Layoffs (World Cup Edition) and the $33K Salary Gap

Nick: Welcome to the Wellable Weekly Podcast, where we talk about key topics and trends at the intersection of well-being, technology, and HR. I’m Nick, along with my good friend and colleague Geoff. Geoff, some exciting news. For the first time, it feels like in weeks, this will not be an AI podcast. Hard to do. There’s always AI news, but I feel we just need to go into the HR world, sans another AI topic. 

Geoff: Yeah, that’s right. Let’s mix it up a little bit. 

Nick: So our first article is actually interesting. I think we’ve talked about this kind of in different ways the last months, not just weeks. Every week it feels like another major company is announcing some type of layoff. You had Meta just most recently, but Intuit, LinkedIn, Amazon. The list goes on and on. And it starts raising a question in the HR world of what’s the best way to communicate a layoff? And not just the layoff when it’s actually happening, but do you give notice in advance? Meta was really the most dominant or newsworthy layoff. They’re a little bit unique in the sense that, whether it’s intentional or not, there was a leak at the end of April that they were going to do a 10% workforce reduction. So they had to address it one way or the other. But even without the leak, a 10% reduction was going to trigger federal notice requirements. There are laws like the WARN Act. For those of you who aren’t familiar, it’s effectively if you have at least a hundred full-time employees, which Meta has exponentially more than that, and if the layoffs are going to affect either 50 or more employees or at least 33% of the workforce, you have to give 60 days notice that a layoff is coming. You also have what they call mini WARN laws for certain states that are a little bit stricter, like New York and California. But in short, there are legal requirements you have. Looking outside of the legal requirement, if a company knows they’re going to have a layoff, what’s the best thing to do? Should they announce in advance and let people know? Should they just do it the day of and everyone’s caught off guard? What are your thoughts? 

Geoff: The WARN Act sets the minimum, right? What you do above that minimum is probably the best signal of what kind of company you actually are. What a lot of leaders and organizations struggle with is that productivity paradox. That’s the real tension. If you tell people early, you’re being transparent and respectful, but you also hand everybody a reason to update their LinkedIn, maybe mentally check out either intentionally or unintentionally just because of the distraction. I also think it has to do somewhat with your organization size. It can’t be a true one-size-fits-all answer. For us, Wellable is a smaller organization, around 75 employees, so it might be easier for us to communicate something like that. One of our core values is transparency. So I hope we’re never in that situation, but if we were, I think we would lean into those core values and provide some advanced notice. But it’s easier for us to do that than a 78,000-employee company like Meta, where without specifics about which department or the scale, it just creates this big anxiety cloud. If you are going to communicate early, the specificity and how you deliver that news is really critical. And hopefully it’s on your own terms too, not like the Meta example where their hand was forced by a leak. 

Nick: Exactly. The article was focused on how you communicate a situation like that. And honestly, I think that’s the wrong question in some ways, because the real question is how do you design an exit that protects business interests as well as workers’ dignity? You have real business concerns. If you announce a layoff and give everyone 60 days notice, one thing is that no one knows if they’re going to be part of it. So the details really matter. For example, if you know you’re not going to touch the sales and marketing department, you can make that announcement and partially relieve the anxiety for that group. But at some point, some people know they’re in the general area of could be impacted. If you’re in a department that might get cut substantially, there’s a ton of anxiety and a lot of politicking happening. Sometimes, like the Meta example, it was done at such high levels that middle managers just didn’t know what was going to happen or if they were going to get removed either. When managers are involved in determining who gets laid off, there’s politicking, a drop in productivity, people talking about what happens if they get laid off, looking at unemployment insurance, applying to jobs. And you create security risks: people saving down files or copying code. So there are interests on both the employer and employee side that are hard to balance. I don’t know if there’s a clear answer. For groups that are very transparency-forward, they should lean that way. That’s part of their cultural values. You don’t want to deviate from your cultural values, because if you do, employees develop a sense that management is only going to be transparent when it’s convenient. 

Geoff: And you brought up the manager level. I think in a situation like this, if you are providing advanced notice, that’s where you should invest your time and energy: training, preparing, and giving guidance to managers in impacted departments for how to handle the inevitable questions they’re going to get from their direct reports. The news comes from the top, but where the rubber meets the road is at that manager level. Empowering them to share enough information in the right way, giving them tools to keep everyone focused while acknowledging the realities of the situation, and hoping to retain as much of the workforce as possible while knowing some folks are absolutely going to be impacted. 

