Why Companies Misunderstood the Pandemic and the Resulting Mass Layoffs
The COVID-19 pandemic has affected businesses all over the world, causing them to reassess their operations and adapt to changing consumer behavior. However, according to Sasan Goodarzi, CEO of software company Intuit, many businesses have misunderstood the long-term impact of the pandemic, leading to mass layoffs. In this article, we explore why companies have misjudged the situation and what led to these layoffs.
Misunderstanding of the Impact of the Pandemic
Companies assumed the changes caused by the pandemic were structural, leading them to hire more employees in sales, data analytics, and engineering to support ongoing growth. However, Goodarzi argues that the pandemic’s impact was a one-time event, rather than a long-term structural change. Companies that grew rapidly during the pandemic now face a slowdown and do not require the expanded cost structure they initially created to support increased business.
Companies Cutting Jobs
Companies that grew during the pandemic experienced a temporary boost in business, leading them to hire more employees than they currently need. However, the slowdown in business has resulted in aggressive job cuts as companies seek to restructure and adjust their operations. Amazon plans to cut 27,000 jobs, while Meta is set to cut 21,000 employees.
Questioning the ‘Fake Work’ Narrative
Goodarzi disputes the narrative that companies were hiring employees to do ‘fake work,’ calling it real outreach and suggesting no company has hired people just to do fake work. The term ‘fake work’ went mainstream when venture capitalist Keith Rabois suggested that Google and Facebook intentionally hired more employees to prevent engineers from going to rival companies. The resulting layoffs have caused uncertainty and flummoxed remaining talent in major tech companies, particularly in AI.
Insights and Perspectives
The pandemic has forced companies to shift their operations and innovate to meet changing consumer behavior. While some companies misunderstood the pandemic’s impact, others have successfully adapted and are thriving in today’s business climate. In this additional piece, we explore the lessons learned from the pandemic and the need for businesses to be agile and flexible in responding to changes in the marketplace.
Lessons Learned from the Pandemic
The COVID-19 pandemic has taught businesses several key lessons, including the need to adapt quickly and embrace digital transformation. Companies that have been successful in the pandemic have invested in technology, increased their online presence, and optimized their supply chain to respond to changing consumer behavior. Additionally, companies have had to be more flexible, allowing employees to work remotely and pivoting their operations as needed to remain competitive.
Agile Responses to Market Changes
The key takeaway from the pandemic is that businesses need to be agile and flexible in their response to market changes. This involves being open to new ideas, embracing new technologies, and having a culture of innovation. Being agile allows companies to pivot quickly in response to changing consumer behavior and adapt to new market conditions.
Examples of Agile Companies
Several companies have successfully adapted to the pandemic and used agile strategies to continue to grow and thrive. For example, Peloton, a company specializing in fitness equipment, saw a boost in sales during the pandemic as consumers turned to home fitness solutions. The company embraced new technologies, such as virtual cycling classes, and was able to rapidly scale its business to meet increased demand.
Another example is Zoom, a tech company specializing in video conferencing software. As remote work became more prevalent during the pandemic, Zoom invested in new features and technologies to enhance its platform and make it more user-friendly. The company’s agility and ability to respond to market changes quickly led to significant growth during the pandemic.
Summary
The COVID-19 pandemic has affected businesses all over the world, causing many to make changes to their operations and adjust to changing consumer behavior. However, some businesses have misunderstood the long-term impact of the pandemic, leading to mass layoffs. Companies are now cutting jobs as they seek to restructure and adapt to new market conditions. The key takeaway from the pandemic is the need for businesses to be agile and flexible, embracing new technologies and responding quickly to changing consumer behavior. Companies that have successfully adapted to the pandemic have invested in technology, optimized their supply chain, and created a culture of innovation.
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This article originally appeared on Business Insider.
The mass layoffs through 2022 and 2023 are because companies and CEOs miscalculated the long-term impact of the pandemic, according to Sasan Goodarzi, chief executive of software giant Intuit.
Companies had incorrectly assumed that COVID-19 had triggered structural changes, rather than one-off, event-based changes, Goodarzi told Insider in an interview.
Intuit, which owns a portfolio of software products that includes Mailchimp email marketing service, TurboTax tax filing software and CreditKarma credit service, had 17,300 employees as of July last year, according to financial reports, compared to to 13,500 the previous year. A spokeswoman confirmed to Insider that the company has not carried out mass layoffs.
“When you see ads skyrocket, payment volume, those are just two examples, some companies assume it’s a structural change that will never go back,” he said. “Then they hired in sales, data analytics, engineering to support that growth in perpetuity.”
Now, companies that grew in the pandemic are experiencing a slowdown. “They don’t need that whole cost structure, which I actually see,” he added.
During the first months of the pandemic, Internet traffic increased by up to 60% in some countries, according to an OECD analysis. That translated into big boosts in the results of digital companies.
Amazon increased employees 138% between 2018 and 2022, according to Insider analysisand record gains experienced during the pandemic. Meta increased its workforce by 143% during the same period and Alphabet by 93%.
These companies are now aggressively cutting jobs.
Amazon is cutting 27,000 jobs. Meta is set to cut 21,000 employees, with CEO Mark Zuckerberg admitting in a memorandum it had wrongly assumed that increased online activity during the pandemic would mean a “permanent acceleration” for Meta’s business.
“I was wrong and I take responsibility,” Zuckerberg wrote last November.
It wasn’t ‘fake work’
Goodarzi questioned a characterization of the mass layoffs by his fellow CTOs of technology: Which was because some people were doing a “fake job”.
“I’m not sure any company has hired a bunch of people to do fake work,” Goodarzi said, adding that this was “real outreach.”
The term “fake work” went mainstream in March after venture capitalist Keith Rabois suggested that Google and Facebook had spent years intentionally hiring to bolster their own staff and prevent engineers from going to rival companies. The cuts, she argued, were an inevitable corollary of the swelling. In May, Elon Musk stated that Twitter employed “a lot of people doing things that didn’t seem to have much value” before its drastic job cuts.
“These people have nothing to do, they actually are, it’s all fake work,” Rabois said at the time. “Now that it’s being exposed, what do these people actually do? They go to meetings.”
However, Goodarzi told Insider that the mass layoffs had in fact flummoxed the remaining stellar talent at major tech companies, particularly in AI.
Hiring, he said, “has actually gotten easier because of all the tech layoffs, because of the uncertainty that the layoffs have caused.” He added: “It’s getting people to raise their heads that I wouldn’t.”
https://www.entrepreneur.com/business-news/intuit-ceo-how-company-avoided-mass-layoffs-fake-work/453730
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