Earlier today, there were reports that Meta will lay off thousands of employees. Meta confirmed that it will lay off 13% of its 87,000 employees. This means that the company will sack more than 11,000 people. It’s the first major layoff in Meta’s 18-year history. In fact, this could be the biggest layoff in the tech industry this year. Meta CEO, Mark Zuckerberg released an internal letter to the company announcing the layoffs. In this internal letter, Zuckerberg analyzed how it came to this point. He also explains how the layoff work, compensation of employees and future targets.
Mark Zuckerberg explains Meta’s layoff
According to Zuckerberg, this is one of the toughest decisions in Meta’s history. He claims the layoff is to make the company leaner and more efficient. Meta will also cut discretionary spending and extend the hiring freeze into the first quarter.
How did Meta get to this point?
At the start of Covid-19, the world quickly turned to the internet. The surges in e-commerce brought huge revenue growth. Many predict this will be a permanent acceleration that will continue even after the pandemic is over. Zukerberg had the same idea so he significantly increased Meta’s investment. Unfortunately, things didn’t go according to plan. Not only has e-commerce resumed its previous trend, but there is also a macroeconomic downturn. There is also higher competition and loss of advertising signals. This has affected Meta’s revenue.
In this new environment, Meta needs to improve capital efficiency. This is why it is shifting resources to a handful of high-priority growth areas. It will now focus on AI engines, advertising and commerce platforms. These are the company’s long-term visions for the Metaverse. It is not only firing employees, Meta will also cut the budget. It will reduce allowances and downsize its real estate footprint. This restructuring is to make the team improve efficiency.
How will the layoffs work?
There’s no good way to make layoffs. However, Meta hopes to get all the relevant information out to the public. It also claims that it will do whatever it can to help the affected employees. Employees will soon start receiving emails with the news of their layoffs. Afterwards, each affected employee has the opportunity to speak. They can speak with others about participating in an information session and answering questions.
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Incentives/compensation after layoffs
- Severance pay: Meta will pay 16 weeks (four months) of basic salary. It will also pay two additional weeks per year of service
- Paid Time Off (PTO): Meta ill reimburse all remaining paid vacation time
- Restricted Shares (RSU): Everyone affected will receive an equity award on November 15, 2022
- Health insurance: Meta will pay the medical expenses of affected employees and their families for six months
- Medical insurance: Meta will pay six months of medical expenses for affected employees and their families
- Career counselling: Meta will provide three-month career support to external suppliers. This will include early access to unpublished job leads
- Immigration support: Meta will assist if there are immigration issues
Given the amount of access to sensitive information, employees will have restricted access from today. Thus, if your access to Meta’s system is not as usual, then wait for the email. However, it will ensure the email address remains valid for all employees to say goodbye. This layoff affects some teams more than others. The company will also hire fewer people next ear. It is handling its business teams on a larger scale.
What other changes have we made?
Mark Zuckerberg believes that layoffs are a last-resort option. He had to make some changes to the operating costs before layoffs. This leads to a good shift in Meta’s operation. Meta is reducing its office space. Also, employees that do not spend much time in the office will have to share desks. Meta will roll out more similar cost-cutting reforms in the coming months.
It will also extend its hiring freeze to Q1 2023. Of course, there will be a few exceptions. Meta will resume hiring if its business picks up. This will allow the company to control its cost structure in the event of an economic downturn. It will also give Meta a more efficient cost structure. However, Meta will continue to retain its basic structure.
Fundamentally, Meta is making these changes for two reasons
- Its revenue forecast is lower than we expected at the beginning of the year
- The company want to ensure that its business can run efficiently
The future target for Mark Zuckerberg and Meta
Mark Zuckerberg says without the hard work of those leaving, Meta will not be where it is today. However, for those staying, it will be tough. It appears that no Meta employee is safe. Anyone can go at any time. Zuckerberg claims that at the moment, Meta is undervalued. Billions of people use Meta services to connect, and its community continues to expand. Its core business is the most profitable ever and has huge potential. Meta says it will share more on how it will achieve its priorities in the coming days.