Asia Martin
Mon, February 20, 2023
Tech companies spoiled workers with perks for decades, adding to a feeling of tech exceptionalism. Now that tech companies are laying off workers, that shine is fading.
iStock; Robyn Phelps/Insider
The tech sector has already cut nearly 100,000 jobs this year.
The arms race to give the best perks
Understanding how Silicon Valley culture gave birth to a certain kind of overindulged tech worker starts with a history lesson.
Vijay Govindarajan, a professor at the Tuck School of Business at Dartmouth College, told Insider that as long ago as the 1980s, tech companies aimed for an open, more-informal office culture, the better to spark innovation. Part of that approach involved creating strong social bonds among employees. Open-office floor plans, communal kitchens, and freebies like food and coffee encouraged employees to gather up and share ideas. It effectively turned lunchtime and coffee breaks into working hours.
It became a recruiting tool, too. When companies wanted to lure and keep parents, they began offering maternity perks, on-site childcare, and lactation rooms. To recruit young professionals who were fresh out of college, companies tried to mirror college dormitories, Michael Malone, a tech historian and author who recalled seeing Pilates balls and video games at the former search-engine giant Yahoo, said.
"Your private life and your work life began to slide into each other. That was kind of cynical by these companies in the sense that 'We expect you to kind of live here,'" Malone said.
Office designs and perks eventually turned into an arms race as companies competed for not only the most talented people, but also for those who wouldn't mind logging a lot of hours. If one company is providing free food, then the other must up the ante, Govindarajan said.
Google became famous for its commuter buses, rock-climbing wall, on-site gym, and in-house massage therapists or massage chairs, depending on the campus. Microsoft paid for its employees' healthcare. Apple started holding Beer Bashes where the company treated employees to free beer, food, and concerts by popular artists such as Maroon 5. Meta installed on-site dental and healthcare, along with dry-cleaning services, and a bike-repair shop. And both Apple and Meta pay a portion of their employees' egg-freezing costs to win over prospective mothers.
Those perks came with a bump in salary expectations, too.
Young people were graduating with desires of becoming the next Mark Zuckerberg as they watched "The Social Network" in 2010, watched his company pull in $1.5 billion in venture capital in 2011, and then watched it achieve IPO in 2012.
Google raised the salary of entry-level positions by as much as $20,000, The New York Times reported, to keep its college-to-company pipeline going. Across the industry, companies went from offering restricted-stock units in less than half of all compensation packages to the units being a top employee perk.
Pandemic fueled the frenzy before the crash to Earth
Recent tech layoffs came after a robust hiring period that occurred during the pandemic-induced shift to digital working in 2020 and 2021. The industry and its eager investors were convinced that the stay-at-home orders had accelerated the country and the world into its digital future.
Tech professionals benefited because it boosted demand for their skills and boosted their compensation. The Great Resignation, where people quit in droves in favor of better-paying opportunities elsewhere, also bolstered the thought that there was job security in the sector.
Young tech workers took to TikTok to show off their offices, perks, and the lifestyles they afforded on high entry-level or junior salaries. The videos attracted hundreds of thousands, if not millions, of views and further pushed the narrative that tech was the "it" industry.
Reality sets in for the tech industry
Then, reality set in as the economy started to sour.
"It went from negotiating salary like crazy and complaining that they had to work past 4 p.m. or whatever, to realizing that working in tech doesn't make them that exceptional and they're also at the mercy of potential layoffs," Ayas said of the rupture point.
Spending so many years in the comforting embrace of tech, and then the harsh wake-up call of reality, disoriented and upset many regardless of whether it affected them.
An ex-Googler who was handed a virtual pink slip told Insider she "mourned" the loss of her job and that the layoff felt "un-Googley." A laid-off recruiter from Meta said she felt "hurt." Those who are still on payroll have been left with feelings of survivor's guilt and anxiety around whether they are next.
It's unfortunate, Govindarajan said, but he added that these tech companies have disrupted other industries like photography, automobiles, and department stores.
"There are many industries the tech sector disrupted where people got laid off. But now it's the turn of the tech sector itself," he told Insider.
The tech sector has already cut nearly 100,000 jobs this year.
(POSITIONS OR FULL TIME EQUIVALENCY(FTE) NOT REAL JOBS OR EVEN WORKERS NECESSARILY)
Those who have identified with their big-name companies and high salaries are taking it hard.
Industry insiders have said workers are being brought down to Earth.
Layoffs at Big Tech companies have caused an identity crisis for many affected workers.
