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Washington Times

Big businesses have begun ‘cutting the fat’

By January 9, 2023January 12th, 2023No Comments

(This column originally appeared in the Washington Times)

When Elon Musk took over Twitter, many employees either left or were terminated. Some reports claim that of the 7,300 employees at the company before his acquisition, only 3,700 — or about 50% — remained. I can’t tell how accurate those numbers are, but wow, just think about that. More than half of the company’s workforce … gone!

Have you even noticed? I haven’t. I’m on Twitter frequently. The service seems fine to me. There have been no outages, and I think the performance has been a little faster. My feed is more relevant, that’s for sure. Regardless of how one may feel about Mr. Musk, I’m still getting as much value from Twitter as I did in the past, even though the company has half the number of employees it had.

Last week, Salesforce announced a 10% reduction in its workforce. My company implements Salesforce and other customer relationship management applications. Do I expect this reduction to have an impact on my business as a consulting partner? As with Twitter, the answer is: Not at all.

In 2022 alone, Meta laid off 11,000 people, Amazon 10,000 and Uber 6,700. Hundreds of thousands of people lost their jobs last year. Did you notice? Is Facebook any different than before? Has your experience with Amazon suffered in any way? Are you not getting Ubers when you need them? If you’re like me, the answer to these questions is no. And the layoffs are far from over. Other big names such as Google, Citigroup, Morgan Stanley, Philips, Stripe and even Disney have already announced hundreds of thousands of more layoffs and hiring freezes heading into the new year. And I’m sure there’s more to come.

No one will notice these layoffs. In fact, these job cuts will likely improve those companies’ profitability and customer service. Don’t believe me?

Back in the last Great Recession of 2009, big brands like Microsoft, Walmart, IBM, and Johnson & Johnson laid off hundreds of thousands of workers. So how did they fare? Spoiler alert: Not too shabby.

From 2009 to 2010, Microsoft’s revenue and earnings grew 6.9% and 28.7%, respectively. Walmart’s sales and profits also grew. IBM ‘s sales during that period jumped 14.7% and its earnings increased 10.4%. Johnson & Johnson’s revenue was flat, and its net profits stayed around the same at about $21 billion. But let that sink in: The company still earned $21 billion! All of these companies continued to grow after 2010, and all with pared-down workforces.

How is this possible? How can these companies lay off tons of workers and yet still sell more and earn more without them? I think the answer is obvious, no?

If you work for a large corporation, this should really concern you. Why? Because every large corporation has fat — and lots of it. I would postulate that any Fortune 1000 company could reduce its workforce by as much as 10% today, and it would have little effect on their subsequent sales growth, profitability and customer service. These companies simply have too many workers. They’re bloated with people. Many of them are now waking up and cutting the fat. Good for them.

Who is this “fat” exactly? It’s the very entitled people that work at these companies. Not all, but a very vocal group. They insist on working from home even though recent studies have shown that remote workers are significantly less productive, on average, than when they’re in the office. They’ve been doing side gigs on their employers’ time at an unprecedented rate. They’ve been publicly complaining and shaming their employers. They’ve been gleeful — and very publicly — “quietly quitting.” They insist on higher pay, more time off, better health care and all sorts of goofy perks, from “pawternity leave” for when they buy a puppy to providing professional chefs and baristas in lieu of the corner deli and a simple Keurig.

But the times, they are a’changin’. The economy is slowing and likely headed toward a recession this year as the effects of inflation, interest rates, more regulations, and slowing worldwide demand for products take hold. More layoffs are coming — lots more — and workers who have been enjoying the tight labor market have become jaded by a false sense of security.

My advice to anyone in senior management at a large company (say, one with more than 500 employees) is that you probably won’t even notice if you cut 10% of your workforce. So think about that. My advice for smaller businesses — which my firm primarily serves — is that instead of investing in property and equipment this year, snap up some of those laid-off workers but do some serious vetting.

And my advice for workers at companies of all sizes? Put your head down and do your jobs. Actually: Do more than your jobs. Come in early. Leave late. Solve problems. Work harder. Prove your worth. Show your value. That’s what successful people do. Don’t be the fat that’s cut.

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