How Meta and Google are using recession fears to clean house

For nearly two decades, top tier tech companies like Google and Facebook (now Meta) were known for their rapid recruitment, great facilitiesand corporate cultures of abundance.

But now, as rising inflation, the war in Ukraine and other macroeconomic factors have caused marketers to reduce their advertising budgets, the work culture of Big Tech is changing. In recent months, Google and Meta have huge reduction in hiringsuch as deduction of allowances employee travel And laundry serviceand started reorganization of departments, Employees fear a deep cut of staff is ahead. Some economists say that these steps are a sign that we are moving forward. “white collar recession” Or declining job growth and security for professional workers not only in technology, but also in other high-skilled industries.

However, there is more to these shifts. External economic pressures are real – but it’s also a good excuse for giants like Google and Meta to clean house.

As Google’s parent companies Alphabet and Meta have grown to become corporate giants of $1 trillion and $385 billion, respectively, they have increased their workforces to more than 150,000 and 80,000. Now, economic conditions are giving management a chance to reset expectations, pressure staff to start working harder with smaller budgets, and some workers showing the door.

“At companies like Facebook and Google, the longest expenses were unlimited,” said one Meta executive, who recently left the company and spoke under condition of anonymity for fear of professional repercussions. “There was a lot of fat in the organizations. Cutting that fat is very healthy. … the party is over.”

It’s not only executives who think some Big Tech companies are too bloated, but also some rank-and-file employees. in front of 2020 presidential primary electionRecode reported that Google and Facebook employees donated most of the money to candidates such as Elizabeth Warren and Bernie Sanders who wanted to break up Big Tech, arguing that making these companies smaller would give them more poor and productive early startups. Can come back in days.

Google and Facebook are still two of the most profitable companies in the world, with annual revenues rivaling the overall GDP of some countries. Unlike smaller tech companies, they can afford to weather the payroll and economic downturn. But, some industry insiders said, in order to increase productivity and demonstrate to shareholders that they are financially responsible, it may be to cut these firms’ profits more than necessary. Meta’s share prices have fallen nearly 60 percent over the past year, and Google’s parent company, Alphabet, has declined nearly 30 percent over the same time period.

Both Google and Facebook have explicitly warned employees that for those left, the company will start demanding more from them. Google CEO Sundar Pichai said in an internal memo: July, reported by CNBC, that Googlers “need to be more entrepreneurial” and “act with more urgency, sharper focus, and more appetite than we’ve shown on sunny days.” Meta CEO Mark Zuckerberg has put it more bluntly in a Company All-Hands in JuneAccording to the New York Times, “I think some of you may decide that this position isn’t for you, and that self-selection is fine for me… In fact, the company probably has people like that.” There is a group that should not be here.”

For employees on the receiving end of this executive pressure, the feeling is that overnight, their job security is no longer so secure. Even though the cuts at Facebook and Google have started recently, many employees are already feeling the change.

A current Google employee told Recode that a few months ago, employees came to Google’s regular all-hands meetings, which the company calls TGIFs, with regular questions about whether they would get salaries to match inflation. Now, the employee said, a more common question among employees is whether there will be layoffs.

“All talk of compensation ends because people are scared,” he said.

Recode, a Google employee, said most of his colleagues approve of management’s cost-cutting measures.

“People are really understanding,” he told Recode. “Because at the end of the day we still have it a lot better than most of the other guys.” Still, he said the company’s recent cuts and an emphasis on productivity have “created a sense of panic and uncertainty over what the company expects going forward.”

That nervousness and uncertainty extends to employees’ future job prospects as well. Typically, Google employees unhappy with their jobs can simply solicit offers from Meta, Apple, or other nearby tech giants to jockey for talent; Most tech companies these days have slowed down on new hiring.

“There’s definitely a sense of ‘Wait, no other tech company can have a chair, if the music stops here,'” said one Google employee.

The fact that in a matter of months, the dynamics of the tech industry have turned upside down, and employees now have less leverage over their employers, represents one of the most significant changes in the sector since the dot-com bust. . In the early 2000s.

In a cynical way that Google employees observed, even if management’s talk about productivity didn’t amount to much real efficiency, it Is Working effectively to prevent workers from being pressurized for higher profits. And it shows shareholders that Google is serious about its stock performance.

Both Google and Meta have seen significant declines in the stock over the past two years, a large part of which Rising inflationwar in ukraine, Changes to Apple’s Privacy SettingsAnd increasing competition from tiktok,

Kewal Desai, a former Google executive from 2003 to 2009 who now runs a venture capital firm, said, “When a recession hits or when things soften, I think these companies that run very well are internally.” take it as an opportunity to settle things. He founded, Shakti. “I believe that smart companies take opportunities and make unpopular decisions.”

But implementing unpopular decisions can be difficult. And improving productivity in large corporations like Facebook or Google isn’t as easy as making demanding employees work harder.

Some Google employees Recode said they think in order to be more productive, executives should focus on giving teams clear direction.

“There’s a fear that people aren’t working hard enough, but I see a lot of people working hard with unclear business priorities,” said a Google employee. “They may not be making the best business decisions, but they don’t know that.”

One example: Google isn’t clear about how much it wants to prioritize its hardware line. It looked like the company was moving forward with developing its next Pixelbook laptop product, until it canceled the latest planned release and disbanded the team working on it earlier this month, The Verge reported.

And in March, Google 100 Google Cloud employees laid offgiving them 60 days to find a new job within the company – which some employees filed a petition against, asked for more time. The layoffs happened despite the fact that Google Cloud, while still an unprofitable division, is growing its revenue significantly.

Laszlo Bock, co-founder of Humu, the workplace software company that led Google’s People Operations teams from 2006 to 2016, said he agrees with the view that some major tech companies today aren’t as disciplined as they could be, and that That it might be time for a change.

“I think there is a way for companies to navigate, however, you need to have a fairly clear set of principles about how and why you want to change.” Bock said.

At Google, the company is focusing its research efforts on AI, and in Meta, the company is prioritizing VR/AR work to support its Metaverse plans as well as its TikTok competitor, Reels.

google recently made a big cut its in-house research lab, Area 120, on projects that were not directly focused on AI. meta is also reportedly extended back Its new experimental products division to re-focus exclusively on reels. Broadly speaking, meta planning To cut workplace expenses by 10 percentThe Wall Street Journal recently reported through staff cuts — and some teams have begun to quietly disband — giving employees 30 days to find new jobs within the company.

An employee who recently left the company said that some Meta employees are trying to find new positions on projects related to the Metaverse, which Zuckerberg has made his top priority.

“There’s definitely been a mad dash over the last six to nine months [Reality Labs], and especially within the Metaverse product group,” said a former Metaverse employee who recently left the company. “It seems like everything else is less secure in terms of the future of the company.”

Some employees and industry experts worry that too much cost-cutting could stifle employee innovation: the kind of creativity that makes these companies great.

“Traditionally, the way you increase productivity, do you manage more tightly, you set goals, you cut costs. And the way you drive innovation, you give people more freedom and Some give flexibility and room to experiment and fail,” Bock said. “So I’m not sure how you increase productivity and drive innovation at the same time.”

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