"If you've identified yourself with your salary, which a lot of people do, and if you identify yourself with working for a glamorous company like a Microsoft or Google or Meta, then your identity is taking a hit," Laurie Swanson, a career coach and a recruiter at InspiHER Tech, said.
The root of it all lies in the notion of tech exceptionalism: As companies like Google, Facebook, and Salesforce grew into the giants they are today, they seemed to defy gravity — making money hand-over-fist, even as they pampered their employees with perks that seemed too good to be true, such as massages, Ping-Pong tables, and free food.
Now, things are changing, and the world of posh perks and eye-popping salaries that zealous investors supported is reining itself in. Companies have let go of around 100,000 employees already this year, more than half of what they shed in 2022, according to Layoffs.fyi, a website that tracks layoffs in the technology sector. Companies like Google, Meta, Microsoft, and Amazon shed over 50,000 jobs in total, with all companies claiming that they over-hired during the height of the pandemic.
From a business-and-investors standpoint, this market correction is likely long overdue. But for tech workers who were sold on the glamorous lifestyle these companies have provided over the last few decades, this is a blow to their self-image. Tech looked like the solution to so many things that it produced a mindset among some employees that it was the exception to capitalism's rules.
"The feeling was that it is so exceptionally, incredibly, out-of-this-world good," Reyhan Ayas, a senior economist at the workforce-intelligence company Revelio Labs, said. "I feel like that's been brought down to earth."
Those who have identified with their big-name companies and high salaries are taking it hard.
Industry insiders have said workers are being brought down to Earth.
Layoffs at Big Tech companies have caused an identity crisis for many affected workers.
"If you've identified yourself with your salary, which a lot of people do, and if you identify yourself with working for a glamorous company like a Microsoft or Google or Meta, then your identity is taking a hit," Laurie Swanson, a career coach and a recruiter at InspiHER Tech, said.
The root of it all lies in the notion of tech exceptionalism: As companies like Google, Facebook, and Salesforce grew into the giants they are today, they seemed to defy gravity — making money hand-over-fist, even as they pampered their employees with perks that seemed too good to be true, such as massages, Ping-Pong tables, and free food.
Now, things are changing, and the world of posh perks and eye-popping salaries that zealous investors supported is reining itself in. Companies have let go of around 100,000 employees already this year, more than half of what they shed in 2022, according to Layoffs.fyi, a website that tracks layoffs in the technology sector. Companies like Google, Meta, Microsoft, and Amazon shed over 50,000 jobs in total, with all companies claiming that they over-hired during the height of the pandemic.
From a business-and-investors standpoint, this market correction is likely long overdue. But for tech workers who were sold on the glamorous lifestyle these companies have provided over the last few decades, this is a blow to their self-image. Tech looked like the solution to so many things that it produced a mindset among some employees that it was the exception to capitalism's rules.
"The feeling was that it is so exceptionally, incredibly, out-of-this-world good," Reyhan Ayas, a senior economist at the workforce-intelligence company Revelio Labs, said. "I feel like that's been brought down to earth."
The arms race to give the best perks
Understanding how Silicon Valley culture gave birth to a certain kind of overindulged tech worker starts with a history lesson.
Vijay Govindarajan, a professor at the Tuck School of Business at Dartmouth College, told Insider that as long ago as the 1980s, tech companies aimed for an open, more-informal office culture, the better to spark innovation. Part of that approach involved creating strong social bonds among employees. Open-office floor plans, communal kitchens, and freebies like food and coffee encouraged employees to gather up and share ideas. It effectively turned lunchtime and coffee breaks into working hours.
It became a recruiting tool, too. When companies wanted to lure and keep parents, they began offering maternity perks, on-site childcare, and lactation rooms. To recruit young professionals who were fresh out of college, companies tried to mirror college dormitories, Michael Malone, a tech historian and author who recalled seeing Pilates balls and video games at the former search-engine giant Yahoo, said.
"Your private life and your work life began to slide into each other. That was kind of cynical by these companies in the sense that 'We expect you to kind of live here,'" Malone said.
Office designs and perks eventually turned into an arms race as companies competed for not only the most talented people, but also for those who wouldn't mind logging a lot of hours. If one company is providing free food, then the other must up the ante, Govindarajan said.
Google became famous for its commuter buses, rock-climbing wall, on-site gym, and in-house massage therapists or massage chairs, depending on the campus. Microsoft paid for its employees' healthcare. Apple started holding Beer Bashes where the company treated employees to free beer, food, and concerts by popular artists such as Maroon 5. Meta installed on-site dental and healthcare, along with dry-cleaning services, and a bike-repair shop. And both Apple and Meta pay a portion of their employees' egg-freezing costs to win over prospective mothers.
