For tech startups and founding CEOs, the past 10 years have been a bull run. Interest rates were low, venture capital seemed limitless, and valuations skyrocketed. Since money is essentially free, founding CEOs dove in — pursuing revenue, growing their customer base, and investing in countless people and projects.

However, with recent interest rates at their highest since late 2007 and market uncertainty continuing, investors are considering investing more in companies with strong fundamentals and cash flows. For founder CEOs, this means it will be harder to raise funding, and investors will have an even greater expectation of returns on their money. For big tech companies and start-ups alike, cash is no longer free and employee investments need to pay off.

We are entering an era of external investor pressure, higher funding hurdles and general market volatility. This environment requires management to make structural changes to how culture is perceived in the workplace for both labor and capital.

Today’s tech workforce is used to every voice being given a voice and will now have to give way to a new world – one with higher expectations and disciplined investments. Failing to account for the winds of change will jeopardize the careers of many empowered employees.

The post The Era of Happy Tech Workers Is Over appeared first on New York Times.

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