Meta CEO Mark Zuckerberg announced that the social media company would dismiss 10,000 employees and cease efforts to fill 5,000 open roles amid economic turmoil and lackluster performance.
Meta reported $116.6 billion in revenues in its final earnings report of 2022, marking a 1% decline from the $117.9 billion earned in 2021, even as a somewhat higher effective tax rate and a 23% increase in costs from operations contributed to a 41% decline in net income. Zuckerberg said in a Tuesday announcement that ongoing efforts to “improve organizational efficiency” and “garbage collect unnecessary processes” would necessitate the headcount reduction.
“As I’ve talked about efficiency this year, I’ve said that part of our work will involve removing jobs, and that will be in service of both building a leaner, more technical company and improving our business performance to enable our long term vision,” Zuckerberg wrote.
The executive dismissed 13% of his company’s workforce last year after he received a letter from Altimeter Capital Management CEO Brad Gerstner advocating for moves that would significantly reduce headcount, which had more than tripled from 25,000 employees to 85,000 employees over the past four years. Shares for Meta increased more than 20% after the layoff announcement, suggesting that investors were heartened by the emphasis on efficiency.
Gerstner noted that many companies in Silicon Valley could “achieve similar levels of revenue with far fewer people.” Zuckerberg acknowledged that ending less important initiatives freed talented employees to direct their attention toward the most important tasks.
Zuckerberg also told employees on Tuesday that they should brace for a cultural shift toward less managerial bureaucracy, which “adds latency and risk aversion” in decision making, and a renewed emphasis from the company on hiring more engineers relative to other positions. He also revealed that an analysis of remote work suggested that engineers who either joined a Meta office before transferring to remote work or who remained in a physical office “performed better on average” than those who joined the company for a virtual position.
“This analysis also shows that engineers earlier in their career perform better on average when they work in-person with teammates at least three days a week,” Zuckerberg continued. “This requires further study, but our hypothesis is that it is still easier to build trust in person and that those relationships help us work more effectively.”
Similar findings have occurred at other prominent technology companies, many of which instituted across-the-board virtual work arrangements in response to lockdown mandates. Some workers are incensed as their employers reinstitute hybrid or traditional work: employees at Amazon, which requires staff members to report to a physical office at least three times per week, have started an internal messaging channel to challenge the end of fully remote work, while Starbucks employees petitioned management in the wake of a similar announcement.
Employees generally prefer virtual work arrangements because of reduced commuting time and more flexibility, but costs for employers are often significant: 85% of managers believe the shift to hybrid work during the lockdown-induced recession has eroded confidence that employees remain productive, according to a study from Microsoft.