Is Zuckerberg’s Mea Culpa a Harbinger for the Broader Economy and What Companies Should Do About It

After decades of growth, the tech industry, with brands like Meta, Twitter, and Amazon, seems to have finally reached a peak, with the other side of the mountain unfortunately in view.?

According to a recent report from NPR, just this month more than 24,000 employees in the industry have been let go, and the company staffing announcements seem to continue.?

The ultimate need for these cuts arose due to the growth seen by tech companies with society’s necessary adjustments to Covid-19 lockdowns. Studies show ?the increase in internet use rose? from 40 to 100 percent compared to pre-Covid-19 times. Tech companies scrambled to keep up, and flush with cash, threw labor at the challenge, overestimating both the magnitude and the duration of the trends represented during Covid lockdowns.?

Many companies throughout the country are in similar situations, without the luxury of a core business that is “among the most profitable ever built with huge potential ahead,” as Zuckerberg wrote in his letter to the 11,000 employees Meta layed off this week. And, macroeconomic factors are compounding the situation: rising wages, a tight labor market, fears of an impending recession, and the rising cost of capital.?

We are in a particularly stressful time, with a lot of unknowns, but at Connors Group we recommend a careful assessment of your business to allow for an optimal response to changing conditions. Company leadership needs to explicitly understand three “states” of business:?

Expected State?

• This is what is explicitly defined by the company through its policies, Standard Operating Procedures, regulations, etc.?
• Needs to be validated through interviews with executives, stakeholders and all levels of front-line supervisory staff.?

Current State?

• This is what is actually happening on the front lines.?
• Needs to be quantified through observation, sampling, interviews and engineering.?

Desired Future State?

• This is the strategic objective of the company, expressed in operational terms.?
• Driven through corporate strategy direction, coupled with engineering to ensure optimal productivity and systems design.?

Using the knowledge gleaned from observing the company’s three states, align your business model. Ensure you are investing in the right areas and look at factors beyond direct payroll, such as leadership’s span of control, overtime, and scheduling efficiency.?

Additional items to review:

Ensure conditions are set for productivity?

Trained associates: Mass hiring has led to many associates who have not been fully trained

Normal Pace: Ensure that you have the right number of people in the right place at the right time with the right skillsets

Prescribed Methods: Standardize and define how things should be done, and ensure that everyone follows them?

Standard conditions: Make sure that all equipment is functioning and facilities are maintained. It can be tempting to look at deferring things like maintenance as a quick win when under cost pressure, resist it!

Capable Supervision: Ensure that your supervisors and managers know what is expected of them and feel supported to make the “in-the-moment” decisions that drive your daily business

Yes, challenging times are ahead, but knee-jerk reactions to this dynamic economy are dangerous. A careful assessment of your business will provide more clarity and permit greater adaptability in changing conditions. Your business may be at a point where a downslope seems inevitable but using Connors Group’s suggestions can provide strategy and confidence on your company’s journey.?

To discuss how Connors Group can help you assess your current state and define a roadmap to your desired future state, visit us at www.connorsllc.com or call (800) 813-7028.

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