Recent layoffs at tech giants like Microsoft Corp MSFT, Amazon.com, Inc AMZN, Alphabet Inc GOOGL and others could have far-reaching implications in the tech industry and beyond. Insider has published an article by Brandon Southern, former analytics head at eBay Inc EBAY, Amazon, and GameStop Corp GME, where he outlines why he thinks these layoffs happen at major tech firms.
“At most companies, the reason for layoffs is almost always the same: trimming expenses to achieve better margins. But many of those expenses shouldn’t have existed,” he wrote.
Southern believes that managers are the cause of the problem, inflating the size of the company to gain promotions.
“Managers rarely inherit additional teams or team members. Instead, the only way that managers can demonstrate their ability to lead a larger team is to hire more people. By hiring more team members, the manager’s scope would naturally increase, increasing the odds of being promoted,” he explained.
Southern also noted that cost-saving measures by managers impact more than just one team.
“A standstill on budget or headcount reflects on the manager and the manager’s manager — all the way to the top,” he said.
“Even if a leader says they want more efficiency, they really want a bigger scope and promotion to help them move up as well. And efficient teams aren’t helping them get there,” Southern added.
“Given human nature and the constant desire to build something bigger, I doubt that there is any real concern with managers trying to make their organizations as small as possible,” he concluded.