Snap to lay off 10% of its global workforce

 Employees are becoming increasingly pessimistic about how well their employers will fare over the next six months, and ongoing hiring freezes and fears over layoffs are partly to blame. 

Workers’ confidence in their employer’s expected performance for the next six months fell to 45.6% in January, according to company review platform Glassdoor’s most recent Employee Confidence Index. While it’s only a relatively small drop from December’s confidence reading of 47.5%, it’s the lowest number since Glassdoor started tracking worker sentiment in January 2016.

Managers and entry-level employees are fairly aligned when it comes to how confident they are in their company over the near term, but they differ significantly from top executives. While 64.9% of senior employees at the director level or higher reported being confident in their employer’s six-month outlook, just 48.9% of mid-senior level workers and 48.8% of entry-level staffers said the same. 

Concerns about hiring freezes may be affecting employee optimism. More companies implemented hiring freezes in 2023, up 81% from the year prior, according to Glassdoor. And many businesses will likely follow suit this year, as 52% of more than 900 executives surveyed by ResumeBuilder in December said they planned to pause hiring in 2024. Hiring or lack thereof is “one of the most visible indicators that employees have of a company’s business performance,” writes Daniel Zhao, a lead economist at Glassdoor. 

“Hiring freezes are a signal of uncertainty to employees, just like layoffs and high turnover,” Zhao writes.

Concerns over layoffs may also be contributing to workers’ pessimism. The share of reviews on Glassdoor mentioning layoffs grew 27% year-over-year in January, and recent data from career consulting firm Challenger, Grey & Christmas shows 82,307 job cuts in January, a 136% increase from the month before. Except for January 2023, that’s the highest number of cuts since January 2009.

Workers are finding that locking down a job these days is becoming increasingly difficult. While job postings remain higher than before the pandemic, total openings listed at the end of 2023 fell 15% year-over-year, according to Indeed. Employees were less eager to leave their jobs last year, and job seekers openly lamented applying to as many as 500 job openings to no avail. While January produced a blockbuster jobs report that may sway public opinion, workers have so far been getting mixed messages, and hesitant to embrace optimism. 

Managers in particular feel pressured by layoffs, as many staff reductions in the past year including at Meta, were intended to flatten the organization and reduce unnecessary hierarchies.
“Ongoing layoffs have targeted layers of middle management as companies attempt to reduce bureaucracy and increase efficiency, putting more strain on middle managers,” writes Daniel Zhao, a lead economist at Glassdoor.

 (Reuters) - Snap (SNAP.N), opens new tab said on Monday it would cut around 528 employees, or 10% of its global workforce, joining other tech and media firms who recently announced job cuts.
Shares of the company rose more than 2% in trading before the bell.
The Snapchat parent expects pre-tax charges in the range of $55 million to $75 million, primarily consisting of severance and related costs, and other charges, of which $45 million to $55 million are expected to be future cash expenditures.
The majority of these costs are expected to be incurred during the first quarter of 2024.

 In January, hourly wages saw a 0.6% increase from the previous month and a 4.5% increase from a year earlier, surpassing the rate of inflation. This is indicative of a strong labor market, with workers in certain industries still holding negotiating power. After two years of wages trailing behind inflation, they've been outpacing inflation since May, indicating progress, yet there is still ground to cover.

Julia Pollak, the chief economist at ZipRecruiter, suggests that while the wage growth is promising, there are some concerns. Some economists believe that the January wage increase may be somewhat inflated, as it might be attributed to a decrease in hours worked. Additionally, there are indications that wage growth could be slowing, such as substantial declines in the pay offered in job postings over the last year.

Although wages are currently outpacing inflation, economists are not alarmed about a potential wage-price spiral. Instead, they anticipate that wage growth may moderate in the upcoming months.  

 Snap recently laid off about 500 employees across various departments, including technology, content curation, trust and safety, advertising partnerships, and internal employee analytics. The majority of these employees were in North America, with most of the layoffs being conducted over video calls. Impacted employees received two months of severance pay along with an additional two months to cover the mandated notice period. The layoffs were announced before the company's fourth-quarter financial results, with CEO Evan Spiegel expressing a focus on "in-person collaboration" moving forward. The morale within the company is reported to be extremely low.

Snap has seen a significant reduction in its workforce due to incremental cuts, attrition, and leadership reorganizations. The company's recent aggressive performance review culture has left employees uncertain about its future. Despite Snap's investment in AR wearables and a desire to become a leader in that space, the company is facing challenges from competitors like Meta and Apple. Additionally, its core digital advertising business has struggled to recover, while key executives have departed and not been replaced. Despite hiring some new executives, none of them are in the C-suite.  

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