Salesforce is growing again, but should PR and HR work together?

Back in August, I wrote about the boom and bust cycle of recruitment in the tech world, and now we hear that Salesforce is hiring 3,000 staff, just nine months after letting 10% of its workforce go.?

I’ve got a mixed reaction to this news, and I also think it throws up some interesting questions about business strategy, how you communicate these decisions, and the lessons smaller tech firms can take from it.??

How did we get here??

Salesforce cited overhiring as they emerged from the pandemic as one of the main reasons behind the layoffs in January, and they certainly weren’t alone. I have worked through three recessions and I've never seen a bounce back like the one we had post-Covid.?

Business was frozen during lockdown, but not canceled. When staff re-engaged, they didn’t need to find new business. They simply picked up where they left off, and found themselves in a race to hit milestones and beat the competition. That doesn’t happen immediately after a recession. But it does happen when the handbrake is removed after a pandemic.?

I do think that's the nature of the industry too. It all starts with investors, who are the drivers of both growth and consolidation. After Covid, that period of low-interest rates was a very active one for VCs and private equity, as they looked to deliver returns for shareholders. They had a lot of money to spend in an apparently buoyant market, and investment in tech companies usually means scaling up your engineering teams.

What no one saw coming was the war in Ukraine and the energy crisis, which slammed the brakes on the recovery. Every company we worked with took a bullish stance post-pandemic, and at least 90% have suffered from overhiring in the challenging period since.??

Salesforce acted decisively by cutting its 70,000 workforce by 10%, and now it has signaled that good times lie ahead. For me, that’s bittersweet, for several reasons.?

The downsides

Often when a company hires – and possibly rehires – staff less than a year after layoffs, it suggests to me that mistakes were made and there was a failure to look ahead. You can argue that pandemics and wars can’t be anticipated, but this isn’t the first or last cycle of hiring and redundancies in the tech world.?

It can also take many months for the savings from layoffs to be realised, not to mention the costs involved in redundancies, recruitment, onboarding and the loss of productivity during that period.?

So I think the idea of a strong turnaround within nine months can be difficult to accept, especially for people both inside and now outside the business who were affected by the redundancies.?

Putting the commercial realities to one side for a moment, I find the communication around major workforce decisions very interesting. PR teams will always see new investment in key future-facing areas as a positive story. However, there should be some sensitivity around how that will be perceived by a workforce whose scars will still be raw.?

I have always felt strongly that companies should be mindful of the impact of commercial decisions on both their internal culture, and the external perceptions they create. There is nothing more painful than redundancies,?seeing friends and colleagues let go. No matter how great your culture is, it creates uncertainty and fear.?

These decisions are usually justified as critical for the long-term survival and growth of the business, and they may well be. The problem it creates is that, if within six or 12 months you announce that the company is targeting growth and hiring thousands of people, it can stretch to the limits of the trust and credibility you’ve built up. ? ?

Questions will inevitably be asked about why executives opted for such rapid growth in headcount, and staff may wonder if this is now the type of business that cuts people at the sniff of a downturn, then hires again when things look brighter. Investors may like that approach, but talent certainly doesn’t.? ?

The upsides

Despite that, I am not saying that companies should avoid resizing when the business demands it. As a CEO or Director, you have an obligation to your business, your shareholders and your staff to?make those calls and make them early. ?

I do take positives from this story; Earnings surprising to the upside is great news, growth and optimism are fantastic and I am pleased to see evidence of a fresh bounce back in what is still a difficult business environment.

I’m also pleased to see that Salesforce isn’t just expanding across the business, but focusing resources on its Data Cloud, AI and Einstein 1 platform. I and many others in my network are completely behind the direction Salesforce is going in, and I believe workforces should evolve to reflect a new strategic focus.?

For me, the important news isn't the number of staff being hired, but the growth in exciting areas of technology that shape the future of the business. This is one of the lessons I think smaller firms can take from this story, but there are others too.??

What small tech can learn from big tech

Firstly, it pays to take notice of big tech’s R&D focus, as it can be a fairly reliable indicator of where the market is headed. If enterprise companies are investing heavily in generative AI, for example, you can bet some very bright people and a lot of money have already been dedicated to ensuring it’s the right call. One caveat is that everyone, including your competitors, will know this, so it won’t give you a first-mover advantage, but it can help to inform your overall strategy.?

Second, as big tech goes all-in on new areas, they tend to buy up smaller firms that have led the way and may eventually compete with them. If you’re a start-up or scale-up who wants to attract that kind of investment, focusing on technology that is likely to be an area of focus for big tech is a good place to start.??

Third, companies should absolutely communicate investment in new areas, but they should do it while being respectful of other areas of the business that may be deprioritized, and also with an understanding that things can change very quickly. Today you could be announcing new investment, but in 12 months’ time, you might be sending a very different press release. That’s why I’d like to see HR and PR teams working together so they balance the positive message with the risks inherent in these cycles. I realise that big tech needs to feed the market’s hunger for good news, but I also think it’s worth considering the benefits in sometimes being the silent assassin whose actions speak louder than words.?

My last point relates to the reputational risk involved in redundancies and the rehiring of staff. The boom and bust cycle of tech recruitment makes it even more critical that you take care of your alumni, whatever the reason they left your business.?

When you have 70,000 employees and cut 10%, it’s often a paper exercise. There is a directive to follow, and the process is often not especially person-focused. As a result, there will be many ex-Salesforce staff who still feel disgruntled and unwilling to return. That’s where smaller tech firms have an edge. When you employ 70 people and let 7 go, it’s a very human exercise. There is a lot more sensitivity to the individuals involved, albeit the smaller scale makes relationships easier to manage.

I am a huge believer in the power of alumni, because when you cultivate that community, wonderful things happen. If you do need to hire, former staff will be more receptive to returning, and they are more likely to become future clients too.?

To their credit, Salesforce are very good at looking after their staff, whether it's maternity terms,? wellbeing and other issues. January's layoffs came as a shock to many who felt the decision was inconsistent with the company's 'Ohana' value - treating its workforce as a family - there I hear there was also recognition that rightsizing in focus areas is important. This year, the company has also pushed the concept of ‘boomerangs’, its term for someone who leaves the business and returns (as several senior staff have done recently) so I am glad that Salesforce wants to keep its alumni on board.?

Thanks for reading, and I’m always keen to hear opinions and experiences from my network. What’s your take on the Salesforce news and positive stories of bounce back in the sector? Do you have personal experience of the recruitment cycle you’d like to share? Please comment or get in touch!