Nick: Exactly. I tend to use this as a paradigm for how I think about decisions, especially hypothetical ones: what is my default answer, and then I work from there. In this case, I think the default is transparency. And that’s not just for our organization and the values we hold. I think it’s just generally true. The minute you start treating adult employees like secrets that need to be managed, it’s going to backfire. And I think about what comes next. At the end of the day, when you have a layoff, the day two question is always what are we going to do with the current workforce? If you weren’t transparent and people are generally aware that first layoffs are often followed by second and third layoffs, you have a group of people who are distracted, less productive. Some of your best people are going to go look for jobs, especially top performers who happened to land on the chopping block. In the case of really profitable companies like Meta, the reason they’re having these layoffs is to fund major AI infrastructure. That’s not going away. So if they caught everyone off guard, everyone who remains is going to wonder if another one is coming. My general answer is that the default is transparency, with as much specificity as possible. If you’re cutting 10% equally across the board, everyone at least knows it’s roughly a one in ten chance. That’s different from wondering if your specific department is going to lose 50% of its people. 

Geoff: Right. When you have bad news, what do you owe the person receiving it? It’s the right thing for the individual who’s worked at your company, but there’s also a business reputation element for those who stay. They want to trust that their employer, even when there were no good options, held true to the tenet of transparency. And that made me think of another story. The World Cup is coming up, and every country is narrowing down their rosters. US Men’s National Team coach Pochettino had an initial roster of 55 players and had to cut it down to 26. So 29 players were getting some bad news. This made headlines because rather than calling them or meeting in person, he sent them all an email saying they didn’t make the squad. It just felt so impersonal. Sports transcends in so many ways, coaches are such an important part of so many great sports stories, so to have a coach simply decide to be efficient about it — and he actually said calling or meeting face to face is performative, that it’s about making him feel better, not the individual. I kind of get his point. But at the same time, I do think it would probably make the individual feel better to have a more personal delivery, especially in a small team environment where in four years some of those players might be contending for the same squad again. 

Nick: Yeah, and what’s unique is that for all 55 of those people trying to make the team, this was their life goal. Playing in the World Cup for their country is something they dedicated decades to. That’s meaningfully different from most employees. As much as we would love to believe otherwise, for most people this is a job. They didn’t wake up at six years old and dedicate hours and hours for decades to this one culminating event. That context tells me even more strongly that it should have been done in person. 

Nick: I’ll end on this note. We often talk about what to do as if there’s a good answer. In reality, when you’re going to do a 10% layoff, regardless of how big you are, there’s just no good answer. You’re really looking at options that all have pros and cons and making your best judgment. I do think there are better answers among the various options for each company, but there’s just no good answer in a situation like that. 

Nick: Moving on to our next story, also HR and compensation related. It’s really about two surveys that I thought were pretty impactful. The first was around overemployment. For those who don’t know, it’s this concept where employees have two concurrent full-time jobs. It rose through COVID when everyone went remote and hiring was booming. People were taking two jobs and flying under the radar. It still persists today, probably to a lesser extent. The survey covered a thousand full-time employees who are overemployed, and more than half said they would need a raise of 21% to 50% just to give up the second role. Pretty substantial. And then there’s another survey from Job Leads saying that the salary expectations for US workers are drastically different from what they’re actually getting. The average US worker expects an average of $33,000 more in salary than they’re receiving. That reflects people wanting more compensation in a day and age where prices are increasing and the traditional 3% raise just isn’t cutting it. 

Geoff: My takeaway is that the trust gap between employers and employees seems to be widening. Some of that has existed since the dawn of time, but it’s compounded by the last five or six years of remote and hybrid environments and digital tools that unlock the possibility of taking on multiple roles at once. We are now in an employer-friendly market. The balance of power has shifted. I’m not excusing truly working multiple jobs when your employment contract states you’re exclusive to that company. Transparency goes both ways. But employers in a favorable market should ask what they do with that leverage. It’s not to say they have to fully close the gap between perceived and actual salaries, but it’s certainly important for organizations to be cognizant of what folks are facing across rising healthcare costs, cost of living, gas, and groceries. It’s all going up. 

Nick: Yeah, I think about our company. Up until last year, we guaranteed every single employee got at minimum a double-digit percentage compensation increase. Early in our history pre-COVID, that was extremely compelling because everyone was averaging 3%. But during the heyday of COVID, what was super competitive became kind of the norm. And when we tried to hire people while the market was blowing up, we didn’t get the benefit of having hired cheaply when the market was down. I understand the desire to say, okay, now this is an employer-friendly market, let’s lean into that benefit. I don’t know if I like that strategy, but I understand it. And overemployment at a company like Wellable: I don’t think it can exist here for a lot of reasons. One is that we’re hybrid. Being in the office two days a week becomes a real barrier to holding two jobs. And that’s true: you can see why employers are pushing return to office. There are a lot of positive reasons around growth and collaboration, but we also know some companies do it to trim the workforce without paying severance, or to make overemployment harder. The better solution is building an environment where employees don’t feel the need to find a second job to make ends meet. But requiring in-person attendance a few days a week would largely prevent it as a quick practical measure. 

Geoff: Yeah, two to three days seems to be becoming that magic number. That seems like a good place to wrap up today’s pod. Thanks as always for listening. You can catch Wellable Weekly on Apple Podcasts, Spotify, or wherever you get your podcasts. Be sure to subscribe to Wellable Weekly for all of our latest insights. Thank you.