Those perks came with a bump in salary expectations, too.
Young people were graduating with desires of becoming the next Mark Zuckerberg as they watched "The Social Network" in 2010, watched his company pull in $1.5 billion in venture capital in 2011, and then watched it achieve IPO in 2012.
Google raised the salary of entry-level positions by as much as $20,000, The New York Times reported, to keep its college-to-company pipeline going. Across the industry, companies went from offering restricted-stock units in less than half of all compensation packages to the units being a top employee perk.
Pandemic fueled the frenzy before the crash to Earth
Recent tech layoffs came after a robust hiring period that occurred during the pandemic-induced shift to digital working in 2020 and 2021. The industry and its eager investors were convinced that the stay-at-home orders had accelerated the country and the world into its digital future.
Tech professionals benefited because it boosted demand for their skills and boosted their compensation. The Great Resignation, where people quit in droves in favor of better-paying opportunities elsewhere, also bolstered the thought that there was job security in the sector.
Young tech workers took to TikTok to show off their offices, perks, and the lifestyles they afforded on high entry-level or junior salaries. The videos attracted hundreds of thousands, if not millions, of views and further pushed the narrative that tech was the "it" industry.
Reality sets in for the tech industry
Then, reality set in as the economy started to sour.
"It went from negotiating salary like crazy and complaining that they had to work past 4 p.m. or whatever, to realizing that working in tech doesn't make them that exceptional and they're also at the mercy of potential layoffs," Ayas said of the rupture point.
Spending so many years in the comforting embrace of tech, and then the harsh wake-up call of reality, disoriented and upset many regardless of whether it affected them.
An ex-Googler who was handed a virtual pink slip told Insider she "mourned" the loss of her job and that the layoff felt "un-Googley." A laid-off recruiter from Meta said she felt "hurt." Those who are still on payroll have been left with feelings of survivor's guilt and anxiety around whether they are next.
It's unfortunate, Govindarajan said, but he added that these tech companies have disrupted other industries like photography, automobiles, and department stores.
"There are many industries the tech sector disrupted where people got laid off. But now it's the turn of the tech sector itself," he told Insider.
Amazon staff might get paid 50% less than what they were expecting because shares in the online giant have fallen so much
Eleanor Pringle
Tue, February 21, 2023
When the going’s good at Amazon, employees certainly get their cut. But when shares slump—and Amazon’s have fallen by around 35% in the past year—staff incomes can take a hit.
According to a report from the Wall Street Journal, corporate staff at Amazon get a chunk of their wages from restricted stock units. Yet because Amazon’s share price was so underwhelming in 2022—down almost 50%—pay packets may sink anywhere between 15% and 50% below compensation targets, according to sources familiar with the matter.
This drop comes after CEO Andy Jassy issued a rallying cry to his remaining workforce following the January announcement of 18,000 layoffs. According to leaked audio heard by Insider, Jassy said turning the company around will take “many months” and moves will likely be “misunderstood” by the market.
In his speech Jassy also encouraged staff to think like “owners” of the business, a sentiment echoed by a spokesperson who responded to Fortune’s request for comment.
“Our compensation model is intended to encourage employees to think like owners, which is why it connects total compensation to the company’s long-term performance,” the Amazon spokesperson said in a statement to Fortune. “That model comes with some year-to-year upside and risk because the stock price can fluctuate, but historically at Amazon, it’s had a history of working out very well for people who’ve taken a long-term view.”
A report published last week also dubbed Jassy as one of the most “overpaid” CEOs in the U.S. after it was revealed he took home a total of $212.7 million, while the median Amazon worker receives $32,855. His “excess pay” component accounted for $197.3 million of the total, according to the report from shareholder advocacy organization As You Sow published Thursday.
Unlike its Big Tech peers Google and Apple, Amazon reportedly offers lower salaries but makes up a competitive offer through stock options. It also seems as if relative veterans at the organization could be hit worse by the share depreciation, with employees saying that the longer they stay at the company the more their compensation is dependent on stock awards. For those who have been with the online behemoth the longest, up to 50% of their total income is balanced on market outcomes.
Materials viewed by the Wall Street Journal also reveal Amazon’s HR team has been getting in touch with managers and issuing documentation on how to handle conversations around the effective pay cut.
