Risks and opportunities in the technology sector
Among the causes of employee departures – falling revenues, workforce restructuring, M&A activity – add another to the list: global pandemics. Indeed, the unprecedented disruption of COVID-19 has put organizational policies on layoff and workforce transition in the spotlight like never before.
How have technology companies responded to the challenge called pandemic? How are policies changing? And, not least, with recruiting a top priority at 81% of tech companies globally, how are they aligning their layoff and workforce transition programs to improve overall strategic talent outcomes?
In this article, we’ll look at the state of layoff and workforce transition in tech right now, starting with high-level trends and then moving on to key learnings.
Five top-level trends in technology
To reveal the latest high-level trends in layoffs and workforce transitions, we surveyed HR leaders with varying levels of seniority (from HR managers to CHROs) at top tech companies around the world. After analyzing the numbers, what did we conclude?
The following five high-level trends stood out.
1: Increased focus on employee experience continues to drive change.
Improving the employee experience was the most cited reason for updating severance pay.
2: Severance pay, which used to be reserved for leadership, is being democratized.
So much so, in fact, that many tech companies now offer them to all their employees. This is a significant change.
3: Redeployment programs are important – but they are often under-resourced.
While most technology companies (84%) have redeployment programs in place, 42% of respondents agreed that partnering with outside consultants could make their program much more effective.
4: The global pandemic has led to a significant increase in outplacement.
Nearly three out of four tech employers began offering outplacement in the wake of COVID-19. Interestingly, this shift does not seem to be having the same degree of success in other sectors.
5: Despite attempts to control employer branding, consequences remain a problem.
Most respondents continued to experience negative pressures, either on company rating sites or social media, in the wake of layoffs.
Connecting the dots: compensation eligibility, employee experience and employer brand.
Consider for a moment the fact that 57% of job seekers say they won’t even apply to companies with negative online reviews. In other words, it’s almost impossible to overstate what’s at stake when it comes to employer branding. Moreover, the evidence of a causal relationship between employee departures and negative sentiment, whether on ratings sites or on social media, is simply too strong to ignore.
Increased severance pay at the time of termination is a trend that many tech companies are following with an eye on their employer brand. Explicitly – “protecting brand reputation” was among the top three motivations cited by respondents. On the other hand, almost half considered increased benefits and severance pay to be potentially valuable factors in helping them attract talent.
But from an employer brand perspective, what can tech companies do to more effectively protect their brand reputation if and when unfortunate events like layoffs occur?
Assessing employee sentiment would be a good starting point. Indeed, the fact that most tech companies lack key metrics in this area is among the most surprising findings of our survey. Namely, for example:
Three-quarters of respondents said they are not currently conducting formal exit interviews when layoffs occur.
Even more surprising, another 70% indicated that they do not have programs in place to assess feelings or get feedback from affected employees.
This lack of visibility into how employees feel, or what they think, at the time of departure is something that companies must address. Taking short-term action can lead to significantly better results, including less negative impact to employer branding in the future.
Retention, redeployment, and outplacement create agility – and challenges
When COVID-19 came along, unprecedented uncertainty, disruption, and instability – varying only gradually – were transformed into new normal conditions for virtually every business. Technology companies may have weathered this storm better than most, but the industry was by no means immune to the general trend.
In light of the veritable “war for talent” in the tech space being waged right now, and with the overall volume of tech job postings up by as much as 16%, what else can tech companies do to retain valuable talent during a layoff phase?
Offering retention incentives is a lever that many companies in the tech space have put in place with great success. From greater flexibility in work arrangements to retention bonuses, these incentives have grown in popularity over the past couple of years.
The tech sector is also increasingly turning to redeployment. Our survey found that 84% of organizations in the space offer rapid redeployment programs for employees or employee sharing with partner organizations to meet changing business needs and avoid layoffs. Maintaining an optimal program requires tremendous effort and resources, however – with most respondents noting that they want to improve their organization’s program when it comes to matching employees to job openings and providing more robust career coaching and resume support.
And when it comes to outplacement, leveraging strategic partnerships is an area to explore. After all, only about half (54%) of technology companies currently manage their programs through external partners or a hybrid of service providers and internal stakeholders, compared to 82% of companies in the chemical/utilities/energy sector and 79% of non-profits. Thus, there are clear ways for technology companies to improve external outplacement and, in doing so, ensure that it provides maximum value not only to the affected workers, but also to their businesses.
Given the scope of existing hiring challenges – not to mention the magnitude of the risks that tech companies face from an employer brand perspective – organizations that leverage the expertise of external partners when it comes to both outplacement and redeployment aim to gain a competitive advantage in the future. Translated with www.DeepL.com/Translator (free version)