The executives of Alphabet and Meta Platforms, the parent companies of Google and Facebook, and the major giants in technology worldis warning underperforming employees to step it up, raising concerns about the possibility of layoffs amid continued economic downtown.
The US economy shrank from April to June for the second consecutive quarter, raising fears of a recession. Consecutive declines in gross domestic product (GDP) constitute a traditional, though not definitive, measure of a recession.
“Anytime there’s a recession or a recession warning, companies start to look inward and say, how can we get through this?” Julie Bauke, founder and chief strategist of The Bauke Group, told FOX Business.
Bauke is one of many industry experts who have told FOX Business that these warnings are a sign of a weakening job market – including layoffs.
After a disappointing financial quarter, Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai both told employees they had productivity concerns and were “turning the heat on” in managing employee performance.
According to sources obtained by Reuters, Zuckerberg, the company’s first revenue decline in history, told employees last week that his hope is to raise expectations and have more positive goals. .
Zuckerberg is quoted as saying: “Just turn up the heat a little bit. “I think some of you might decide that this place isn’t for you, and it’s okay with me to make your own choices.”
Meanwhile, Pichai raised similar concerns. Pichai told employees last week that there are “real concerns that our productivity in general is not what is needed for the amount of heads we have.” The comments were first reported by CNBC.
Google revenue growth in the last quarter decelerated to a two-year low as advertisers rein in their spending amid growing recession fears. Second-quarter revenue has grown 13% this year from 62% in the comparable quarter last year.
According to economist and Thru the Cycle President John Lonski, these announcements are a signal of the possibility of layoffs, which can lead to more unemployment, fewer jobs, lower wage increases, and less opportunity. more job opportunities at startups.
“If there’s a large number of warnings about underperformance, there could be layoffs unless there’s some unexpected recovery in the economy,” Lonski said, adding that if employees are alerted to poor performancethey should be prepared for a possible layoff.
Gross domestic product – the economy’s broadest measure – contracted at an annual rate of 0.9% from April to June. According to the Commerce Department’s report, the decline came shortly after GDP fell 1.6% annually from January to March. It is a far cry from the 5.7% growth the economy achieved last year.
“There’s no denying that payrolls would grow much more slowly if it were true that economic growth averaged less than 1.5% through 2023,” added Lonski.
The first thing companies will do is close any open or unfilled positions, which will reduce the number of jobs opening in the market, according to Bauke. The next thing companies will do is ask leaders to identify the worst performers to prepare for a possible wave of layoffs.
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“If all the low-performing people are ignored and they still need to cut back, in general, they’ll look at the parts where they can live without people,” Bauke said, adding that will depend on that department.
Not all industries will be equally impacted as certain roles can be difficult to fill. People with special skills, such as accountants or engineers, who perform well have nothing to worry about, according to Bauke.
“If they get it lay offthey will be hunted in a split second as demand outstrips supply and it will take a long time,” she added.
However, these warnings should also be a sign for employees to reevaluate if they even like where they’re working – especially if they’re not giving their best, Bauke added.
Robyn Duda, event strategist and founder of Robynduda.com, agrees. Duda said these warnings are also being used as a tactic to “get rid of people who don’t really want to be there or can’t handle that pressure, and that’s an easier way than having to fire people.” “
The Associated Press contributed to this report.