People added that the compensation scheme is based on the assumption that share value will appreciate 15% every year. In the past that has rung true. In 2015 shares rose 117%, 11% in 2016, 56% in 2017, 28% in 2018, 23% in 2019 and 76% in 2020, according to research platform Macrotrends.
The past two years have not been as rosy for Amazon’s stock price. It fell 2.3% in 2021 and a whopping 49.5% last year.
Not all bad news
The good news for employees is that Amazon has rallied in 2023—up just over 13% at the time of writing. Experts are convinced it’s a trend set to continue: “I struggle to see a company like Amazon not bouncing back from a decline of this magnitude,” Craig Erlam, a senior market analyst for Oanda, told Fox Business.
He added: “Sentiment towards tech stocks takes a little longer to settle, but things should become much clearer over the next few months in respect to the economy and interest rates, at which point attitude towards tech could be very different.”
The so-called war for talent pushed Amazon to reexamine its cash offering in 2022, seeing it raise the component cap within salaries from $160,000 to $350,000. Some of those interviewed by the Wall Street Journal added that this year the company is considering further raises of between 1% and 4% as inflation pressures continue to mount.
However, they added, the shortcoming in share income won’t be offset in further restricted stocks being given to staff.
This story was originally featured on Fortune.com
Eleanor Pringle
Tue, February 21, 2023
When the going’s good at Amazon, employees certainly get their cut. But when shares slump—and Amazon’s have fallen by around 35% in the past year—staff incomes can take a hit.
According to a report from the Wall Street Journal, corporate staff at Amazon get a chunk of their wages from restricted stock units. Yet because Amazon’s share price was so underwhelming in 2022—down almost 50%—pay packets may sink anywhere between 15% and 50% below compensation targets, according to sources familiar with the matter.
This drop comes after CEO Andy Jassy issued a rallying cry to his remaining workforce following the January announcement of 18,000 layoffs. According to leaked audio heard by Insider, Jassy said turning the company around will take “many months” and moves will likely be “misunderstood” by the market.
In his speech Jassy also encouraged staff to think like “owners” of the business, a sentiment echoed by a spokesperson who responded to Fortune’s request for comment.
“Our compensation model is intended to encourage employees to think like owners, which is why it connects total compensation to the company’s long-term performance,” the Amazon spokesperson said in a statement to Fortune. “That model comes with some year-to-year upside and risk because the stock price can fluctuate, but historically at Amazon, it’s had a history of working out very well for people who’ve taken a long-term view.”
A report published last week also dubbed Jassy as one of the most “overpaid” CEOs in the U.S. after it was revealed he took home a total of $212.7 million, while the median Amazon worker receives $32,855. His “excess pay” component accounted for $197.3 million of the total, according to the report from shareholder advocacy organization As You Sow published Thursday.
Unlike its Big Tech peers Google and Apple, Amazon reportedly offers lower salaries but makes up a competitive offer through stock options. It also seems as if relative veterans at the organization could be hit worse by the share depreciation, with employees saying that the longer they stay at the company the more their compensation is dependent on stock awards. For those who have been with the online behemoth the longest, up to 50% of their total income is balanced on market outcomes.
Materials viewed by the Wall Street Journal also reveal Amazon’s HR team has been getting in touch with managers and issuing documentation on how to handle conversations around the effective pay cut.
People added that the compensation scheme is based on the assumption that share value will appreciate 15% every year. In the past that has rung true. In 2015 shares rose 117%, 11% in 2016, 56% in 2017, 28% in 2018, 23% in 2019 and 76% in 2020, according to research platform Macrotrends.
The past two years have not been as rosy for Amazon’s stock price. It fell 2.3% in 2021 and a whopping 49.5% last year.
Not all bad news
The good news for employees is that Amazon has rallied in 2023—up just over 13% at the time of writing. Experts are convinced it’s a trend set to continue: “I struggle to see a company like Amazon not bouncing back from a decline of this magnitude,” Craig Erlam, a senior market analyst for Oanda, told Fox Business.
He added: “Sentiment towards tech stocks takes a little longer to settle, but things should become much clearer over the next few months in respect to the economy and interest rates, at which point attitude towards tech could be very different.”
The so-called war for talent pushed Amazon to reexamine its cash offering in 2022, seeing it raise the component cap within salaries from $160,000 to $350,000. Some of those interviewed by the Wall Street Journal added that this year the company is considering further raises of between 1% and 4% as inflation pressures continue to mount.
However, they added, the shortcoming in share income won’t be offset in further restricted stocks being given to staff.
This story was originally featured on Fortune.com
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