why are some companies laying off despite record breaking profits ? my “unpopular” opinion

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So we started the day today with the news about Salesforce doing layoffs, “after record breaking quarter” as news articles liked to highlight. We saw similar “flavored” articles after Walmart layoffs as well recently. The “embedded” messages in these articles is that the layoffs may be result of what they like to call “Corporate greed”. And I disagree!

I am a man of empathy and a strong proponent of importance of empathy in Digital age (if you know me). Layoffs can be life breaking and soul crushing. Though I have never experienced one, my wife has once. She worked for a small boutique Marketing Analytics consulting company that survived on only three major clients. She led the account for one of them, HH Gregg. The client went bankrupt and the firm did not have any bandwidth to absorb anyone with her salary and competence in what was left of the company. Though it was evident that the layoff was a result of everything but her talent, the impact of the layoff on her was extreme enough. And because I am so vested in her career, I felt her pain. I felt her trauma. Layoffs are confidence sucking, depressing and what not.

So now coming back to the employers, taking the Walmart example- Walmart was probably already strategizing about evolving into a true Omnichannel company. In strategic implementations and executions, timing is everything. It is unfortunate, both for those impacted and Walmart, that the time to initiate the efforts to transition to Omnichannel ended up aligning with this pandemic, which btw brought the importance of Omnichannel for retailers to the forefront. Org restructuring is key to any retailer trying to evolve into a true Omnichannel player and has to be executed asap. I actually believe that Walmart has shown its humane side by offering a seperation package that is unheard of in the Industry.

As companies try to evolve to align with today’s world of business, timing is everything. Waiting for a year can cost companies a major strategic advantage against competitors. Revenues are secondary

Now let us discuss Salesforce layoffs. You would argue that they don’t need to evolve into a different business model, like Walmart. Agree. Have you heard the whole thing about re-skilling and how automation will eliminate some jobs and create new ones ? That is not happening overnight. It will be a gradual process and the process has started, across Industries. With the pandemic, you have now probably already heard about “acceleration of Digital Transformation” hundred times. So as companies like Salesforce try to catch-up and evolve, they will re-trim and re-organize. This layoff could be a part of that. Now, you can question the timing. Why couldn’t they wait ? To be blunt here, as you may have read in many of my other articles and LinkedIn posts, “Wait” is the most dangerous word now in the world of corporate strategy. I can tell you one thing- many…many of the big brands and companies you know will die in this coming decade. And half of those deaths will be attributed to one word- “Wait”.  

So no…they don’t have an option to wait, because they just don’t know when the pandemic will eventually wind down and in what way. It is not about profits or corporate greed. It is about survival. If they don’t act now…their survival may be at stake. That means millions more jobs, across companies.

Again, it is easier to write words but I can’t feel the true pain of those impacted (even though I feel I may). But I just wanted to share some insights on why this is not about corporate greed or short term profits, and hence has nothing to do with performance in recent quarters. If these biased articles are making you feel that way…Don’t ! It may make you feel worse (if you have been impacted) to think that you were let go to save bucks. You are much more valuable, and you will come out of this with better skills and stronger mindset.

Views expressed are strictly my own.

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